Are you wondering whether to finally get an electric vehicle (EV)? As a Tesla shareholder since 2018, I'm happy to report that now is a great time to get an electric vehicle! There are more charging stations and the price of electronic vehicles has come way down since 2022.
At last, the charging station network is dense enough for electric vehicle owners not to stress out about whether they will run out of battery on longer trips. Battery range is now regularly in the 200 – 300-mile range. Further, there's autopilot technology that is saving lives.
With oil and gasoline prices surging due to the war in Ukraine, the savings you get from owning an electric vehicle has gone way up. It now costs ~$120 to fill up my 2015 Range Rover Sport with gas at $5.5-$6/gallon.
In addition, the competition from other car manufacturers on electric vehicles has gone way up.
Why Interest In An Electric Vehicle Now?
Two things happened recently that has spurred my interest in electric vehicles: 1) Watching a Netflix show on Elon Musk's desire to reduce our fossil fuel consumption by starting Solar City and Tesla Motors, and 2) Getting into my new tennis buddy's Tesla Model S P85+ and being absolutely amazed! My friend used to work with Elon at Paypal, and now runs an enormous internet company. Crazy how interconnected we all are.
14-year old Moose is a gas hog with an average mpg of around 15. But as I said in a previous post, anybody who doesn't DESTROY their old car before buying even a hybrid is adding more pollution to the Earth. Now that electric cars are a reality and Moose is becoming a safety issue, I'm wondering whether going electric is the way to go.
The Benefits Of An Electric Car
Based on my net worth rule for car buying, I can buy a Tesla Model S, but I won't because I feel stupid spending so much on a vehicle with my current level of income. More importantly, it's too wide to comfortably fit in my narrow San Francisco garage. Instead of buying a Tesla, I'm thinking about buying a Nissan Leaf ($33,000 pre rebates), a Fiat 500Ce ($33,000), or a Smart Car Electric ($20,000).
I'm clearly not going to be attracting the ladies in these pint-sized cars. But who knows. Maybe I'll attract their eco-friendly hearts!
1) HOV lane, baby.
There's almost nothing I hate more than sitting in traffic. I can't believe people are willing to get their nerves fried sitting on the freeway for an hour to go to a job they don't really like. Is that not bat shit crazy or what?
On the flip side, I totally admire people who are willing to endure torture every day to go to work to feed their families. I actually left the house at 8:15am to drive down to Redwood City for my consulting gig one day because I wanted to be reminded to never settle for a job I don't absolutely want to do.
The California Legislature passed two bills that extend access to the state’s High-Occupancy Vehicle (HOV) lanes until 2019 for solo drivers of electric cars and plug-in hybrids. That's right baby! All those suckers sitting in traffic can kiss my bumper as I whizz by them in my babe-mobile. I'm not sure other states are as forward-thinking with regards to electric vehicles. Definitely not New Jersey given Chris Christie's ban on Tesla's direct sales business model.
2) Government rebate.
I'm all about taking as much advantage of the government as possible because they are always deciding who benefits and who loses with their arbitrary rules. Electric vehicle purchasers in California are eligible for a $2,500 rebate from the Clean Vehicle Rebate Project (CVRP) until funds are exhausted.
Furthermore, the US government sometimes offers a $7,500 federal tax credit with the purchase of a new Tesla acquired for personal use. That's $10,000 from the government I get to knock off the purchase price of my electric vehicle.
Suddenly, $23,000 for a Nissan Leaf doesn't seem so bad. If you are being hit up with AMT, don't qualify for a child tax credit, are paying a marriage penalty tax, and can't deduct your student loans, you can finally get something from the government with their EV rebate.
3) Incredibly fun to drive.
I've test driven a Smart EV and a Tesla Model S and both are incredibly fun to drive. The power is constant when you step on the accelerator pedal as there are no gears. Electric vehicles are still a novelty so the fact that only a few people have them probably make them even more fun to have.
4) Zero emissions.
Obviously producing zero emissions is one of the greatest benefits of owning an EV. Once you get an EV, you can then look down upon every other non-EV driver on the road.
