Despite being a shareholder in Tesla stock since early 2018, I’ve held off on buying an electric vehicle. With limited funds, it always felt better to invest $50,000 in the stock for potential profit than spend $50,000 on a base-model Tesla car.
Besides, I had just bought a 2015 Tata Motors SUV in December 2016 to transport our expected baby. My ideal length of time to own a car is about 10 years. Largely for safety reasons, changing cars every decade is my preference. Besides, car engineers usually come up with nicer creature comforts during this period as well.
However, with gasoline prices averaging more than $4 a gallon in the United States, getting an electric vehicle may finally be a good idea. My SUV has a 27-gallon tank. Therefore, at $6 a gallon in San Francisco, it would cost $162 if I were crazy enough to drive until the last drop.
The deja vu thing is, I clearly remember spending $100 to fill up my tank in 2008-2009. Back then, I was driving an eight-year-old Land Rover Discovery II called Moose. He only got about 15 miles per gallon. The high prices didn’t last for long as a recession ensued.
The difference between 2008-2009 and today is that today most of us are much wealthier. We should be able to better take the cost hit, especially if you’ve been a long-time reader.
I know I’m a late adopter of the electric vehicle trend. However, let’s discuss why owning an electric vehicle may be worth it. I’ll then share what I plan to do about our vehicle plans.
The Benefits Of Owning An Electric Car
Besides saving money at the pump, here are some other benefits of owning an electric vehicle.
1) HOV Lane Access
Traffic has returned to pre-pandemic levels. With more companies requiring their employees to return to the office, I expect traffic to get even worse. Therefore, the ability for an electrical vehicle to access some High-Occupancy Vehicle (HOV) lanes to save time becomes very valuable.
Commuting to work was one of my top three reasons why I disliked work. The other two reasons were corporate politics and long hours. I feel for the people needing to drive an hour one way to get to a job they don’t really like. Thankfully, there are more entertaining podcasts today than ever before to entertain and educate.
However, as electric vehicles become more popular, their special access to HOV lanes may wane. Therefore, check your local state highway laws.
2) Government Mandates And Rebates
The U.S. government plans to end purchases of gas-powered vehicles by 2035 in a move to lower emissions and promote electric cars under an executive order signed by President Joe Biden at the end of 2021. The government owns more than 650,000 vehicles and purchases about 50,000 annually.
California has set a requirement that all new vehicles sold here be emissions-free by 2035, and the Legislature is updating the state’s purchasing incentive program to get drivers into cleaner cars quickly. Other states are following suit.
Therefore, sooner or later, we might no longer be able to buy combustible engine cars. However, to incentivize consumers to buy electric vehicles, governments have offered EV rebates.
Historically, governments have offered anywhere from $1,000 – $10,000 in rebates or federal tax credits when purchasing a new electric vehicle. But I argue these rebates were necessary because electric vehicle prices were much higher than comparable combustible engine models.
Today, the electric vehicle price premium has narrowed. But overall, the average car price continues to go up. We’re talking about the average car price now surpassing $40,000! That is nuts.
3) Fun To Drive
I’ve test-driven several different types of electric vehicles and they were all very fun to drive. The torque is instant and the power is constant. Acceleration is also much faster on average. Electric vehicles remind me of the go karts I used to race at Magic Mountain as a kid.
However, I do love the rumble of a combustible engine. How do you beat the gurgle of a 1990 Mustang GT? Further, there’s something about the smell of burning oil and gasoline that gets my senses going. The older you are, the more you may enjoy gas vehicles due to the nostalgia it brings.
4) Better For The Environment Long Term
Obviously, producing zero emissions is one of the good long-term benefits of owning an electric vehicle. Our fossil fuel supply is finite. More electric vehicles replacing gasoline-powered vehicles helps reduce the pace of fossil fuel consumption.
Here are thoughts from Lucien Mathieu, a transport analyst at Transport & Environment on how electric vehicles are better for the earth.
