AAR48— The Real Cost of Going Electric

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3:08Good day, everyone, and welcome back to At Any Rate. My name is Evan Ray, and we are here to help you make sustainable financial changes without breaking a sweat. And today is another one of those I Will Be Here episodes, because today is actually going to be a solo episode. And I'm going to try to keep as much bias out of it as possible. But today is going to be covering basically the finances of owning an electric vehicle, what that really looks like, what my personal experience has been in owning an EV. So obviously, everything is going to be biased to some degree. I can't avoid that. But the angle with today's episode is going to be focusing as much as possible on the finances of owning an EV, not focusing on, you know, do you enjoy it?

3:46How does it drive? How's the software? Blah, blah, blah. You're trying to avoid that as much as possible and focus on the actual financial impact of a decision like this. Because not only is purchasing a new car always a massive financial decision, but when you're switching the base energy storage of the vehicle, basically, from a gas car to an EV, there are a lot more changes that occur than you might expect up front. And definitely a lot more changes down the road than are easy to predict up front. So we want to cover that as much as possible. So a little bit of background for myself, my EV experience.

4:22I have owned a Tesla Model 3 since December of 2023. So I've had it now for about two, two and close to two and a half years. We'll say two and a half years. And background for charging that vehicle for the first year and a half, I was charging at the apartment complex that we were living at. And it was a mix of that as well as supercharging when I needed to. And we'll dive into the finances and experience of that more a little bit later. but then now since we purchased a home like we've covered many many times i'm actually able to charge a home and that's been a completely different experience as you would imagine but again we'll get into the specifics and i also want to be very clear i'm not here to you know sell anyone on evs or you know push somebody else to do it or say that it's the best thing for everybody else i'm just here to try to run the numbers run the numbers of my experience honestly and then you know you can take from that and apply to your situation and say maybe it is or isn't right for me.

5:18So to cover the first most obvious aspect of EVs when you're going to purchase one is just the sticker price, just the MSRP value of those cars. EVs definitely tend to have a higher upfront cost. There are newer technology. Batteries are very expensive to manufacture. Obviously, everything gets cheaper over time at scale and as technology advances, but there's no getting around the fact that if you go to buy an EV and then you go to buy that exact equivalent vehicle as a gas car, it's going to be more expensive to get the EV version. On average, this difference seems to be around$15 ,000 higher.

5:53We'll talk later about how this isn't necessarily a one-for-one comparison, but the MSRP, if you're just looking apples to apples, is usually going to be about a$15 ,000 difference. Then, past that, you can have a ton of federal and state tax credits that make a ton of difference. And this all changes over time. It has changed drastically over time, and I don't think that's going to stop anytime soon, at least in my just complete guesstimate prediction ahead of time. We had tax credits for a while when it was a big push, and then due to just governmental changes, those have been pulled away, and I would not be surprised at all if in a few years things start to ramp back up and that becomes a push again.

6:36So I wouldn't write it out forever. So for the time being, there are definitely paring down on federal tax credits, but there are still a lot of state tax credit opportunities out there depending on the state you live in. Definitely a quick Google search a way to figure out what the current tax credits are that might be available in your area. All right, so now to break down my purchase process. Again, I'm all about transparency here as much as possible, so I'm just going to be honest, not trying to sell anybody and not trying to push anybody away from it either. Again, I purchased a 2023 Model 3 in December of 2023.

7:08It was purchased new. The final purchase price of the vehicle and also I should mention I got the base level model 3 so basically at the time the cheapest model 3 you were able to purchase the final purchase price for that vehicle was $28 ,000 after the tax credits and discounts that were going on at the time so the tax credit at the time was$6 ,500 I believe and at that at the time as well that was a tax credit that only applied once you filed your taxes so it was a tax credit true tax credit instead of a point of sale discount like they moved to and i know that some state tax credits as well moved to as well and then also in terms of discounts i got some discounts at that point in time because they were transitioning in sort of a new refreshed model three and so that was part a big reason that i purchased at that point was i believe it was about a five or six grand discount due to that transition and tesla isn't usually a company that does you know periodic discounts usually the price is what it is, but this was a special case where they wanted to push out that old inventory.

