I recently got an opportunity to try out an electric car for one month to see if it would fit with our driving needs. In this blog post series, I investigate if now is the right time for us to buy an electric car. In the first post, I formulated three questions that I wanted to answer while we had the rental. In the second post, I concluded on the question if we can charge an electric vehicle without too much fuzz, even if we cannot charge an electric car at home. In this third and final post, I look into the economy of acquiring and driving an electric car compared with a combustion engine car.
But first, let’s look at reasons to buy an electric car at all.
Why buy an electric car?
Electric cars are more expensive than combustion engine cars. Range is shorter and the time to recharge is significant longer than the time it takes to refuel a combustion engine car. So why go electric at all? Well, first and foremost, it is the main way to keep the convenience of having a car while reducing your carbon footprint. An electric car is also quiet and does not emit toxic exhaust fumes.
Lower carbon footprint
If you charge your car with electricity produced from renewal sources, you can keep the convenience of individual transport without contributing carbon emission to the climate change.
In Sweden, electricity mainly comes from two sources: Water and nuclear fission. If we replace gasoline with electricity as energy source for driving, we would need to double the electricity production. There are not a lot of places left in Sweden where damns can be built, and nuclear energy comes with its own disadvantages, most importantly that it is expensive. So the transmission to electric cars also requires a vastly built out infrastructure for producing electricity from solar panels and wind turbines. It is not just an individual change. The larger infrastructure needs to change as well.
In the area where I live, I have six fuel stations within five kilometers. In the same range, there is one public place to charge an electric vehicle. How quickly will the infrastructure change?
Less noise and air pollution
An electric car is quiet and does not emit toxic exhaust gasses. Think about it, who would trust the average citizen to handle highly flammable liquid and emitting toxic fumes in densely populated areas if combustion engines were a new invention coming to market today? Would we accept the air pollution leading to excess mortality in cities? Would we accept the noise pollution impacting people living close to heavy trafficked roads?
What about bio fuel?
Producing gasoline from plants grown today rather than from plants that died millions of years ago is another way of having a carbon neutral energy source. At least if you don’t need to clear huge areas of forests and jungles to produce the bio fuel. Or use area that could produce food to feed people. So bio fuel comes with its own dilemmas. But may very well end up being part of the solution, at least for long distance flying.
But most importantly, electric cars is what the industry and the politicians are betting on to combat climate change. So short of giving up driving at all, sooner or later, I will end up driving an electric. So let’s crunch some numbers to decide if now is the time.
What is the cost compared to a conventional car?
How does a Kia Niro compare to say buying a small gasoline car as second car?
The Kia Niro starts at 400 000 SEK after tax credits. A alternative gasoline car like a Kia Ceed starts at 200 000 SEK. With the purpose of a second car being short trips, we would end up driving less than 10 000 km per year. The Octavia costs around 1 SEK per km in fuel with the current fuel prices. Even if we can charge the electric car for free, with the current fuel prices, we would be saving less than 10 000 SEK per year in fuel consumption.
Road tax for the Octavia is negligible. I pay 492:- SEK per year for the Octavia. However, as of May 2021, for new gasoline cars you pay an emission premium the first three years. For the Ceed it will be around 4 400 SEK per year.
Maintenance and insurance are other expenses you have as a car owner. I’ve read claims that servicing electric cars is cheaper, however, insurance is likely to be more expensive, simply from the higher price tag.
There are lots of unknowns in what the future prices for fuel and electricity are and what the used car value of an electric car is. Prices for charging may go up. Prices for gasoline may go up. Or down. Who knows? Better batteries may drive the prices for used electric vehicles way down. Higher tax on gasoline or gasoline vehicles may impact the prices of gasoline cars.
If we assume prices are unchanged over time, that both cars have the same lifetime, and that financing is free, then with just the rough initial numbers of paying 200 000 SEK extra for a yearly fuel savings of 10 000 SEK and a 13 200 SEK tax discount makes it an 18 year return on investment for the electric car. Excluding the cost of electricity and the cost of establishing the capability to charge at home.
Not exactly a good business case. Choosing the car that is best for the planet(1) over the car that is best for the wallet comes with a significant extra premium.
If the purpose of buying an electric car is purely to reduce carbon footprint, let’s look at the obvious alternative here, namely carbon compensation.
Carbon compensation
What happens if we factor in the cost of CO2 emission from a fossil fuel car over an electric?
I’ve signed up on GoClimate a few years ago and compensate for my carbon footprint by investing in climate projects. At goclimate.com you can calculate your carbon footprint and pay a monthly amount to compensate.
- Scenario 1: Gasoline car only, 15 000 km per year. 9.9 ton/year. Climate compensation 100:- per month.
- Scenario 2: Electric car for local trips, gasoline car for long trips: 8.0 ton/year. Climate compensation 80:- per month.
- Scenario 3: Electric car only: 6.0 ton/year. Climate compensation 60:- per month.
The yearly savings is a mere SEK 240:- for getting an electric car to replace the short trips (scenario 2 versus scenario 1). Not enough to really push the numbers. So even if I factor in a carbon compensation amount, it is still a better investment to buy a fossil fuel car and simply pay for compensation.
Conclusion
It is still early days to buy an electric car — you will be an early adopter. It is possible, but you will get the occasional inconvenience, especially if you cannot charge at home. And it is still not the economical rational decision with the current price levels for cars and fuel/electricity.
Further financial incentives are needed if we want everyone to choose an electric car just from the price alone. Prices for electric cars need to go down, prices for fossil fuel need to go up.
I will be returning the Kia Niro in about a week. A pleasant driving experience and a fun experiment. But until we really do need a new car or a second car, and until we can charge at home, there is no point in us investing in an electric car. Yet. Let’s see what happens. There is an election coming up next year. Maybe enough neighbours sign up to establish charging stations at home. Until then I will be driving the three pedalled dinosaur and miss the kick from the electric.
- Not saying that producing and driving electric cars are good for the planet. Lithium mining, steel production and establishing infrastructure for green electricity in a sustainable way comes with its own challenges.