When to Buy a Plug-in Car
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Sunday Jun 18, 2017 – When to Buy a Plug-in Car – This week I read a very interesting report called "When Should I Buy an Electric Car" written for webuyanycar.com. The report looks at the cost of buying an electric car and tries to project when buying one will be a be financially cheaper than buying an ICE car in the UK.
First the report delves a little into history noting that while the current group of electric cars had only started to be produced in 2011, electric cars have been around for 200 years. That's not too far off, the earliest electric vehicle was probably the one built by Thomas Davidson around 1837. He also mentions the Tesla model S which is noted as a "Premium Product" in the UK.
Next the report looks at the total number of electric cars in the UK and notes that currently there are 95,000 electric cars in the UK up from 3,500 in 2013. This represents a very impressive growth rate. It also says that worldwide sales were a robust 462,000 in 2015 with the bulk of the sales in China, the USA, Norway and the UK in that order. It does point out that this represents about 1% of worldwide light vehicle sales.
Next there is a really neat graphic that lists the top markets for electric cars. It shows the current market share, the number of electric cars at the end of 2010 and 2015 with projections for 2020. The projections look pretty realistic except for the US number of 1,200,000. We are currently at about 600,000 plug-in cars sold but with the Tesla Model 3 starting production in July and the Chevy Bolt being sold nationwide in August, the pace should pick up considerably. Tesla alone is expected to sell close to 1,200,000 cars in the January 2018 to December 2020 timeframe.
The next section asks how much does an electric car cost. It shows the current price of a Nissan Leaf and also talks about some of the other electric cars that are being sold in the UK including the best selling Mitsubishi Outlander PHEV and the funky Renault Twizy both of which are not available in the USA. A graphic shows the cost comparison of buying a Nissan Leaf compared to the petrol and diesel versions of the Ford Focus. Unfortunately the graphic doesn't list options and all too often people compare base models but the base model of the EV is often much better equipped than the base of the car being compared to so the comparison is not totally valid. In this case though I am going to assume that the two cars are similarly equipped and the purchase price of the Leaf is net of government incentives. In this case the Ford Focus would work out about $5,000 cheaper than the Nissan Leaf over the first 5 years of ownership.
Please note that a part of this is that the Nissan Leaf is more expensive to insure than the Ford Focus. In the UK there are 50 insurance groups numbered from 1 to 50 with 1 being the cheapest to insure and 50 being the most expensive. Clearly the annual premium for the Leaf, being in group 18, is going to be a lot more expensive than the Ford Focus to insure. Unfortunately the report does not give me the actual amounts projected and I am not familiar enough with the UK insurance industry to be able to tell just from the group number. Other than the initial higher cost I am also not sure why the Leaf would be so much more expensive to insure than the Focus.
The next section is a graphic that
lists performance numbers as compared to the Ford Focus petrol and Diesel
vehicles. In this graphic the Ford Focus won out on every category except
CO2 emissions. Maximum range, top speed, and power came as no surprise.
I was a little but surprised that the Leaf put out more torque than the petrol
version of the Focus hatchback but the biggest shock was that the Leaf's 0-60
time was slower than the Focus; usually an electric will smoke an ICE ever time
in the dash from 0-60.
The next section had some very interesting information about the cost of an electric car. One of them was the conclusion on why the resale values were so low. This was blamed squarely on the cost of a replacement battery pack. I agree here that one of the reasons that people are skittish about buying used EVs is that we really don't know about how long the battery pack will last on these cars. Early Nissan Leafs did show severe battery degradation when they were charged in really hot temperatures like those experienced in the deserts of the Western US. Tesla batteries are doing much better with some indications that they might manage to last as much as 200,000 miles before they hit the 80% threshold usually used to determine when the battery needs to be replaced. The truth is though that we really don't have enought data yet to really know how long these batteries are going to last. The good news here is that we are not seeing large capacity drops so far in cars that are now as much as 7 years old.
Nesxt was the most interesting graphic, at least for me, in the whole report; the trend on battery costs per kilowatt hour. The graphic shows that while the cost of batteries makes up about 25% of most electric cars, battery costs have been falling rapidly dropping as much as 80% from 2010 to 2016. If this rate can be sustained the optimistic view shows that the point where electric and ICE car costs reach parity, which is $150 per KWh, could be reached as early as 2022. Even at conservative rates parity would be expected no later than 2030.
In the end the conclusions drawn are somewhat wishy-washy. The problem is that while the report looked closely at the way batteries were evolving it failed to consider other innovations in the electric car space. These include longer range vehicles with ranges in excess of 200 miles such as the latest version of the Renault ZOE and the Chevy Bolt that are just starting to emerge. Unfortunately it doesn't look like GM will be making a RHD version of the Bolt so this may not be available in the UK. Tesla's Model 3 will also be making it's appearance later this year but may not get to Europe until 2018.
Advances are also being made in fast charging. Right now we have the ability to take a Chevy Bolt up to about 50% in around 30 minutes and faster charger options are beginning to be devised. In my opinion the fall of battery prices are going to go into adding more range rather than reducing costs in the near term, so I don't expect price parity to occur until 2030. There are other reasons for buying an EV though including the smooth quite ride and the ability to charge overnight at home, not to mention that the ICE puts out toxic fumes that cause major health problems, so I think that the market will continue to grow and evolve.
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