You can even pass some Grey Poupon when parked next to another EV driver at a stop sign. It'll be great! Like one big exclusive club of EV drivers doing our part to save the world. Let's skip over the energy costs for producing EV batteries in this article.
5) Cheaper to operate.
The general math I've found after speaking to dealers and owners of EVs is that it costs about half as much to operate an EV vehicle as it costs to operate a gas vehicle (Gas – higher electricity bill).
You can also be a fantastic cheapskate and simply plug in your EV at dealership charging station like I see many people do at the Nissan dealer on Van Ness Avenue in San Francisco.
6) Price of electric vehicles have come down
The price of Teslas and all electronic vehicles have come way down since 2022. With increased competition, EV tax credits, and lower input costs, EV vehicle prices should continue to come down further. Just don't look at luxury EV car prices, they are outrageously expensive.
The Negatives Of Owning An Electric Vehicle
Here's the biggest reason why not to get an electric vehicle.
Range isn't as good as gas vehicles.
The Nissan Leaf, Smart EV, and Fiat 500Ce can only go 70 miles until a recharge is needed. 70 miles is enough for most people to zip around a city or go to and from work, but 70 miles is definitely not enough to go on an extended trip. Lake Tahoe is 190 miles away from San Francisco, for example. There's no way I'm going to spend 4 hours at a quick recharge station every 70 miles to get to Tahoe.
For those of you who love to fill the gas tank when there's at least one click left on the gas meter, you will have way too much anxiety owning an EV because the number of EV charging stations is tiny compared to the ubiquity of gas stations.
The second biggest concern is the cost of replacing the rechargeable batteries. Best you ask your dealer for as much specifics as possible as I hear it can cost $10,000+ every five years. The solution is to therefore lease an EV vs. buying.
The final negative of getting an electric vehicle is reliability. The average age of a vehicle on the road has grown to over 12 years now. I think the mass market is still waiting for electric vehicles to become more reliable.
My Electric Vehicle Buying Plans
I won't be buying an electric vehicle until:
1) I can make $1 million a year to afford a $100,000 Tesla Model S or X for my family
2) Tesla comes up with a cheaper, but similar 250 mile range model for closer to $50,000.
3) Nissan, Smart, and Fiat up their range from 70 to 200+ miles while maintaining their sub $33,000 price tag.
4) The government incentivizes people even more and spends a huge amount to subsidize the buildout of EV recharging stations.
I really like the idea of leaving a smaller carbon footprint at an affordable price. My only fear is that Moose won't last long enough until any of the four points are made. Let me go feed him some motor oil now.
I'm pleased to say for 2024 and beyond, I can comfortably afford to buy a Tesla Model X for my family. But I won't for now because I have an awesome 2015 Range Rover Sport with only 52,500 miles. I plan to drive him until 2029 to save money. In my opinion, the ideal length to own a car is at least 10 years.
By 2030, it will be an even better time to get an electrical vehicle due to greater range and even more charging stations. Further, self-driving technology for EV and other vehicles should be ready by 2026 as well.
Related: The 1/10th Rule For Car Buying Everyone Must Follow
Be More Responsible, Buy Less Car
You should follow my House-To-Car Ratio guide for fiscal responsibility. If you want to eventually reach financial freedom, you should have a house-to-car ratio of at least 50. Cars are guaranteed to depreciate in value, houses tend to appreciate in value.
Buy Real Estate Instead Of An Expensive Electric Car
Keep your car expenses to a minimum. Instead of buying a fancy new electric car, use the money to invest in real estate instead. This way, you can build more wealth and achieve financial freedom, which provides way more value than driving a nice car.
To invest in real estate without all the hassle and unexpected costs, check out Fundrise. Fundrise offers funds that mainly invest in residential and industrial properties in the Sunbelt, where valuations are lower and yields are higher. The firm manages over $3.5 billion in assets for over 500,000 investors looking to diversify and earn more passive income. The minimum investment amount is only $10.
Another great private real estate investing platform is Crowdstreet. Crowdstreet offers accredited investors individual deals run by sponsors that have been pre-vetted for strong track records. Many of their deals are in 18-hour cities where there is potentially greater upside due to higher growth rates. You can build your own select real estate portfolio with Fundrise.
