EV sales continue to trend upward as more consumers adopt hybrid and electric cars, with manufacturers looking to shift from traditional combustion engines to electric power. For many buyers, this technology adoption represents a shift towards a more sustainable and environmentally friendly lifestyle.
A major perception of EV ownership revolves around savings. You’ve heard it before: gas is expensive and you can see dollars falling out of your pocket at the pumps. Perhaps driving an EV can help cut down on the cost of gasoline. While electricity is indeed a cheaper commodity than petrol, with the increasing cost of living, it’s important to crunch some numbers and see if you come out ahead with owning an electric vehicle.
In 2023, the 10 top-selling models were:
- Tesla Model Y
- Tesla Model 3
- Chevy Bolt EV
- Ford Mustang Mach-E
- Volkswagen ID.4
- Hyundai IONIQ 5
- Rivian R1S
- Ford F-150 Lightning
- Tesla Model X
- BMW i4
EV powerhouse brands like Tesla have teased even more affordable versions like the Model 2, but they have yet to materialize. Other manufacturers such as Volkswagen, Ford, and Hyundai continue to release their own models in an effort to establish their own positions in the EV market.
Vehicle Cost
So you’re intrigued by the concept of owning an electric vehicle, but you’re not quite sure if it’s going to make financial sense. Without a doubt, the cost of the vehicle itself is by far the biggest factor in your purchasing decision.
With Tesla dominating the US EV market, let’s use the compact Model Y as a case study. As one of the fastest growing vehicle segments, consumers want performance as well as the flexibility of additional stowing capacity which makes SUV/CUVs particularly appealing. Whether you’re single or have a growing family, sports utility vehicles are increasingly popular.
The MSRP for a base Tesla Model Y starts at $43,990 USD. Depending on options, you’ll max out around $52,490 USD.
Other Costs To Consider
Home Charging Set Up
The overall installation process for a charging station in a detached home can range between $2,500 and $4,000 USD
Insurance, Maintenance, and Repairs
Typical expenses will include scheduled maintenance, normal wear and tear items, and expected repairs. However, with a new Tesla Model Y, it will be under warranty for the first several years so we will assume that the only expense is insurance at $1500 a year.
This is a very conservative estimate as other purchases such as a new set of tires would cost an additional $1000. However, it is not mandatory unlike insurance coverage.
Charging
Tesla has a supercharging network all over North America and has a pay-per-use pricing structure. Pricing can vary by location but it is estimated that the cost can range from $0.24 to $0.36 per kWh.
Putting this into perspective, the Model Y Long Range Dual Motor has a battery capacity of 82kw, so the cost of a full charge would be roughly $30 for 336 miles of range. Assuming that you’re charging once a week and driving roughly 17500 miles a year , this would put you at around $1560 in electricity costs, and that’s on the high end using supercharger pricing.
If you’re charging at home, expect this cost to be much lower.
Financing and Depreciation
Most cars will depreciate 20% in the first year but considering Tesla’s success, we can be a bit more conservative in our estimates. Across 5 years, depreciation for a Model Y purchased for $44,000 may look like this:
| Value Lost (Based on $44,000 purchase price) | |
| Year 1 | $11,000 |
| Year 2 | $5148 |
| Year 3 | $4344 |
| Year 4 | $3668 |
| Year 5 | $3095 |
| Total Depreciation | $27225 |
If you’re financing the vehicle on an APR of 4.75% with a purchase price of $44,000 USD with a loan term of 60 months, the cost looks like this:
- Total Loan Amount- $44,000.00
- 5% Sales Tax – $2,200.00
- Total of 60 Loan Payments – $49,518.25
- Total Loan Interest – $5,518.25
- Total Cost (price, interest, tax, fees) – $51,718.25
Tax Credits
Depending on where you live, there are government tax credits that could net you a rebate of up to $7500 if you buy an EV vehicle that qualifies.
Is It Worth It?
Due to various factors, estimating the cost of driving an electric vehicle can be complicated. These numbers include assumptions such as conservative estimates for maintenance and repairs, cost of electricity, and amount of driving.
| Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | Total | |
| Home Setup | $3000 | – | – | – | – | $3000 |
| Maintenance & Repairs | $300 | $300 | $300 | $300 | $300 | $1500 |
| Charging | $1560 | $1560 | $1560 | $1560 | $1560 | $7800 |
| Financing Interest | $1917 | $1529 | $1123 | $697 | $250 | $5516 |
| Depreciation | $11,000 | $5148 | $4344 | $3668 | $3095 | $27,225 |
| Total | $17,777 | $8,537 | $7,327 | $6,225 | $5,205 | $45,041 |
Assuming all of the variables above, the total cost of ownership for a Model Y over 5 years would amount to just over $45,000 USD, not including the monthly payments of the vehicle itself.
Electric vehicles are an enticing option for car buyers. They now have a litany of technology to improve the driving experience, but the novelty will come at a cost. It’s easy to forget that costs can add up significantly especially with a luxury brand such as Tesla. On the other hand, hybrid vehicles are an excellent alternative to EVs, so be sure to consider them as well.