8:11So I definitely got a good opportunity there. So the final loan that I took out for the car, because I didn't pay the entire thing off in cash, was$18 ,000. $18 ,000 at a 6 % interest rate was a loan that I got. That is scheduled currently to be paid off at the end of this year. I know I paid off a little bit extra either last year or the year before when I got my bonus. I put some of the money towards that, so it got paid down a little bit quicker if you're doing the math and you're saying, hey, you're lying about that. Scheduled to pay off at the end of this year. And the purchase process was incredibly easy.

8:41We're talking about the finances of the situation. It definitely didn't change the cost, but it changed the mental load and effort that went into the purchase process because it was all just done online and or done in the app. Documents were filed that way. Payments were done that way. Wires were done that way. Forms over time over and over again were signed that way. It was all completely done either online or literally on a phone app, the purchase process, as well as pickup checklist and scheduling the pickup and then getting into the car. It was all done that way. And that was a massive, massive headache saver as opposed to haggling with a dealership or blah, blah, blah.

9:19And I also kind of want to call back to, we've talked about it before in past episodes, but this purchasing this Tesla was actually almost my worst financial decision that I could have made. And at a given time, what I mean by that was having a Tesla, having an EV in general has been a dream of mine for quite a long time. And that pushed me to almost get into purchasing an EV a lot sooner than I should have. I almost got one soon after graduating college, just when I landed an engineering job, I'm being paid solid money, let's go buy this. And if I had followed through with that, I guarantee you that I would not be in the current financial situation that I'm now and I would not have been able to purchase the vehicle nearly as comfortably.

10:03I wouldn't have been able to afford the insurance or the monthly payments nearly as easily. I just wasn't financially ready for it. And I believe that the only reason that I didn't end up purchasing it was that the price went up a little bit while I was looking at it and it was like, okay, you know, I'll just, I'll just wait. And that was really the only reason that I waited. But if I had gone through with it, that would have significantly cut down on my savings at the time of which I I didn't have that much because I just recently graduated and cut down significantly on what I would have been able to save ongoing month by month going forward past that.

10:35This vehicle was purchased at a financial point in time for me where the down payment was affordable for me. The quote unquote affordable. It's not like I just had it lined in the couch cushions, but I was able to afford that while still having plenty in the bank in savings on the back end and having built up stuff like a 401k and Roth IRA as well that are on their way to compounding. And I was earning enough money and had budgeted well enough that when I plugged in the monthly payment insurance, blah, blah, blah, whatever I needed to pay into my budgeting calculator, I still have plenty left over to be able to save on the side, which is what I've been doing since then.

11:10So any previous discussions I've done of budgeting and where my money goes and how much I'm saving in terms of percentages here and there, that has for quite a while now, anything you would have heard has been including that car payment. So again, it would have been horrible if I had done it at the wrong time, but because I did it at the right time, it was sustainable for me. And I'm still here talking about it, saving a significant amount of money and being able to save for my future, which I wouldn't have been able to otherwise. So speaking of budgeting and ongoing expenses for the vehicle, another big obvious thing for an EV is stuff like fuel savings.

11:46How much am I spending on electricity? How much would I have been spending on gas? That kind of math. So trying to do these calculations based on averages as much as possible. If we take the national average gas price versus the cost to charge per mile. So just if you want to drive one of these vehicles a mile, how much is it going to cost you? Assuming an EV efficiency, I'm going to give the numbers. It might mean nothing to you if you've only ever driven a gas car, but if you've driven an EV, maybe this is something that you can compare to your situation as well. For my EV efficiency of about 250 watt hours per mile, so basically four miles per kilowatt hour, also assuming 35 miles per gallon, assuming a cost of 20 cents per kilowatt hour, which is about average as far as I can figure out.