I've personally invested $954,000 in private real estate since 2016 to diversify my holdings, take advantage of demographic shifts toward lower-cost areas of the country, and earn more passive income. We're in a multi-decade trend of relocating to the Sunbelt region thanks to technology.
Both platforms are sponsors of Financial Samurai and Financial Samurai is an investor in Fundrise funds.
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Thanks for helping me understand the benefits of owning an electric car. I find it interesting to learn that these cars do not produce any emissions at all! My uncle saw a couple of posters about electric cars being sold and it got him curious. Since he’s environmentally conscious, I should share this with him and suggest that he get one. He should probably get a residential electric car charger installed too, before purchasing one.
[…] lack of product innovation as the novelty of the Model S wears off. Furthermore, low oil prices may lower electric vehicle (EV) interest at the margin. But I’m betting that as soon as Elon starts talking up his new product […]
Just a note that the Nissan Leaf fast charger (level 3 chademo) takes just 30 minutes to reach 70 miles range, and many Nissan dealers offer these chargers for free. I’ve driven from SF to Sacramento twice in my 2013 Nissan Leaf, only needing to stop once in Vacaville for a free 30 minute charge at the Sonic drive in restaurant. The Nissan Leaf can use a Level 3 fast charge. The other EV’s (honda fit chevy volt, fiat, etc) have slower Level 2 J1172 capabilities that take 4 hours to reach 70 miles. The Nissan also has Level 2 and regular household outlet charging options.
A vehicle other than the Leaf that might be worth it is the Toyota RAV4 EV which has a Tesla battery and a range of 130+ miles at full charge. But it only has level 2 charging capability meaning 6-7 hours for a full charge.
NOTE Currently, unless you’re buying Tesla, you should always lease an electric car it is not worth it to buy , . Because current batteries will degrade with time and you will get less and less range. I paid $2,000 down and $353/month (including taxes) for 36 months for a fully loaded 2013 Nissan Leaf SL with all options. I got back $2,500 from California state so that paid for the deposit + 1 month lease. Toyota RAV4 EV’s are leasing for $400/month with zero down.
Thanks for differentiating between level 2 and level 3. 30 minutes is a fast recharge!
I agree with you on only leasing.
I’ve been looking too. Right now Volt or Tesla due to the range issue. But, next gen Tesla for sure if they can get the costs down.
What a timely article…I just started driving for Lyft for fun and I started thinking about fuel efficiency.
The Leaf, out of all of the pure electric vehicles, makes the most sense to me. It will still take a long time to recoup your initial investment if you go the Tesla route, considering you can buy a “luxury” vehicle for much less. You have to consider that electricity still costs SOMETHING.
For someone who usually does less than 40 miles a day and wants the option of gas too, the Volt sounds like the best bang for the buck to me right now. The Volt is about $~26k after incentives and still gets 35-40 when not in EV mode.
I probably wouldn’t consider an electric car just yet. Maybe after recharging stations become more available and there are more/better options to choose from. For now there are plenty of gas powered cars that can get 40+ mpg and put your conscience at ease. I’m glad you brought it up at the end, because the process of making the batteries that go into the electric and hybrid cars is terrible for the environment, eco-friendly cars aren’t always as green as we think!
Love the idea of an electric car but will wait until its a bit more proven. Its definitely the direction the car industry is headed. Just need to wait another 5-10 years for the kinks to be worked out (and hopefully a higher density battery is invented too).
This is an amazing car, I have eyed it for a while. But unfortunately I do not meet either 1/10th rule yet. I’ll hold off till it’s smart, by the time I do need or can comfortably afford one I am sure tesla will have a more affordable EV car. And a more developed supercharger network.
Hindsight should of gone all in on TSLA stock when it was 30-60 dollars a share! Wish I had a crystal ball!
Eventually with us running out of natural resources, probably not for 100 years or so but it will happen we will need alternate cars..
I’d say we’ll need to make a change at some stage, you are right the range at the moment is not great..
What are your thoughts on this Sam?
