Sunday, July 30, 2017

Should You Buy an Electric Car?

Random Thoughts on Electric Cars
"Tesla unveiled its new Model 3 sedans, starting at $35,000, in a ceremony on Friday night [July 28] on the grounds of its sprawling assembly plant and research facility outside San Francisco.

-- Bill Vlasic, "In Pivotal Moment, Tesla Unveils Its First Mass-Market Sedan," New York Times, July 30, 2017, p. A1
Reading the Times story about Tesla's ceremony and first "sale" (to employees) of 30 Tesla Model 3 electric cars, my thoughts accelerated back to my first experience driving an electric car a couple years ago. [Photo credit: Tesla Motors.]

It wasn't a Tesla. It was a Nissan Leaf. I wanted to experience driving an electric car more than I wanted to buy one -- although that was both a possibility and the dealer's wish.

It was a very nice driving experience. There was no reason not to have one because of that drive.

Ultimately, analysis led me to conclude that although it might make no sense for my wife and me, I could imagine people for whom an electric car could be a wise purchase.

Meanwhile, here are some other random thoughts as well.

Environmental impact. Face it, the only forms of transportation that come close to environmental purity would be: walking, bicycling, horseback riding, moving through the air in a glider, or over water with a sailboat.

The operation of an all-electric vehicle may have substantially less adverse environmental impact than operating an internal combustion engine. But if the electricity came from a coal-fired power plant, and a lot of electricity was lost while in transit to your community, the difference is less dramatic.

Then there's the batteries -- a lot of batteries -- the China-controlled rare earth elements it takes to make them, and what happens to them in landfills when they need be replaced. ("Most electric car batteries use lithium nickel manganese cobalt oxide (NMC) cathodes and graphite anodes. 'Rare earth' metals dysprosium, neodymium and terbium, chiefly mined in China . . . are used in some electronic components of the motor." The Electric Car Revolution Is Making These Investors Very Optimistic," Reuters/Fortune, October 4, 2016.)

Convenience. However wonderful the act of driving an electric car may be, there are limits to how far and where you can drive one.

Gasoline filing stations are everywhere -- except in the dead of night in sparsely populated areas of the country. Charging stations for electric cars are not (yet) as available.

At this time, few would want to set off on a cross-country trip in an electric. Even with a probable range "up to" (as the cable companies say about megabits per second) 100 to 200 miles (depending on the make/model), to avoid being stranded without a sufficient charge you would want to allow margins of error when starting out on more than short trips around town.

And instead of filling your tank with gas every week or so, building a home charging station, and going through the routine of starting the charging process every night, would approximate the ever-present obligation of a dairy farmer to milk the cows every evening.

Buy or lease? For me, cars are just transportation, not collectors' items or bragging rights. As long as a car is reliable and safe, I've never cared how old it was or what it looked like. So I've never before calculated the comparative benefits of buying or leasing new cars.

But when considering the Leaf, my initial analysis was that leasing would make the most sense.

Why? Internal combustion engines, properly maintained and worked on, can operate for 250,000 miles or more. There are ways to extend (or curtail) the life of batteries, but they will need to be replaced at some point -- life and price data are not yet definitive, but five years and $5000 might be examples. "[B]attery replacement costs is one of three key considerations why 57 percent of Americans cited in a USA Today/Gallup Poll say they wouldn’t buy an EV." Jim Motavalli, "Replacing EV Batterries: Your Costs Will Vary,", June 19, 2012.

Of course, that was five years ago. The technology, and pricing, are still evolving.

It's hard to compare the cost of buying with leasing because there are so many variables. But the financial differences are usually not wildly dramatic.

Bottom line: leasing means you'll always have the latest of the rapidly evolving technology, have some additional guarantees and servicing from the dealer, and never need to spend thousands of dollars on a fresh set of batteries.

Borrowing from the TV pharmaceutical commercials,"Ask your doctor if an electric car might be right for you." So what made me decide to forgo the fun of leasing an electric car?

(1) Little or no need for any car. My wife and I are retired and live in Iowa City, Iowa -- which I sometimes refer to as a "toy town." The law school is a three-or-four-block walk from home. One of the nation's largest research hospitals is closer still. The Big-10 football in Kinnick Stadium is one block further. The dental school maybe three blocks beyond that. Going "to town" is almost exactly one mile, a 15 or 20-minute walk (often quicker than the total time, including parking, to use a car). I mostly get around by bicycle and walking. We already have one car each that mostly sit in the driveway, both old and purchased used.

