So what battery production prices are falling 10% a year around the same for solar and wind electricity. As more electric car manufacturing ramps up with more investments prices will keep falling.
Most people finance a purchase like cars are paying it over 6-7 years. Today looking at gas prices the fuel cost saving can be anywhere between $100-300 a month depending on how much you drive where you charge. So even if an electric car that is 10k more expensive than ice is actually still cheaper today for a lot of people if you look at monthly expense. And each year it gets cheaper for more people to go electric as electric cars get cheaper. This is going to accelerate the price drops are too rapid for most people to understand cost analysis research from 2 years ago might no longer be valid today and today cost analysis wont be valid in another 1-2 years
Sad truth, as you say, most people finance their cars, and with higher rates, those fuel savings mostly vanish, due to interest on the extra 15k loan over 4 or 8 years.
Ironically, the EVs are currently priced higher due to Fed+State tax incentives. I bet the EV prices would be much lower if there were no such tax incentives (this is evidenced by the fact that EV prices are usually updated the day after the govt. changes these values).
Do you have any sources because that’s some backward thinking that needs some strong evidence? It would mean all the car manufacturers would have to collude to raise their prices by the amount of the incentives.
It’s funny how you assume they need to collude instead of each acting in its own independent selfish interest.
Why does one need to present strong evidence that prices will rise by $7500 when the demand curve suddenly shifts right by $7500 due to government intervention? Surely this is just Econ 101.
1. There’s an assumption here that all manufacturers will simultaneously raise prices by $7,500 in response to a demand curve shift. If a single manufacturer steps out of line and lowers prices, they will carry more volume, and therefore more revenue.
2. Manufacturing costs do not increase when subsidies are introduced. EVs, as a result, have higher profit margins. Therefore, this will result in enticing more firms to enter a more lucrative market, resulting in more EV sales, which really, isn’t that the goal of subsidies in the first place?
I don't know if you realize it, but you are making the assumption every EV manufacturer has the capacity to produce vastly more EVs than they currently do. What makes you believe in that assumption?
If you believe that firms don’t respond to incentives, then sure. If you believe that people do not innovate to optimize their utility, then sure. If you think America can’t build things, then sure; it’s an invalid assumption.
I don't know if you understand this, but factories have a maximum capacity they can produce. You can't just snap your fingers and double the capacity of a factory overnight if you realize that it is too small.
Look at how long it took Tesla to build the Shanghai gigafactory: About two years--and literally everyone who knew anything about auto manufacturing said it would be literally impossible to make that timeline when Tesla announced it in the beginning. People made jokes about it. Oh look at that! Elon Musk is lying again! Hurhurhur.
I mean, why do you think the Model S had zero competition for over 7 years? The first 2 years I understand--everyone thought EVs were a dead market. But why did Mercedes, BMW, Audi, et. al. wait the other 5 years (while Tesla was absolutely destroying their market share in the US) to bring out a competitive product?
Was it because they're a bunch of dumb-dumbs?
Or was it maybe because it takes many years to design a complex product like an EV and build a factory to build the car?
> If a single manufacturer steps out of line and lowers prices, they will carry more volume, and therefore more revenue.
How will they do that? Every one of them is production-constrained right now.
> Manufacturing costs do not increase when subsidies are introduced. EVs, as a result, have higher profit margins.
Now you're getting it!
> Therefore, this will result in enticing more firms to enter a more lucrative market, resulting in more EV sales, which really, isn’t that the goal of subsidies in the first place?
Sure, but it takes 5-10 years to design a new EV and spin up a plant. Will the subsidies still exist by then? (Probably not, because we are in the exponential phase of the EV adoption curve, so the subsidy will quickly become unsustainable).
This seems like a good test to determine the amount of competition in an economic sector. With suficient competition, the price will race to the slimmest sustainable profit margin. I mean you could try to raise your price up by $7500, but if your competitors don't, who will be getting sales?
In any case, EV prices have been dropping over recent years, and I haven't seen a $7500 bump in prices, just in more people being willing to go for a nicer vehicle instead.
That only works if the total capacity to produce products for that market is greater than the total demand for products in that market.
If people want 100 units of something, and 5 competing manufacturers can only produce 90 units total (and can only expand to, say, 110 units in a "short" timeframe), offering subsidies doesn't reduce the price.