If you can afford it, I think it is a great way to spend your money. The car is awesome and you’re investing in technology that can improve the environment (not to mention it will lessen our country’s dependency on foreign oil).
What’s an HOV lane? Why not build more lanes on the high traffic highways?
Having good highways is what you pay taxes for (along with jails).
Anyway, there will be an electric car in your future. It is the most practical way to deal with automobiles in urban environments. If you wait a year or two, you will likely find brand new EVs for around $35,000, with a 200 mile range.
Two people at my wife’s work have Nissan Leafs (Leaves?). They both leased, and the $5000 Georgia tax credit basically paid for the lease. Both of them use it for zipping around to and from work, but sometimes they use it to go up to the other side of town, so the range can be a concern. The Leaf comes with a navigational system that will point out charging stations if they are needed. Plus they love showing it off to people!
Gotcha. That would be sweet if the state tax credit pays for the entire lease! I’ll ask the dealer here. We only get $2,500 from CA. I’m surprised Georgia gets $5K.
I love the concept, and they are seriously cool cars. But hat 70 mile range is a deal breaker at that price point (and until faster & more frequent charging options are available). While don’t often drive 70 miles in a day, it can happen.
Sam,
You forgot one downside of an EV in CA (or the Bay Area at least), you have to put those ugly, tacky, and (likely) impossible to remove “HOV OK” stickers on your bumper! Why anyone would put those on a beautiful Tesla S is beyond me, but I swear I’ve seen it.
Have you heard of Build Your Dreams (www.byd.com) car company? They’re mfg electric cars in China. They’re an affordable (and less flashy) Tesla, which have been selling well overseas but aren’t yet available in the US.
I agree with others, Musk will have a cheaper Tesla model available over the next 5 years. It would be best for that company to focus on building out the network of charging stations before they produce a cheaper model that will be a hit and then cannibalize itself with a shortage of recharging stations out on the road.
I’ll be hanging on to my 2008 Jeep JKU for the foreseeable future…especially since it’s paid for and loads of fun.
Cheers.
I like those bumper stickers! Like the 911-Foundation on license plate covers. An exclusive club!
For the record, I love my Prius C hybrid. It fit my goal of spending no more than approximately $20K out the door. Similar to the price I paid for m 1995 Honda Accord coupe (new). The Prius electric is quite a bit more expensive! As far as the ladies, it depends what kind of lady you are looking for. The kind who is attracted to expensive cars usually spends a lot for status symbols.
The C is the smaller/cheaper version yeah?
I wonder why Toyota has not come out with their own mass market electric car yet, or have they? Electric cars are really taking share away from the Prius line.
The C is smaller, but very similar to the full size one. Unlike the electric, I have a much bigger driving range (about 500 miles). They do have an electric model, it looks like the standard Prius.
Firstly, great post! You and I are in a similar boat. But I’m gonna get another four years out of my 2001 Subaru Forester, and as you said, EV technology should be better by then. Word is that Tesla will have a 35-40K car by then
If you can’t wait, I’d consider getting the Leaf. A friend of mine has had one for two years and loves it. Maintenance costs are crazy low. When the battery does start to die, Nissan offers a battery lease program for $100/month. That might seem crazy, but by the time your car is 8-9 years old, that…plus the low ongoing maintenance costs, will still be lower than most cars that age will run. Depreciation on the Leaf appears to be huge. Why? Cuz used Leaf buyers don’t get the Obama payouts you mentioned.
I commute from San Carlos to SF every freakin’ week day – mostly in one of those evil commuter buses. In the bus I adorn myself with free WIFI, beautiful women fan me with palm fronds, and I eat canapes adorned with Grey Poupon.
Oh…in terms of range limitations, who cares? You, cuz, need a S.O. who drives a gasoline vehicle. That takes care of your Tahoe trips. Boom.
BTW, I agree to ignore the HOV lane BS. The HOV lanes on 101 begin in Redwood City and go South. (BTW, get me a gig at your company, and I’ll ride my bike to work…every freakin’ week day).
Steve, remind me again where San Carlos is?
Just kidding!
