Are Electric Vehicles A Good Investment

Are Electric Vehicles A Good Investment?

Electric cars offer savings on gas and maintenance, but higher sticker prices spark questions on total ownership costs. We crunch the numbers on EV investments.

As gas prices continue their rollercoaster ride while climate change concerns mount, more drivers are wondering if now is the time to go electric. Electric vehicles (EVs) promise lower operating costs, but crystal balling total long-term savings involves assessing factors like tax incentives, charging infrastructure, and resale values down the road.

Let’s crunch the numbers on electric vehicle ownership, compare pro and con factors like range and emissions, and gauge if EV investment dollars pencil out across 5 or even 10 years of driving one of these high-tech whips.

Upfront and Operating Costs

The upfront price tag on EVs remains the biggest barrier for lots of drivers. Battery packs don’t come cheap, pushing purchase prices well above similar gas-powered rides. Federal tax credits and state incentives can help blunt the blow, but figuring out charging costs and savings proves tricky too.

EV Price Tags Still Demand Premium

The Manufacturer Suggested Retail Price (MSRP) on electric vehicles runs anywhere from several thousand to over $10k more than comparable gas cars when comparing similar vehicle classes and body styles.

For example, the Hyundai Kona EV stickers for around $34k compared to $21k for its gas kin. The Chevy Bolt lands around $32k while the gas-powered Chevy Sonic starts under $18k. Sticker shock proves real even for EV pioneers!

Electric VehicleBase MSRPGas EquivalentBase MSRPPrice Difference
Hyundai Kona EV$34,000Hyundai Kona$21,000$13,000
Chevy Bolt$31,500Chevy Sonic$17,595$13,905

While the inflation rate on new cars recently topped 8%, federal EV incentives and local rebates provide some cushion against those EV MSRP premiums.

Incentives Can Chop Costs By Thousands

The landmark Inflation Reduction Act signed into law in 2022 earmarked $7.5 billion towards consumer EV tax credits ranging from $3,750 to $7,750 depending on the vehicle make and model. There’s no cap on the number of qualifying purchases per manufacturer anymore. EV incentives like these take decent slices out of MSRP gaps:

  • A $7,750 credit reduces the Kona EV premium down to $5,250
  • The $3,750 Bolt rebate cuts cost difference to $10,155

State and local incentives can also help lighten the load. California’s Clean Vehicle Rebate chips in up to $2k more for Cali residents, while New York and New Jersey hand out $2k and $5k rebates respectively off qualifying EVs and plug-in hybrids.

With some savvy incentive stacking depending on your location’s programs, narrowing the EV price gap becomes more feasible.

Charging Costs Vs Filling Up At The Pump

How do home charging electricity costs compare to gassing up your ride? The fuel savings potential with EVs draws lots of attention, but accurately forecasting those costs involves some estimates on driving habits and charging options.

The average US household pays around 15 cents per kWh for electricity according to 2021 data. With the average EV driving range hovering around 250 miles give or take on a full charge, that translates to around $2.50 to $3.00 to “fill up” at home.

Compare that to the average national gas price floating around $3.50 in early 2023. Assuming an average 25 mpg for most gas vehicles, driving 250 miles burns 10 gallons meaning it costs $35 to fill your tank these days. Based on those averages, you save about $30 on roughly every 250 miles driven.

Of course, gas and electric rates vary wildly across states so crunch numbers with your local rates. Fast public EV charging stalls also cost more than home outlets, so your savings rely heavily on convenient apartment or workplace charging access too.

Overall though, EVs feature lower “fuel” costs per mile giving them financial appeal as long commutes become more commonplace. The gasoline your car breaths also grows more expensive as GLOBAL oil supply tightropes.

Fewer Oil Changes Slash Maintenance

Another budget buff comes from fewer maintenance hassles and repairs needed on EVs compared to internal combustion rides of similar price brackets. Electric motors consist of far fewer moving parts while regenerative braking reduces wear on brake pads too.

A 2022 Consumer Reports study on maintenance costs found that electric vehicles averaged maintenance bills around $462 over five years compared to $889 for gas-powered cars after tallying inspections, fluid changes, brake jobs and tire rotations among other routine work.

Tesla covers included maintenance plans on new vehicle purchases for up to 50,000 miles over 4 years. Other makes tend to offer at least a couple years worth of included or pre-paid maintenance packages. Taking advantage of those perks helps ease cost-of-ownership demands.

Recap – Sticker Shock Fades With Incentives

  • EV average purchase price premiums hover $10k – $15k above gas rivals
  • Tax credits and purchase incentives help offset higher MSRPs
  • Home charging electricity costs roughly one-sixth compared to gas
  • Less fluids, belts and brake changes reduce maintenance bills

Okay, so while buying or leasing extra EV batteries proves pricier upfront even factoring incentives, lower operating costs start kicking in with the first home charge session. Next, let’s examine what total ownership costs look like for keeping an EV running over 5+ years.

Total Cost of Ownership Calculations

Are Electric Vehicles A Good Investment
Are Electric Vehicles A Good Investment

Image: Credit Stock Photos

Depreciation and resale values make up significant variables when determining any car’s total cost of ownership from purchase date through eventual sale. Insurance, financing rates and fees matter too, so we’ll explore how EVs stack up across all those important factors.