If the government creates a demand shock, it doesn't matter how much competition exists in the market. They don't need to collude for prices to go up.
Look at what happened to toilet paper during Covid. Were Walmart, Amazon, McMaster and Grainger all colluding on toilet paper prices? Or was there a demand shock?
> In any case, EV prices have been dropping over recent years, and I haven't seen a $7500 bump in prices, just in more people being willing to go for a nicer vehicle instead.
All car prices have been dropping because we're getting past the Covid supply shocks. And if you go back farther, EV price drops are mostly the result of introducing new less-luxurious models (the current base Model 3 still costs more than the first RWD Model 3, and it has been decontented--missing features like parking sensors).
They don't have to collude to react to a change in the market simultaneously.
It has precedent too, solar panel incentives, home building incentives etc. When government grants show up, vendors can take it into account if they want. If enough of them do, the market price has changed and so everyone can put their prices up. They are in a market that is not racing their prices to the bottom to drive demand so it works out.
Most manufacturers (besides Tesla) lose money on every EV they sell, such as ford losing 32k per EV (other OEMs don't break out reporting for EVs), they would not lower cost by the tax incentive if it went away.
I think Tesla may start losing money soon. Sales are down, new quality issues are found every day and the company is involved in 100+ lawsuits.
I don't know about Ford, but most other major companies are only "losing" money because they have started a new vehicle platform and need a year or two to get the development costs back. Compared to previous CE platforms they are actually doing much much better.
Where are you getting a $10K premium? I don't see an ICE ATP listed as you maintain. The number that you appear to be referring to $44K, is for non luxury vehicles, which is not directly comparable to the EV category.
I would guess the premium is closer to $5K, the difference from the $48K ATP for all transactions. Those are 90%+ of all transactions.
> The number that you appear to be referring to $44K, is for non luxury vehicles, which is not directly comparable to the EV category.
I mean, that's the comparison that matters to most people. The vast majority of cars are not luxury cars. Just because EVs target a little up-market, that doesn't exempt them from the reality that they're being compared to ICE cars in lower price categories by most buyers.
I mean yeah, fair point. Average sale price of a category of car is probably a bad way to gauge affordability. A better question would be what percentile of car purchases do ev prices fall into.
I was looking at the new Mazda SUV, and the PHEV version was a $12k premium over the gas version. I have a PHEV and enjoy the benefits, but I’m not sure it’s worth an extra 12 grand (25% more than the regular version). I get that there are some cost savings in the long run, but electricity costs a lot where I live, and insurance costs also go up with a more expensive vehicle.
Varies based on how cheap your electricity is and expensive your gas is but my experience has been about $1000/yr in just gas savings according to my teslas calculations, we don’t commute with it tho, so it could pay off faster for commuters, but still on the order of years to break even.
A big difference is maintenance though. No oil changes, mechanical issues, etc. Just new tires when they’re worn out and occasional problems.
I have a solar roof and live in a hot part of the US. I haven’t paid to charge my Tesla in more than 2 years (besides long road trips though I usually end up taking our ICE vehicle for those). I go through a tank of gas in roughly 10 days. That’s around $200 a month or $2500 a year. Also no oil changes/filter replacements adds up.
I recently compared low-end cars in the US by 10-year cost of ownership, including purchase price, tax incentives, etc. A new Bolt was cheaper than even a pre-owned Civic.
My post is about the cumulative cost over ten years, not only the purchase price. And naturally it depends on the condition of the car you're comparing. You could find a broken civic for less than 1k!
I chose to compare a 2016 Civic with ~60k miles to the 2023 Bolt with ~0 miles. The market price for the Civic is ~18k [0], and the lowest for which you can realistically get a Bolt is the EUV for ~32k [1]. I also considered 12.5k in state and federal tax breaks, which decrease the purchase price of the Bolt to 19.5k.
Here is a cumulative vehicle cost calculator https://afdc.energy.gov/calc/ It makes a graph, from which we can look at the value for year 10.
Add a 2023 Bolt, and a 2016 Civic. Change the price of the Bolt to $19.5k, and the Civic to 18k. Choose your state for energy prices. You may also change the gas price or the number of miles you drive. Click Get Results.
My results are Civic: 52k, and Bolt: 45k. That's assuming that the ratio between gas and energy prices doesn't change in the next ten years.
