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By the International Energy Agency’s most recent account, 7.2 million electric vehicles are on the road now. In a sea of 1.4 billion cars, it doesn’t seem like much. But compared to the 17,000 electric vehicles on the road ten years ago, it’s a massive figure and growing exponentially — in 2019, the number rose by 2.1 million.
Today, China, Europe, and the United States are first, second, and third in total vehicle purchases. All three are actively promoting the production of electric vehicles through subsidies for manufacturers to develop and market these vehicles, and for consumers to buy them

But in spite of all these incentives, the conversation keeps coming back to the same question: 

Do you really save money with an electric vehicle?

The short answer: yes. 

Buyers are often startled by the higher initial cost of electric vehicles. Consumer Reports shows they can be 10 to 40 percent more expensive than comparable gas-powered cars in the same class.

Unfortunately for most consumers, this is where their explorations end. The savings come a little further down the road, but they’re substantial.

Operating costs

The most fuel-efficient car run entirely on gas is the Mitsubishi Mirage. It costs around $1,550 per year to fuel. Pretty good, right? Now consider an electric car, which costs $282 per year to charge.

That’s $6,340 in your pocket over five years, which will offset a large percentage of the purchase price. And we’re just getting started.

Maintenance costs

Over an electric car’s lifetime, it’ll average about $4,600 in maintenance in repairs vs. a traditional car at $9,200, bringing the lifetime savings up to the $11K range.

Electric vehicles are inherently less expensive to maintain and repair because of their design: no oil changes, spark plug replacements or coolant, and far fewer moving parts.

Also (and this is really cool), most electric cars are built with “regenerative braking,” which is essentially the engine taking on some of the power required to stop. This leads to softer stops and a reduction of wear and tear on tires, suspension, and especially brake pads.

Depreciation costs

Over three years, the average car’s value depreciates by 39 percent. So far, electric cars have dropped quite a bit faster, depreciating by 52 percent in the same time; this means you’ll get less in return when you sell or trade in for a new model. This is going to change as markets flood, perceptions shift, and auto manufacturers adapt. The new Tesla models are only showing 34 to 36 percent depreciation, which is less than the average gas-powered vehicle.

So when it’s all said and done, you’re looking at between $12K and $15K in savings.

Is it more expensive to insure an electric vehicle?

Once again, the short answer is: yes. But this is beginning to change. 

The reasons for the higher insurance premiums are straightforward. Electric vehicles are complex. Both the cost and method of repairing one can vary quite a bit from a traditional car. Think of those regenerative brakes — if they’re damaged in an accident, it’s a harder piece to replace. Many body shops aren’t equipped to work on electric vehicles or replace their high-tech parts. Furthermore, some of those parts are uniquely designed by the manufacturer and aren’t available after-market, so repairs may require a specialty mechanic.

However, as the number of electric vehicles on the road increases, so will the infrastructure to support them. 

More shops will be familiar with repairs and parts will become standardized and more ubiquitous. This will push down maintenance costs and, subsequently, insurance costs as well.

Another consideration is that insurance prices are dependent on both car and driver. 

Average insurance premiums in Canada are about $1,151 per year. While electric vehicles are generally more expensive, your location, personal driving record, and the car you choose can all put you closer to or below this average. 

Insurance companies have already started to notice that electric vehicle drivers make fewer claims. Like any other car purchase, choosing one with a great insurance record will get you a lower rate.

More about electric vehicle incentives

In addition to the cost-saving measures you gain, you can also take advantage of government programs designed to encourage electric vehicles. Canada has a federal incentive program to reduce the cost of buying or leasing. You could get $2,500 to $5,000 knocked off the price tag based on your choice.
Provincial governments also offer additional rebates on top of the federal incentive program. Some extend the savings onto used cars, and others will even help install a charging station in your home.

What’s the final verdict on electric vehicles?

They’re an increasingly good investment, and despite higher upfront costs, will likely save you money over time depending on the model. 

But let’s be honest, in all likelihood, your reasons for considering an electric car aren’t purely economic. When you take into account the positive effect reducing emissions has on the environment, combined with the competitive cost-saving measures outlined above, electric vehicles really do seem like the future.

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