(2) Need for internal combustion car. We would still need a car capable of distances beyond the range of an electric -- not only for cross-country trips, but for much of our travel within the state, or for two-day trips to places without charging stations.

(3) In order for the lease to make any kind of economic sense for us it would need to be driven distances as close as possible to the maximum permitted under the lease agreement (before there are additional per-mile charges). I was not sure that even using it for all of our around-town driving would come anywhere close to that.

"You began by saying, 'I could imagine people for whom an electric car could be a wise purchase.' So, whom might they be?"

I'm not thinking of those who say, "If you have to ask the price you can't afford it;" the people for whom "money is no object." They can buy any electric they want, regardless of how much they use it, run around in it for six weeks or six months, or until their name comes up on Tesla's backlog list of 500,000 potential buyers who've paid $1000 each to stand in line -- at which point they can give the first electric car to one of their kids.

No, here's who I had in mind. A young couple, with or without kids, both of whom have steady jobs that require daily commutes. They are wealthy enough to buy new cars, but not wealthy enough to consider a $100,000 Tesla.

One of those commutes is, say, 60 miles a day (round trip), or other distance well within the car's range on a full charge (so as to avoid any risk of being stranded). If that was not enough to approach the maximum allowed mileage under the lease, the electric could also be the car of choice for any running around town.

The closer the leased electric could get to that maximum mileage the more economic sense it would make to have the car. (Of course, like most electrics owners, they would need to build a charging station in their garage and remember to charge the car every evening.)

Their other car, new or used, could be a fuel efficient gasoline car. It would be used for the other partner's daily commute, any cross-country (or local) trips beyond the range of the electric, and for local errands once the electric had reached its budgeted monthly mileage.

And that's what I think about electric cars.

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jackmarie said...

Gratitude for sharing this Electric car buyers guide here! I agree that everything comes with own pros and cons but in this modern era the electric cars are getting more and more popular. Even I am thinking to get one soon.

Anonymous said...

We purchased a Toyota Prius Prime (base trim level) in July 2017. We had a hybrid 2005 Prius since new. While we did not appreciate the electric range of the Prius Prime prior to purchase, We've found that a charge is sufficient to cover most trips including a commute of 24 miles where the employer has a free charging station. We now prefer the electric mode to the hybrid mode due to the smooth and powerful performance. The hybrid mode is excellent too with about 60 mpg. The features in the base model are luxurious too. When we purchased the Prius Prime Toyota was heavily discounting it, there was a large state rebate and significant federal tax advantages. We own both the Prius Prime and a hybrid Highlander so we cover a wide range of capabilities including 3500 lb towing capacity with the Highlander which is why we purchased it. The daily use of the Highlander is about 10 miles so the Prius Prime gets many more miles of use per year. The Prius Prime is not sold as an electric but most of our driving is done on battery power only. Having both a small highly efficient car and a large relatively efficient SUV gives us the option to choose which one best fits our use.

Anonymous said...

One further thought after writing about the Prius Prime. Most people should think about avoiding the purchase of a car, if possible, because they drain a lot of your income and impede building your net worth (a topic few have been educated about). If you can live where you can get to work without a car, you will be greatly helping your finances. Likewise, overspending on cars, while very easy to do given easily available loans, will harm your financial situation.

Kandy Maharas said...

We followed my son and his 2015 Tesla on a 8 day road trip to 3 National Parks -Glacier,Yellowstone and Grande Teton, even briefly into Canada. My son had an app showing all the charging stations. -even one in Lusk, WY. We had 2 times where my son had to be creative. Being a Master Electrician he convinced a convenience store clerk to let him hook up to her panel for charging overnight. The other necessitated hooking up to an RV spot. Both necessitated overnight charging ( as did a hotel we stayed at in MT) Usual charges took about a half hour and are free. ( Tesla is spending a lot of money to supply these around the country- I doubt that they will be free forever!) Timing the charges can be made at mealtime. It was fun talking to a Lady in MT that had traveled from CA. I wouldn't hesitate to take another road trip!-

Found your site while watching CSPAN and info about PBS- Thank you for all your contributions and also settling back in Iowa City- a great town where I also grew up- and a '67 grad living in Denver since '68.