Nice!! Oh….there’s something to be said for perhaps buying a five year old Prius, driving that into dust, and THEN seeing what you can get in terms of EV technology. The fact YOU sir, see some of the world’s worst drivers (SF taxi dudes) beating their Priuses to the ground…well if fills ME with confidence.
Or…if you really want to lease and go EV now, check out if the Honda Fit EV is still a leasably lovely option in CA. 3 years @ $260/month.
Sam you’re drooling over the wrong futuristic car technology. The real question is, can Moose hold out until autonomous vehicles are available to consumers? The technology basically exists already and California is working on legislation to legalize autonomous vehicles by 2015. Think about how much more pleasant commuting will be if you can write blog posts while your car drives you to your destination! I suspect you’ll have to wait about 4-5 years for this, but surely it’s worth holding out just a little bit longer and then splurging on what will surely be a huge improvement to your quality of life.
Ah yes, Moose will surely die before autonomous driving cars will be in production!
I really dislike driving in traffic… but not so much if someone else has to drive me in traffic as I write blog posts for sure.
Sam… get a Tesla Model S!
We need early adopters…. so they can produce the $40k one that I can afford. Help a brother out.
Can’t afford it yet! One day. I’m sticking to my 4 point plan.
I am leaning towards the Leaf though.
I see a surprising amount of Leafs (or is it Leaves..??) in Atlanta actually. I’d be very concerned about 70 mile range. I guess you’d have to take a real good look at your driving habits. You can always get a Leaf then use a carsharing service for longer trips.
Yeah, the Leaf is good as a SECOND car. But then that kinda defeats the purpose of trying to save the world going from one car to two cars.
I checked one out today along with the Fiat 500e. They are sweet, but a 70 mile range is just way too short imo.
Depending on the configuration, option#1 in your 4-point plan may not be as far off as it seems.
A 60 kWh Tesla Model S with minimal options (tech pkg, air suspension) should be under $75K, after the CA and Federal incentives. Over 10 years, the cost-per-mile may not be too far off the typical car.
Gas is about 2x more today than it was in 2004. Considering current car’s depreciation, gas price increases, unplanned repairs, and gas-related maintenance, etc. – what is the cost of keeping your current car?
Hypothetical fuel + maintenance for next 10 Years :
$40,000 Fuel (100k miles, 15mpg, $6/gallon avg. over next 10yrs, estimated)
$10,000 Maintenance, and other Murphy’s law old car stuff
———-
$50,000
The numbers are imprecise, but should convey the expense of feeding the current car and the delta between that “default expense” vs a Model S. In this hypothetical, the Tesla is about a $25k premium over 10 years.
Get a motorcycle for 3-5K and be done with it. You get to ride in the HOV lane AND split lanes where there is no HOV, without range anxiety all while getting 60-90 mpg. Something in the 250/300 cc class will work great. You can even get a nice scooter with similar displacement and get all the benefits without having to work the clutch. Keep your truck for winter driving. To preempt the standard “motorcycles are dangerous” arguments here is a good link https://biodieselhauling.blogspot.com/2012/02/chapter-iv-in-which-i-recommend-that.html
I’m afraid for the baby’s sake. Kinda rough in big cities.
Speaking from the viewpoint of someone who had a Honda CBR 600, Ducati 848, and a BMW R1200C.
What baby?
I say go crazy and be “irresponsible” for once ;) When was the last time you did something big like this?? Besides quitting your job? And getting a new one?
(okay okay, you’re a big do’er…Great idea still from where I’m looking at. And much easier for me to spend your money than you :))
I LOVE spending other people’s money, so does the government!
I enjoy the act of dreaming more than the final purchase and parting of money. Maybe I will go crazy, cray and blow up my finances a little. But I sure would rather earn a million bucks a year at least first!
I’ve been reading up on Tesla and reading this post is working to cement me buying this car eventually. Unfortunately (or fortunately), my current chevy cobalt is going strong at 60k miles and no problems so far. My current commute is pretty short about 10 minutes each way so I see myself driving this car for a long time. My hope is by the time its on its last legs the Tesla will be more affordable and/or there will be more competition. Time will tell. Great article.