“Electric vehicles emit 64% less CO2, including all the different stages like electricity generation and fuel production. But this still hasn’t shaken off the argument that electric vehicles use up a large amounts of raw materials. Our analysis shows that the raw material needs of EV batteries pale in comparison to the fuel burned by fossil fuel cars, which, unlike batteries cannot be recycled.”
The Brussels-based campaign group said battery electric vehicles were superior to their petrol and diesel counterparts across raw material demand, energy efficiency or cost – as well as eliminating exhaust emissions of carbon dioxide and other harmful gases.
On the overall energy efficiency of vehicles, T&E calculations suggest that battery-electric cars will use 58% less energy than a petrol car over their lifetimes and emit 64% less carbon dioxide.
5) Cheaper To Own And Operate
Without liquids and as many moving parts, electric vehicles often cost less than half as much to maintain and operate as gas vehicles. Here is some data from AAA with some new gas price and mpg assumptions.
- Fuel – the electricity required to drive 15,000 miles per year in a compact electric vehicle costs an average of $546, while the amount of gas required to drive the same distance costs $3,000 at $4/gallon and 20 mpg.
- Maintenance/Repair/Tires – electric vehicles do not require as much maintenance as gas-powered ones since they don’t need oil changes or air-filter replacements. If maintained according to the automakers’ recommendations, electric vehicles cost $330 less than a gas-powered car, a total savings of $949/annually.
Funny enough, I’ve had very little maintenance issues with my gas car over the past 5.5 years. I may write about the cost of owning a “luxury” vehicle in a future post.
6) Less Dependency On Foreign Oil Producers
Being dependent on anyone for anything is risky, including your spouse! People or organizations can turn on you in an instant. As a result, we all need to be more self-sufficient in everything we do.
Imagine if every vehicle in America was an electric one. Now imagine if all our homes were fully powered by solar. Our economy would be much more resilient against tyrants like Putin and the people who support him.
Being able to more easily cut off dependency from oil-producing countries run by evil actors might very well be the #1 reason why we should all get electric vehicles. Because unfortunately, more conflict is an inevitability due to human nature.
Top Oil-Producing Countries
Below is a map from World Population Review that shows the top oil-producing countries as of 2022.
Here is a list of the top ten countries and their respective barrels per day (BPD) rates:
- Russia – 10.58 million BPD
- Saudi Arabia – 10.13 million BPD
- United States – 9.352 million BPD
- Iran – 4.469 million BPD
- Iraq – 4.454 million BPD
- Canada – 3.977 million BPD
- China – 3.383 million BPD
- United Arab Emirates – 3.174 million BPD
- Kuwait – 2.753 million BPD
- Brazil – 2.622 million BPD
Do we really want to be dependent on any of these countries besides our own for oil? Hell no! We humans tend to be selfish, greedy, and biased. If a country gets someone as unhinged as Putin in power, he could last for decades.
As a personal finance enthusiast trying to help people achieve financial freedom, I’ve been daydreaming about all of us having enough wealth to withstand much higher oil and gas prices. $10/gallon for gas? Bring it on!
Alas, so much work still needs to be done to improve everyone’s finances. Further, a lot of folks are just getting started on their financial independence journey. But I’m confident that over time, we will all be less dependent on foreign oil.
Main Negatives Of Owning An Electric Vehicle
The main negatives of owning an electric vehicle are:
- The premium price to buy one
- Battery range and technology
- Charging grid density
Paying $35,000 for a nicely-equipped Nissan Leaf, a compact electric vehicle, still feels like too much compared to paying $25,000 for a comparable Toyota Corolla gas engine vehicle. Therefore, getting rebates or tax credits from the government is important to adopt change. We all want to save the world, but not at any price.