[0]: The site itself pulls a value of 18,640 from somewhere, but my 18k value came from online listings. My wife looked for these, and I think she mainly used KBB.
[1]: The Bolt EV cannot be purchased, only the EUV. I called about 20 dealerships. After 3 weeks I had gotten several offers to buy vehicles for 32k and higher, but none lower.
Can't access the website, but you are likely aren't including depreciation. To me, it looks like you are trying to prove your point without actually making a fair comparison.
Also, a Civic is a much better car than a Bolt, it's a silly comparison to make. You should compare a Bolt with a car with similar features like space, how it feels to drive one etc.
The comparison is on cost. It is explicitly not a goal to include something like how it feels to drive one. I don't like cars, and none of them feel good to drive. I don't want a car, but I have to own one for transportation. I want to own the cheapest one I can that can still reasonably and safely get me around. I don't care that you think it's ugly or whatever. I'm not using that as criteria.
You have no reason to question my motivation, and it's unreasonable to make up possible deficiencies you imagine my methodology might have without even attempting to understand what is there. I provided plenty of information. The link works.
Depreciation never enters into it, nor should it. The model is that you buy the car, drive it for ten years, and then add up how much you spent on everything: The original purchase, fuel, maintenance, insurace, registration, etc. The value of the vehicle at any point after you buy it is irrelevant. You never sell it. It simply ceases to exist at the end of ten years. If you think I should include a sale price in the model, it will not be favorable to the car that sells for 15k less at t=0 and is 7 years older. But I'm not including that, because it's not useful. I'm looking at the cost for driving a car for ten years. When I do, a new bolt is cheaper than a used civic.
The prices are very similar (18k vs 19.5k) after tax break. And the electric one costs a lot less to drive over time, so after ten years you spent less money. It's not complicated, and the math bears it out easily. I brought receipts. Just look at them. Or do it yourself. Or propose your own model.
> Depreciation never enters into it, nor should it.
Well that is not a realistic comparison. Residual value absolutely must be considered in the comparison.
(I don't know which car it would favor, didn't try to research that. But either way, you need to include the residual value in the computation.)
> It simply ceases to exist at the end of ten years.
I mean but of course it doesn't! The car doesn't evaporate. You can sell it after those 10 years and get some money back. It's not realistic to just ignore that.
You're right, the model would be improved by adding depreciation. I suspect it would increase the disparity, making the Bolt even cheaper. But I don't know that without looking into it more. I think I will at least look at the topic when I do this again next year. Thanks for bringing it up to me.
There are lots of other things not included in the model, too. I would need to pay a contractor to add a 240 outlet to my garage, which will be like $500 since it's next to the breaker box. I will also spend hours of my life waiting for the car to charge during trips over those ten years. I bet people probably underestimate how much that will suck before they buy an EV. I could include a healthcare cost adjustment due to safety ratings, the impact of which I probably grossly underestimate.
I think the biggest omission is change in the gas:electricity price ratio over ten years. Using current values for the whole ten years is a mistake, considering it's the main difference between the options and is likely to change a lot.
edit: also I'm sorry for the tone of my previous post. I didn't mean for it to sound that way.
> I suspect it would increase the disparity, making the Bolt even cheaper.
Depends, but depreciation generally benefits older cars and hurts new cars.
If you buy a Civic that has depreciated to 5-6K, there's not a lot of room to depreciate more. Unless it completely dies, you can use it for a long time and it's still worth 3-5K. Occasionally older cars even go up in value. I bought an Acura for 6K and sold it for 6K almost 15 years later. I bought a Mazda for 3K and sold it for 6K nine years later.
New cars are the worst for depreciation, the moment you drive out the dealer lot it's worth thousands less. And over a few years, the depreciation curve is quite steep until it flattens later. Very brand/model dependent so YMMV.
Factoring in government incentives is a tricky thing. See college loan forgiveness.
I already own an EV and can't cash in retroactively on the latest government incentive without purchasing another. But I could probably find some loop hole and sell my used EV to my neighbor, then buy my neighbor's identical EV and we both qualify. We don't exchange any money, but each file for some thousands of dollars from the government.
If the government lets even the purchase of used vehicles qualify, and lets you qualify, say, once a year... my neighbor and I can just keep trading cars every year and get paid.
But that doesn't seem to be any valuable way to calculate TCO.
