An EV Might Be More Affordable Than You Think

I came across this article from Andrew Moseman.

The numbers don’t support the case that consumer EV demand has fallen off a cliff. Instead, it looks more like this particular stage of EV development is coming to an end while the next one isn’t quite ready to begin.

I pretty much agree with everything in this article. I was hopeful that 2024 was going to be the year of the more affordable EV, but it now looks like that will slip to 2025. But I also replied to someone who shared it on Twitter:

The perception that EVs are “too expensive” is not completely accurate. While I agree that we definitely need more and better EVs in a lower price range (in the $20,000s), I disagree that current EVs are too expensive (especially when you add in tax incentives and lower total cost of ownership). The average price for a new vehicle in the United States is around $48,000, and there are plenty of good EVs that you can get for that amount or less. So later in that Twitter conversation I said,

I still think it would be helpful if every article included some examples of the affordable EVs (especially when you factor in TCO) that are available now.

I also wondered if there was a one-stop site that would simply show all the current EVs and the incentives they qualify for, preferably by state (knowing that there are also sometimes local incentives from utilities that still wouldn’t be factored in). I didn’t really find such a site, so I decided to (sort of) create my own.

The Spreadsheet

Hopefully the spreadsheet is pretty self explanatory.

• Step 1: Choose File–>Make a copy to get an editable copy.
• Step 2: Choose your state
• Step 3: Input current cost of a gallon of gas in your area
• Step 4: Input current cost per kWh for electricity in your area. The cost needs to be the cost at the time when you would typically charge. (For us, that’s at night, and we have time-of-use pricing that gives us that rate between 7 pm and 1 pm the following day.)
• Step 5: Input the approximate total miles you drive in a year.
• Beyond that, you can input your own EV if it’s not on the list, and you can modify anything that comes up. (For example, if there is an additional state or local incentive that the spreadsheet doesn’t factor in, you could overwrite the amount.)

Some important and major caveats to this spreadsheet.

• It’s done in Google Sheets, so obviously it could be done much better by someone with skills and a web server application.
• It would be great if I could find a way to automatically pull in the current prices and incentives, but I don’t see that happening.
• I’ve selected just a few of the current EVs that are available, but I tried to focus on the ones that were more popular and on the more affordable end (e.g., not Tesla Model X).
• The “Lowest Price” listed for each EV is for the most basic option and based on current inventory available in Colorado. Obviously many folks will purchase something more expensive than the most basic option, but that’s true for ICE vehicles as well, so I feel like it’s still a good comparison.
• There are restrictions on the Federal Tax Incentive, including MSRP of the vehicle and that you need to have enough tax liability to take the full credit (it’s not refundable). For the vehicles I’ve listed, they should qualify under MSRP, and most folks reading this blog will likely have at least $7,500 in federal tax liability. (Also, the vehicles that qualify change over time, so be sure to check the website and use the dropdown for current eligibility.)
• I’ve tried to bring in any state incentives but, like the federal incentives, they sometimes have MSRP or other eligibility rules. So I’ve defaulted to including only the basic state incentive that I think most will qualify for, which can either understate or overstate the incentive. For example, Colorado offers a $5,000 state tax incentive, but also an additional $2,500 for EVs with MSRP below $35,000. But the spreadsheet will only list the $5,000 so would understate the incentive for lower cost vehicles like the Bolt (and hopefully a bunch more soon).
• For the estimated price of the ICE vehicle equivalent, I did my best to choose a true equivalent. For models like the Chevy Blazer EV, where there is an ICE version of the Chevy Blazer, I used that. For models like the Tesla Model 3, I tried to pick something fairly similar, so I picked the Toyota Camry. For all the crossovers, I picked the Toyota RAV 4.
• The total cost of ownership (TCO) for EVs is much less than for ICE vehicles and that, of course, is not reflected in the up-front price. For example, “fuel” for EVs is much less (hundreds to thousands of dollars a year), no oil changes (hundreds of dollars a year), far fewer moving parts so fewer and less expensive repairs over time (undetermined, but likely hundreds of dollars a year over the life of the car). On the other hand, EVs do go through tires a bit more quickly (because of the additional weight), so we should probably subtract a couple of hundred dollars a year from that TCO savings.
  
  So, for the purposes of this post and the spreadsheet, I’m only including the estimated “fuel” savings. I did my best to find the estimated battery capacity of each vehicle listed as well as its range (EPA), and then used the EPA mpg estimate for the ICE equivalent. As most people know, the EPA estimated range for EVs is often high, but that is also true for mpg for ICE vehicles, so I assume that’s a wash. At the top of the spreadsheet people can input the current price of gas in their area, the current price of electricity (at the time they would typically charge), and the number of miles they drive each year. It’s not perfect, of course, but it should be a decent estimate.

So let’s take a look at several of the more compelling examples.

While the Chevy Bolt and the Model Y are the obvious best choices (which is why the Model Y was the best selling car in the world in 2023), the other three are pretty compelling as well (and especially in states like Colorado that have an additional state incentive). And when you throw in the lower TCO, I would argue that many EVs are already price competitive (and actually better) than their ICE counterparts.

Again, that’s not to say that we don’t really need EVs that start in the $20,000’s before incentives, and I look forward to when that hopefully become a reality in 2025. But if you’re gut reaction to thinking about purchasing an EV is “they are too expensive”, I’d ask you to dig a little deeper and see if that is actually the case.

If you have suggestions/constructive criticism, please let me know so that I can try to improve this.