I think what everybody here that is a capitalist is missing is “the government is trying to pick winner and losers”…let the free market economy determine if EV’s are viable. Fact is they are not…even Elon took government dollars to start Tesla. (which on a side note is sweet ride) Look up all of complete blunders the current administration has made trying to give money to these green initiatives. The reality is they are not viable yet…they will be some day but why in the hell as a tax payer should I be subsidizing people driving a car that you cannot make a business case for? If you are truly worries about being economical get a Ford Fiesta (or equivalent) that costs $14k gets 50mpg…
This might sound crazy, but I’m taking a different approach…I actually try to have the largest carbon footprint possible. I don’t buy cars/trucks/boats with under 500hp or that get greater that 20mpg. If we used up these fossil fuels faster, the really smart people will start working on the “real” solution. Until there is an economic reason to do the proper focus will not be on the problem. I’m doing my part to solve the problem in my own way.
Hahaha, awesome! 500hp+ or BUST!
I love how Tesla got a $400 million or so loan during the meltdown from the government. My point is, if you can’t beat the government, JOIN the government!
How cool would it be to: earn a government salary, get a lifetime pension, get tax credits for a child, pay no AMT, pay no marriage penalty tax, get solar credit for your house, write off your student loans, get a home mortgage interest deduction, and now get $7,500 from Federal and $2,500 from California per vehicle!
Awesome!
As a state worker with over a quarter mil in student loans, this is exactly what I’m doing. Loans gone in a decade and tax breaks on my Fiat 500e. All in baby.
The benefits I see to owning an electric car is that you don’t have to stop at the gas station once a week (twice a week or however often you do) and you can drive in an HOV lane (if your state allows that). The zero emissions thing doesn’t really concern me, and I’m not convinced that total emissions are cut when you include manufacturing, etc.
Texas does not allow EVs to drive in HOV lanes. If it did, I would get an EV for that alone.
But the Tesla sure is a nice EV.
p.s. HUGE style points for the Grey Poupon reference. Awesome!
Thank you! They need to bring that commercial back.
You make a good point re. energy costs in battery manufacturing. There are also costs in terms of rare earth elements. The battery itself, because it needs to be replaced periodically, should also be factored into the lifetime economics of owning such a vehicle.
However, many people fail to remember that while they may have partially removed refined petroleum from their day to day they are still consuming energy that has to be created in some way. Consumption, on a kilojoule basis, doesn’t change.
At present, electricity rates are mostly a function of natural gas prices. This is because natural gas prices have been severely depressed for several years. As a result, much of the power generation infrastructure within the U.S. has shifted away from coal and toward natural gas. Storage and transportation limitations make natural gas more of a regional commodity than something like oil which can easily be traded internationally. For these reasons electricity rates may be 4.5x more expensive in Hawaii than California. Natural gas prices are hitting all time record highs in Asia. Russia wants to secure Crimea for two reasons: 1) warm water naval outlets which they have historically controlled and 2) continued control of natural gas pipelines. This affects Europe’s market.
It is likely only a matter of time before Liquefied Natural Gas is exported from the United States. Doing so would catalyze domestic NG prices to regain parity with their historic ratio to oil of about 7:1. This would obviously be a hit to the perceived cost savings in driving an electric vehicle.
A swing back to primarily coal based electricity generation would be costly in terms of carbon because coal ain’t the cleanest game in town. Solar, wind, nuclear, hydrolysis; they all have their problems. Solar is probably the most promising. Bottom line, if the motivation is ecological you’re likely fooling yourself.
Surely many people have heard of the term “peak oil”. This is generally accepted as being the idea that perhaps we have reached the peak of the bell curve in exploitable oil reserves. However, I prefer to think of it in a different way: perhaps we have reached a point of diminishing returns in terms of the amount of energy required to create energy. In oil and gas this may be something like the cumulative effort, in terms of energy, of finding, drilling for, transporting, refining and delivering the hydrocarbon (kilojoule of energy) for consumption. In other industries perhaps the macro picture is much different. Either way, you’ve reached diminishing returns when you have to put in more energy than you can get out.
Insightful, although my head hurts a little. What do you suggest is the ideal vehicle to buy then based on consumption, price, etc? thx