> Beginning January 1, 2023, if you buy a qualified used electric vehicle (EV) or fuel cell vehicle (FCV) from a licensed dealer for $25,000 or less, you may be eligible for a used clean vehicle tax credit (also referred to as a previously owned clean vehicle credit). The credit equals 30% of the sale price up to a maximum credit of $4,000.
They have to be a licensed dealer, and the benefit is a portion of the sale price.
> Change the price of the Bolt to $19.5k, and the Civic to 18k
Ok if that's your starting point your numbers make sense.
Are you sure about 12.5K in tax rebates? Sounds high. My partner just bought a VW EV a few months ago and didn't qualify for a single penny in rebates.
So for me the comparison would be Bolt at full $32K vs. a $6-$8K Civic since I like to buy cheaper used cars.
I didn't pull the trigger, and thus didn't pay a tax person to tell me for sure, but I am fairly certain of the rebate.
For the federal credit, only some EVs qualify, and the list changes each year. You also have to have a tax burden within a certain range. The credit for used vehicles has different requirements, too. Starting next year, you get the rebate back as cash from the dealership at the time of purchase, which is nice.
My state offers a 5k credit for new EVs costing under 80k with no other strings. Next year they're adding 2500 more if the cost is under 35k.
> So for me the comparison would be Bolt at full $32K vs. a $6-$8K Civic since I like to buy cheaper used cars.
A no-brainer at those values, for sure! The last vehicle I bought was a 6 year old Focus for $7k. Because my family has changed since then, I was looking at used cars in the 15k range instead of under 10k
I would never have even considered a new car if the tax credit hadn't pulled the Bolt down into a range that made it competitive. All of the other EVs either cost too much initially, or didn't qualify for the credit. Also a lot of them had really small driving distances on one charge, which surprised me.
Another thing I found surprising, was that some people purportedly purchase a new EV each year for the tax credit. They drive it for a year, and sell it next year at a small profit. Market liquidity not totally accounting for the credit value (varies by model). I am far too risk-averse to do such a thing.
Employer is one option, but free L2 charging isn't that rare around me in Southern California. A lot of grocery stores, pharmacies, department stores and similar businesses use free charging to differentiate themselves from competitors.
Interesting. In this area there are no free public chargers. The best one we've found is at Whole Foods but it was around 60c/kWh (don't have my notes here for exact price).
Maybe because there are so many EVs in norcal that businesses can't afford to make these free.
Wow, that's crazy. The L2 chargers around me are mostly around $1-$2/hr, so around 20-30 cents per kWh (that's around the same as the residential electricity price, so I imagine Chargepoint & Friends are getting a better rate)
I get the number from my October'23 PG&E bill in front of me.
I'm on the EV2A plan. The numbers on that website link are not what they charge on the actual bill. I don't know why they are allowed to publish fake numbers.
I see it all the time on Facebook and I’d love to understand what drives people to spout misinformation about EVs. Cobalt, fires, diesel powered charging stations, they simply can’t wait to spread some nonsense.
I mean the OP is exagerating wildly, but the range does decrease. We had a Fiat 500 leased for 3 years and in just 3 years the range decreased from ~90 to about 75 (almost 20% decrease).
Not doubting you, and different manufacturers are doing different things - e.g. Nissan did a pretty good job of putting people off EVs by not watercooling their batteries, but some info below:
> Tesla Battery Life
> How long does a Tesla battery last? The data shows that a typical Tesla battery will last in excess of 10 years. We say this with some degree of confidence because even the 10-year-old batteries were still delivering around 80% of the original range.
> Tesla Battery Replacement Cost UK
> The team at NimbleFins has made some calls and been given ballpark figures to get a Tesla battery replacement starting from £8,000 plus labour (from one Tesla repair centre) and £10,000 including labour (from an independent repair shop). We've heard some readers think the figure could be even higher.
My Tesla costs 3p/mile to run with sentry mode on etc. If we generously say that a diesel would be 12p/mile the fuel savings over 120,000 miles would cover the cost of a new battery. Assuming 80% isn’t enough at that point and that battery costs remain the same. Lots of variables in there of course.
A $14k drop is great, but what is the average price?
EDIT: $53,469, just shy of a $10k premium over ICE vehicles.
https://mediaroom.kbb.com/2023-08-09-Kelley-Blue-Book-Analys...