Just about two years ago, the very idea of owning an electric car raised just enough doubts as to its efficiency and reliability that most consumers were quick to discard this possibility. Times have changed, however, and electric (and hybrid) vehicles such as the Nissan LEAF are conquering the market at an impressive speed. Now, the biggest question mark is… the cost of such cars.
The upfront cost
Taking a look at the retail price of today’s most well-known electric cars can be quite uninviting. For instance, the price tag of the 2012 Nissan LEAF SV announces U.S. $35,200. Such a cost can comprehensibly give the shivers to many consumers, given that the “sticker price” of a gas car of the same category is significantly lower. Nevertheless, this does not mean that driving an electric car is more costly in the long run. Here are 5 reasons why.
1. Tax credits
Because governments across the globe are pushed to fight global warming, they need to find ways to reduce greenhouse gas (GHG) emissions. Since transportation alone accounts for about one-fourth of all carbon dioxide emanations, it has a great potential of GHG emissions reduction.
Therefore, many governments have put in place some programs to bring consumers to make responsible choices when it comes to transportation. Some of the most famous incentives include federal income tax credits up to $7,500 in the United States and provincial subsidies up to $8,000 in Québec, Canada.
These programs significantly reduce the upfront cost that motorists have to assume when they voluntarily decide to buy an electric car. In effect, such governmental support partly closes the price gap that separates the new technology from the old, thereby rendering the purchase of an electric car more accessible.
Beyond tax credits and other similar programs also lay a bunch of advantages that very few people are aware of. For example, discount rates for charging an electric car at peak-off times are offered in many Californian locations and so are some free parking spots. These savings certainly are not negligible.
2. Gas savings
Even though this may not be a surprise to anyone, charging a car with electricity rather than filling it up with gas represents significant financial gains. In the United States, it is generally recognized that driving one mile on electricity is 4 to 5 times cheaper than traveling the same distance on gas.
If we do the maths, someone who currently fills up his or her tank on a weekly basis for $50 spends about $2,600 in gas every year. The same quantity of energy, if it were electrical, would only cost the car owner between $520 and $650 per year. In other words, the owner of an electric car could save up to $20,000 in energy over the course of 10 years (inflation not taken into account). That, in itself, more than offsets the prohibitive upfront cost difference between an electric car and a gas car.
3. Maintenance savings
The maintenance of a conventional car is, as everyone knows it, quite costly. A part of this reality is due to the 200-some moving parts a gas engine contains. Among these: connecting rods, pistons, intake valves, exhaust valves, lifters, etc. The repairing and replacing of many of the engine’s moving parts is inevitable.
In contrast, an electric engine only has about five moving parts. This means that over a rather long period of time, the maintenance of an electric car’s motor will not call for as many visits at the mechanic’s. Forget about the regular oil and filter changes; there is no more of this stuff with an electric car! Some studies actually claim that the maintenance of an electric car is between 30% and 40% less expensive than that of a gas car.
4. Potential insurance savings
Even though this is still open for debate, there is much gossip about how owning an electric car instead of a gas car can potentially reduce a motorist’s insurance bills. There already is evidence of companies offering advantageous plans to electric car owners; the main argument supporting their rationale is that electric car drivers are probably rather careful and calm by nature, which reduces their risk of being involved in an accident.
Of course, some think reversely, claiming that insurance policies covering electric cars are likely to be higher than those of gas cars, for this technology is still a fairly recent addition to the market and it remains highly complex. Nevertheless, it seems that insurance companies are heading in the opposite direction, knowing that they have a whole new branch of the market to seduce.
One of the most financially disastrous aspects of car ownership is depreciation. It is a well-known fact that as soon as a car leaves the dealership, it loses 20% of its retail value. Even worse: during the first 4 years of ownership, it loses 60% of its retail value!
Though electric cars are not impervious to depreciation, many experts estimate that they will lose their value more slowly than gas cars because of their low running costs. Here is thus another source of potentially very substantial savings. In the light of all this, doesn’t it appear quite enticing to replace gas by electricity in your daily travels?
About the author : Alexandre Duval is a blogger for Mercier Nissan. He is also currently completing his master’s degree in political science at the University of Quebec in Montreal.
(Ed’s note: The The information provided in this article was researched and written about by its author and is not necessarily representative of RawAutos.com’s views and/or beliefs on electric cars)