Yes, EVs save you money on energy (and potentially a lot)

Introduction

TL;DR: EVs, in most situations, will save you money on energy. Just buy a Tesla Model 3, a Tesla Model Y, or a Chevrolet Bolt and you’ll be saving money.?

I continue to see headlines with some version of “EVs more expensive to fuel than traditional ICE cars”.??

Exhibit A: “Electric Vehicles Might Not Be The Cheaper Alternative Consumers Thought: 2022 Study Reveals Surprising Results” - Yahoo News?

Exhibit B: “Electric vehicles more expensive to fuel than gas-powered cars at end of 2022: consulting firm” - Fox Business?

What do both articles have in common? They cite the same study done by Anderson Economic Group, a consulting firm that has worked with traditional ICE OEMs for years. The study in question claims that EVs are more expensive to fuel than ICE vehicles specifically as it relates to their direct monetary costs per 100 miles (think energy, road taxes, cost of chargers, cost of deadhead miles).??

Frankly, this study is misleading. I applaud their attempt to include deadhead miles cost in their calculation and to incorporate other costs outside of pure energy (i.e., fixed cost to install a home charger). However, the assumptions underlying these final cost numbers are broken and mislead consumers into thinking they’re better off with a gas car.?

Let’s make this clear, in most situations, you WILL save money on fuel with your EV even after considering the cost to install a charger at home.??

• If you’re charging at home, I can almost guarantee that you’re saving 50-70% on fuel costs.??
• If you charge primarily at public chargers, you’re likely still saving some money and only with particularly inefficient vehicles will you spend potentially more.?

Enough of this high-level, fluffy talk though. Let’s get into some real, hard data and you can decide for yourself whether an EV saves you money on fuel (hint: the answer is probably yes).?

Methodology?

So what matters in this calculation? Relatively few variables:?

• EV Vehicle efficiency (how many kWh per mile)?
• Residential electric prices (which vary by state)?
• Public charging electric prices (used to be fixed, although more companies switching to variable pricing. Assuming $0.48/kWh here.)?
• % of energy received from public charging vs. home charging?

• Fuel efficiency (mpg)?

• Fuel price (varies by state)?

• Fixed costs like charger installation – we will consider these separately at the end?

To make this as broadly relevant as possible, we’ll perform these calculations and comparisons for three EVs that span the spectrum of efficiency (Tesla Model 3, Polestar 2, Rivian R1T) and for all 50 states. We’ll compare the cost to energize these EVs against an ICE vehicle averaging 25 mpg.?

The ideal situation: home charging?

Most people would say something like “don’t even consider an EV unless you have a home charging solution”. Let’s see how great home charging is by assuming 100% home charging.??

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Woah! That’s a lot of savings. Across all states, you’ll save money if you charge your EV at home. No questions asked, end of story. Even if you’re using a heavy, powerful vehicle like the R1T you’ll be saving money and that’s relative to a 25mpg ICE vehicle! I highly doubt that ICE vehicle has the same capabilities as the R1T.?

The practical situation: 50/50?

Ok let’s hold our horses. I can’t always be charging at home especially when I want to do long trips or have particularly busy weeks. What then? Well, let’s assume that 50% of the time you charge at a DC fast charger and the rest of your energy you get from home. Let’s further assume that those DC fast chargers cost, on average, $0.48/kWh (on the higher end).?

Would you look at that? The Tesla and Polestar still save money in every state while the Rivian hits right around break even. That’s not bad!?

The worst-case situation: 100% DC fast charging?

Finally, let’s assume that only the privileged get access to reliable home charging. What about the rest of us in large cities that can’t install a home charger? Am I totally screwed if I’m constantly using DC fast chargers? Let’s see:?

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The answer is, if you are a Tesla driver, you’re still saving money. For less efficient vehicles, you’ll start spending more. Remember again though that this is relative to a 25mpg ICE vehicle. The delta between the Rivian and a similar truck isn’t nearly that big.?

But, but… charger installation costs!?

Yes, the home charger will be an upfront fixed cost. That cost will vary depending on your situation. If you’ve already got a 240V plug in your garage, it could just be a few hundred bucks. If you need a full wiring, plug, and charger installation you’re looking at $1200-$2500. However, these are the amounts before federal and state incentives which can take off another $500-$1000. Regardless, let’s see how long it would take to pay off a $1500 total charging setup.?

A 2022 Model 3 RWD saves about 70% in gas costs in the state of California assuming 50% home charging. If you drive 12000 miles per year with an average MPG of 25, you’re using 480 gallons of gasoline per year. At $4 per gallon, that’s $1920 in gasoline spend. Taking our 70% savings number that would mean you save around $1300 per year. In around one year, you will completely pay off your home charger and then you’ll be saving that $1300 every year after that. Not so bad, right? Of course, less efficient EVs may take a bit longer but hopefully you’re also charging at home more than 50% if you have a home charger.?

OK fine but EVs are expensive?

Agreed! And it’s a shame! But with current federal and state incentives you can get a Model 3 for the same price as any other vehicle of its size ($39,000 - $7500 – state incentives). In fact, leases on a Model 3 are less than many other similar ICE vehicles like the Camry, Accord, and others. ?

Unfortunately, Chevrolet is discontinuing the Bolt but that starts at just $27K and qualifies for federal incentives bringing the vehicle price to potentially below $20K. Buy it now before it stops production at the end of 2023!?

Still don’t believe me? Try it for yourself.?

I get it, you have some funky situation where your uncle gives you a sweet deal on gasoline at the local gas station or you’re a hyper-miler that somehow gets 80 mpg in your Prius. I know that the conclusions drawn here don’t apply to every situation and every vehicle which is why I’m making the underlying model available to download. Feel free to enter your own parameters and see for yourself what your savings could be!?