12:29We currently pay about 15 cents per kilowatt hour, but there are other places in the country that pay 25 or 30 cents a kilowatt hour. So I'm trying to be more fair about that. And if we take$3.50 per gallon of gas, the cost to drive per mile is about half with an EV versus a gas car. That's just how the raw numbers and the raw math works out. And this isn't including any of the maintenance or insurance or anything like that that we'll cover a little bit later. But if we're just talking about fuel, the cost to drive per mile is about half. If I include my lower cost of electricity, which I know applies to a good chunk of the country, or if we include the current gas prices that are in a lot of places$4 plus per gallon, that starts to ramp up significantly into more like three or even sometimes four times cheaper to drive an EV per mile than a gas car.

13:19if we to be fair if we include something like fast charging so if you're using superchargers or other faster chargers out there those are going to charge you noticeably more per kilowatt hour and that price difference pretty much never reaches exactly even regardless of what you do but it can land you closer to about 20 percent cheaper per mile for an ev versus a gas car of course home charging is always going to be much much cheaper and so if you can then that's the best way to do it but how this applies to my personal situation is for the first year and a half i was charging like i said as much as i could at our apartment but it was sometimes kind of inconvenient to charge at because we were across the complex a linear complex um so we had to drive it over there walk back keep an eye on when it was going to be done so we didn't pay any fees for letting it sit there once it was done and then go walk back across and get it and drive back so it was a bit of headache at times to do as well as leaving it overnight could be kind of difficult again because you start paying fees if you leave it for too long once it's complete.

14:20But I was charging at that$0.15 per kilowatt hour that applies in our area, and I would sometimes or semi-regularly supercharge at about$0.30 or$0.35 per kilowatt hour.

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16:57I would do this basically whenever I wasn't able to charge overnight or, you know, walk over to the apartment charger when I wanted to, or of course when we're traveling or we're out and about more than we were able to do on a single tank of gas, so to speak since August of last year. So August of 2025, I've been charging nearly solely at home. So charging at home, I got a dryer outlet installed in the house. And I know a lot of people tend to think that getting chargers installed in your house is a whole big complex expensive process i will tell you myself that i got a dryer outlet installed in the garage and that cost me 80 to have installed and that was the only cost i took on my car as well as i know a lot of evs out there come with what they usually call a mobile charger a portable charger and all that is is a cable that you can either put a 110 outlet on or 220 outlet on a mail end and plug that in and now plug in the other end of the car and you're charging.

17:53So you can always charge on a slow charger. If you want, you can charge off of a normal 110 wall outlet. The one that I guarantee is in the room that you're sitting in right now. If you're in a car, then I apologize, it doesn't apply. But if you're in a house right now or in an apartment, any of the 110s you can charge off of that will charge much more slowly, of course, but you can do it. Or if you get a dryer outlet installed, then the charge time for me takes about eight or nine hours. So overnight I'm back to a complete a hundred percent. And so that only costs me about$9 for the 240 mile range of the battery.

18:27And you can see that, you know, when you compare that to going to get a full, you know, tank of gas that yes, is usually going to have more range than 240 miles, but not always that much more that will easily cost you at least 30, 40, sometimes 50 bucks just to get a fill up. Whereas I can charge at home for nine bucks overnight, Never have to think about it, never go anywhere to do it, and it's done. I do still, like I said, supercharge in a pinch because it can be very, very convenient in certain situations, but it's just so much more expensive relative to charging at home that whenever possible, I'm going to be charging at home or just do a quick top up during a trip when supercharging.

19:02The savings in this, as you can see, are definitely real, but they're going to take years to materialize depending on how much you drive. I don't drive very far to work, thankfully, but that also means that I'm not going to as quickly recoup the savings of how much cheaper it is to charge. But the further you drive, the faster this is going to add up for you. So now we've seen all the good around charging and how cheap that can be. Something that isn't always as cheap is insurance. Now, thankfully, this worked out decently well for me, but EVs typically have a higher cost to insure compared to comparable gas vehicles.

