The car or cars (as many families have two cars) are a significant expense in the family budget. So, making smart decisions when picking a car is impactful.
The car’s make and size significantly impact the financial costs of buying and owning it, but in this article, we’ll only focus on the propulsion: electric vs. gasoline.
Fuel costs
Financially, the first thing people think of when thinking about electric cars is the savings on fuel. We will do some calculations for Europe, but although the amounts differ, the ratios generally stay the same.
Most of the year, we’re not doing long-distance travel, so charging at home or work is enough. When charging at home, electricity can be as low as €0.07/KWh at night and rarely higher than €0.30/KWh during the day. Of course, this depends significantly on where you live, but let’s assume a €0.20/KWh price. The typical energy consumption of an EV is 15KWh per 100km, resulting in a cost of €3 for driving 100km.
A gas car uses, on average, 8 liters of gas for 100km, which at €1.80/liter results in a cost of €14.40 to drive 100km.
Suppose you are charging at high-speed chargers during longer trips. In that case, the charging cost is closer to €0.40/KWh, and consumption is also slightly higher, so driving 100km can cost between €6 and €8, which is still significantly cheaper than gasoline.
Service
The cost of servicing a car is overlooked by many, but not for those of us who manage our finances.
Electric cars are much simpler than gas cars; their engines and drivetrains require no maintenance, and their brakes are barely used due to regen braking. This results in little to no service costs for most EV models.
As a comparison, even for a new gas car with no malfunctions, yearly service will cost, on average, €250/year for more affordable models and can cost more than €2000/year for premium brands.
Insurance & Tax
Many countries have much lower taxes for EVs, and insurance can also be less expensive. This difference is likely to be reduced, as with the growth of EV adoption, tax incentives will be phased out.
Purchase price
The cost of batteries has declined considerably over the past few years, and in the Chinese market, they are already less expensive than their gas counterparts.
However, in the European and American markets, most traditional automakers focus on larger, higher-end, more expensive models due to the relative cost of batteries. Meanwhile, imported EVs are artificially made more expensive through tariffs to protect local automakers.
These factors make electric cars too expensive for many, but this is already changing and will trend towards price parity.
Conclusion
Whether you like high-tech electric cars or you prefer the more traditional gas-powered ones, this article doesn’t try to convince you to buy one or the other. But, if you’re a disciplined financial planner, you should also consider these factors when picking your next car.