As someone who occasionally drives 210 miles to Lake Tahoe from San Francisco, I want an electric car battery that can comfortably last 250-300 miles. Just like how we should never trust the stated miles per gallon, we should never trust the miles per charge (EPA range) either. Car manufacturers always give us the top efficiency based on ideal driving conditions.
Thankfully, battery technology has improved to where electric vehicles can now travel between 300 – 500 miles on one charge. However, you still have to pay up for longer battery life. For example, one of the cheapest electric vehicles, the Tesla Model 3 Long Range (~350 miles) still costs over $51,000 pre-tax.
For those of you who fill up long before empty, you may feel too much anxiety driving an EV over long distances. Thankfully, however, the charging grid has become denser, and charging speeds have improved. Below is the latest Supercharger location map in America.
Finally, if you enjoy driving your car for decades, you may have to eventually buy a replacement battery. Just like your smartphone, an electric vehicle battery will lose its charge over time. Currently, the average cost to replace an electric car battery is about $6,000.
My Plan To Buy An Electric Vehicle
I really want to buy an electric vehicle in this environment. It feels bad to be dependent on Putin and potential other bad actors from large oil-producing countries. Besides donating money to Ukrainian relief efforts, there’s a desire to take action to help a bad situation.
However, President Biden has already banned the consumption of Russian oil in America. While oil giants like Shell and BP have stopped doing business with Russia. Perhaps more oil companies will follow. Therefore, along with sanctions, a lot of what America and other countries can do to financially suppress Putin’s war machine is done.
If I decide to buy a new electric vehicle, my gas vehicle will need to be put out of commission to make a difference. Otherwise, I will simply have two vehicles consuming energy. Or my gas vehicle will be driven by another person if I sell it. Given I only drive about 4,500 miles a year, the new buyer will likely consume more.
As a result, the most logical solution is to continue to own my vehicle until the ideal 10-year mark is reached in 2025. I will aim to reduce my driving from 4,500 miles to under 4,000 miles. Further, I’ll invest the savings from not buying an electric vehicle into real estate, stocks, and organizations that do good.
As a father of two young children, I don’t want to compromise the safety of my family by buying a smaller vehicle. No matter how good of a driver you are, you also need to protect your family from other drivers. I drove a Honda Fit hatchback for three years and was often bullied on the road. The crumple zones are just too thin for comfort.
Target Electric Vehicle Of Choice
Out of all the electric vehicles out there, the one I’m eyeing the most is the Volkswagen ID.Buzz. That’s right. Not a fancy Porsche, Tesla, Audi, Lucid, Range Rover, or BMW, but a VW. It’s supposed to come out in the U.S. in 2024 and cost over $40,000.
Back in 2003 I was very close to buying a VW Eurovan/Microbus (older version) instead of a condo in San Francisco. After four years of work post college, I was already itching to become a nomadic vagabond instead. I dreamt of visiting all the national parks and camping in my Eurovan without a care in the world.
Alas, financial responsibility got in the way. Today, I’m financially good to go. With two young kids, the VW ID.Buzz should be perfect. It brings back a tremendous amount of nostalgia, which I love! Here’s the official VW ID.Buzz reveal from VW.
And here’s an independent video review of the ID.Buzz from Top Gear.
Just Have To Wait A Little Longer
In 2025 or 2026, I will buy an electric vehicle for my family. By then, supply chain issues should have hopefully worked themselves out. Instead of buying new, I’ll buy one that’s a couple years old (produced in 2023 or 2024). From there, I will drive the electric vehicle for another ten years.
I got to say, the anticipation of buying an electric vehicle in the future has me all excited! Here’s hoping to further technological innovation and reasonable prices over the next several years.
Readers, what are your thoughts of buying an electric vehicle today? I’m sure many of you are driving one now. Do you feel relatively better about owning an electric vehicle in this high gas price environment? What are some other negatives and positives of owning an electric vehicle I haven’t discussed?
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Getting An Electric Vehicle May Finally Be Worth It is written by Financial Samurai for www.financialsamurai.com