19:37And this is really just due to higher repair costs, specialized parts, and fewer independent shops that are willing to work on them. This, I would say, more than others even applies to Teslas because they're much more restrictive of who they give authorized parts to or authorized tooling to. And so it can be, again, even more expensive to insure than other vehicles. My experience is I did have to hop around and get several quotes to find a good rate, but I was able to land somewhere that was only about 10 or 15 % more expensive than my insurance on my previous car. And for reference, my previous vehicle was a 2018 Volkswagen Golf.

20:16And so again, this was only 10 or 15 % more expensive to insure, but it was more expensive and there was basically no way in heck I was going to get it down to the same price as it was for the Golf. absolutely before you go through with a purchase of course you have to anyways but definitely make sure that you get a ton of quotes from places because otherwise this can be a surprise line item for you and as we as we take a huge focus on here at any rate your financial decisions need to be sustainable and so maybe you find a great price on an ev and that's fantastic but if the insurance is going to double for you just to get that vehicle and that's going to mean you can't save nearly as much or spend nearly as much then that may not be a sustainable financial decision for you yet.

20:56Maybe shop around a little bit more, maybe try a different EV that's going to give you lower insurance costs, whatever you need to do to make that a sustainable long-term financial decision for you. Something that was actually a positive surprise for me, as opposed to something like the insurance, which was definitely not a positive surprise, was savings around maintenance. So of course, there's no oil changes required in EV. Also something that people don't tend to take into account or think of is that you need far fewer uh far less brake maintenance on evs than you do gas cars a lot of people assume oh well the car's heavier bigger whatever so the brakes are going to have to work harder but in reality the vast majority of evs out there have regenerative braking and what that does for you is when you let off the pedal or if you have it set so that when you start hitting the brake but you haven't pressed it very hard it will regenerate that energy back into the battery and not only does this of course give you more energy into the battery but in terms of maintenance this is going to put a lot less strain and stress and basically just just uh use time on the brakes because a lot of the time you can save by just putting it into the battery and using the motors to slow you down instead also evs just have a simpler drive train it's just a big battery plugged into some electric motors we've we as you know a civilization have been doing that for quite a long time and gotten very very good at it and so it's just a very simple system compared to a very complex mechanical system that has a ton of moving parts, ton of points of contact and points of friction, as well as around batteries.

22:24Batteries have a warranty of typically eight years or a hundred thousand miles. So for a lot of people, especially if you buy that vehicle new or purchase some kind of extended warranty with a used EV, your battery is going to be covered for basically anything that happens to it over the life of owning that vehicle. you do one of the things you can't get around is faster tire wear for two reasons one is that evs are slightly heavier than their gas counterparts as well as if you're just you know blasting around with that instant torque of an ev that really does make a difference with tire wear if you're blasting it off the line every time same as a sports car just like any fast car out there you're going to wear through the tires faster however when we talk about faster i would And in my experience and other people's experience I've seen online, this difference is about a 20 % change or so.

23:12So 20 % more quickly, you're going to wear down the tires. That is definitely a noticeable change, but I wouldn't say that the numbers are anywhere near large enough to skew the purchase decision for me in my personal situation. So my experience with tires has been after about 25 ,000 miles, the only maintenance that I've done on it is wipers and wiper fluid. and then I did replace the tires once due to first off getting a nail in an irreparable place on the tire on the sidewall as well as the tires from the dealership just being softer and cushier but not going to last as long which seems to be pretty dang common with dealerships out there to give you softer tires so it feels nicer but it's just not going to last as long so I got harder tires put on now but those have literally been after 25 ,000 miles my only two maintenance line items has been getting the wipers replaced and wiper fluid and getting the tires replaced that has been it no no oil changes no spark plugs no regular checkups for other stuff nothing so a question mark here is what happens after the warranty a battery replacement becomes the biggest unknown and kind of scary thing hanging over your head a battery can be 15 20 25 000 plus batteries can to be incredibly expensive to replace if you just you know were to go buy a new battery yourself that is how expensive it would be and it is a lot however i would highly stress that the modern battery technology especially the newer evs out there it is so so incredibly stable it yes it's the same chemistry as what is in your phone battery or something like that but car batteries see so far fewer cycles can regulate their temperature so much more consistently and and basically handle that 24 7 so they're going to see so much less stress and strain than something like a phone battery a laptop battery that is constantly seeing big cycle swings and big big power swings not to mention that they're developing new technology all the time and so modern batteries are just getting better and better at lasting and not degrading very much at all so they're really designed to last 500 000 miles plus they're designed to last far longer than most of the mechanical systems on the car are going to last and at that point you're just you're replacing so much else that the battery probably is your last concern as well as one last thing i'll mention on batteries is that degradation historically has only been a few percent so even after having the car for years and years and years and driving it for hundreds of thousands of miles you're likely only going to see the battery degrade a little bit and it probably won't even have any impact on your daily day-to-day usage or even trip usage but after that those years of having it another big concern that people bring up is depreciation.

25:56Depreciation was something that due to concerns around the battery technology was a huge impact on EVs. Even just a few years ago, they would degrade, depreciate in value significantly more quickly than a gas car. They just wouldn't hold their value. Now that seems to be stabilizing from what I've seen in the market. And I believe that this is just due to rising gas prices, as well as again, EV technology is getting better and better and now we have more and more historical data to base the dependability of an EV on that people are getting more and more trustworthy about it and so values are holding much more steadily they don't seem to still hold quite as well as a gas car but they are holding better and better and for again my personal situation with this trying to gauge the approximate value of my car using Carvana has been tracking it over time it's only dropped a couple thousand dollars from the purchase price for me since I bought it.

26:53Now again, I had the unique situation of getting the tax credit and the discount, but that just goes to show you that if you get a good deal on it, it can really hold its value incredibly well. And even if I hadn't gotten those deals, it's still been holding its value close to as well as it would if it was a gas car after that many thousand miles and that many years off of new. Okay. So if you're seriously considering getting an EV and you want to gauge how that's going to have an effect on your finances, of Of course, charging is one of the biggest, if not the biggest ongoing thing, cost, you know, line item for your car that you're going to need to keep track of.

27:26So I want to do a quick breakdown of the different charging setup costs and how they compare to each other. So the first option, like I mentioned before, is level one, what they call level one. You can just plug into a standard outlet. It's very, very slow, but it's going to be normal electric cost at wherever you are. So if it's at your home or your apartment, if you're able to plug in your balcony or something like that, it's going to be slow. It'll usually take 24 hours, 30 hours plus to do a full charge, but it's going to be about 15 cents per kilowatt hour. So it'll be very, very cheap. Yes, it'll take a very long time to do a full charge, but usually you're not doing a full charge.

28:02You're usually just charging from your commute or maybe you go visit the city and come back or whatever. Usually you're just charging for your daily commute. And so often this is plenty for people to get by. if you have a longer commute or want more peace of mind like i did a level two is your next option this requires a 240 volt system and so you can either get something like a dryer outlet if you want to supply your own cable like i did and that was again eighty dollars for me to get installed or you could get something like a level two charging station installed in your garage that basically has its own own inverter as well as its own cable and it will it'll handle the um the electricity delivery those systems usually cost a few hundred dollars plus so they're noticeably more expensive but i would definitely keep an eye out because there are utility providers out there that will offer discounts or even free installations of these charging systems because they get federal rebates or state rebates for doing it themselves so look for those kinds of opportunities connect because that can change the math pretty drastically and as a reminder that 240 volt outlet is usually going to give you a full charge in about eight to ten hours so you You know, by the time you get home and wake up in the morning, you'll guaranteed have a full battery no matter what you've done that day.

29:13I've been paying a lot more attention to how my body actually performs and recovers lately, especially since I've been having a huge focus on building muscles in the gym not just for the aesthetics of it,