EV Resale Values Hold Strong So Far

Future resale values always require some crystal balling. But recent analysis from Edmunds found electric vehicles maintaining value better than gas cars, retaining around 65% of their sticker price after 5 years compared to 51% for combustion engine vehicles.

Table: Electric Vehicle vs Gas Car Resale Value Comparison

Vehicle TypeAverage MSRPValue After 5 YearsValue Retained
Electric Vehicle$56,000$36,40065%
Gas-Powered Car$38,500$19,63451%

What drives EV resale staying power? For starters, the computerized components and simple drivetrains seem pretty durable, able to outlast 150,000+ mile warranties from some brands if battery degradation stays minimal.

Secondly, scarcity inflates values as inventory struggles to meet consumer demand. And hype around gas prices and environmental benefits should keep interest and sales momentum steady. FWD and AWD options deliver more traction on slippery roads.

If buying used, capacitor degradation worries fade since degraded batteries commonly get replaced under warranty anyway. So buying new may make more economic sense for EVs.

Financing Favors Fixed-Rate EV Loans

Since electric vehicles make up 1% of cars on US roads, limited data exists so far on insurance costs and loan terms specifically for EVs. But we can make some logical assumptions and projections around the financial nitty-gritty.

Loans – Newer EVs likely require financing ranging from 36-72 month terms for those lacking over $30k in spare capital. Industry analysts recommend fixed rate loans since they carry lower interest rates overall than variable rate options.

With the Fed forecasting several more interest rate hikes in 2023, fixed rate loans hedge against climbing variable rate costs down the road. Smaller local banks and credit unions sometimes offer lower EV loan rates too.

Insurance – Electric vehicles initially cost more to insure due to higher replacement part expense should repairs become necessary. But EVs recoup some of those premium costs over time via loyalty discounts and lower accident rates tied to advanced safety and driver assist features.

TCO Formula Factors

Weighing total cost of ownership requires tallying everything from loan payoffs to wiper blades. Edmunds formulas track these EV costs over the first 5 years of operation:

Depreciation – The difference between new purchase price and projected resale value

Interest – Total interest paid on auto loan throughout its term

Fees & Taxes – DMV registration expenses plus sales taxes

Fuel Costs – Electricity is cheaper than gas per mile

Maintenance – Less routine service needed on EV drivetrains

Insurance – Comprehensive and collision coverage annual premium

Add all those expenses up, then divide by total months of ownership. That reveals the all-in average monthly driving cost provides the fullest picture.

EVs Ownership Costs Competitive

  • Resale values expected to remain higher than gas rivals
  • Financing costs a wash though EVs seen less risky
  • Formulas tally TCO across 5-year ownership span

Let’s shift gears and examine what it’s actually like living with an EV in terms of driver experience. Do realities match the hype regarding torque, tech and convenient charging?

The EV Experience – Perks and Drawbacks

Thus far, the numbers tilt favorably towards electric vehicles making financial sense for lots of American households based on incentive sweeteners and projected operating savings. But an EV remains a big purchase, so beyond the monetary factors, how do these 21st century whips actually drive, handle and charge?

Instant Torque Offers Neck-Snapping Acceleration

One way EVs flatten gas cars comes through lightning quick acceleration with full torque available instantly with the pedal push. No gear shifts necessary!

The quickest Tesla models rocket 0-60 mph in under 2.3 seconds thanks to ample horsepower and instant-on motor torque. The electric Ford Mustang Mach E gives the muscle car icon an environmentally friendly jolt reaching 60 mph in the mid-3 second range in GT Performance trim.

Even econobox EVs like Mini Coopers and Chevy Bolts offer zippy acceleration besting V6 performance. Slam the pedal from a dead stop and most EVs will pin you to the seat like Six Flags thrill ride, making commuting way more fun!

Nimble Handling and Better Weight Distribution

In addition to straight line speed, the lower centered weight and evenly distributed mass of EV battery packs leads to nimble handling and agile maneuverability too. Ride quality improves without heavy gas engines and exhaust components up front compromising weight balance.

The BMW i3 sets handling benchmarks for EVs, living up to the automaker’s sporty reputation by carving tight turns with precision. Reviewers praise the Hyundai Ioniq 5’s composure hitting sweepers thanks to a low center of gravity. Upscale EV SUVs like Audi e-tron or Mercedes EQC models filter out road imperfections via air suspension while offering all-weather traction.

Basically, virtually all road manners and performance metrics excel on EVs compared to gas counterparts since software and battery innovation focuses on power delivery, consistency and optimizing weight distribution.

Pro Tip: FWD and AWD options deliver more traction on slippery roads.

Advanced Technology Abounds

From huge touchscreens to semi-autonomous driver assist capabilities, electric vehicles brim with high-tech creature comforts. EV dashboard displays provide precision details on power flow and charging needs while also allowing over-the-air software update installation without needing dealership visits.

Tesla again leads the way maximizing EV technology integration. The biggest touchscreen in any production car spans 17 inches. Bioweapon Defense Mode ratchets up cabin filtration to hospital grade standards. Sentry Mode enables 360-degree exterior camera recording when parked to deter break-ins.

The Lucid Air and Mercedes EQS channel executive jet vibes via reclining rear seats, built-in massagers and Mercedes adding new features via downloadable software upgrades.

ModelTouchscreen SizeUnique Feature
Tesla Model S17 inchesBioweapon Defense Air Filtration
Lucid Air34 inches curvedExecutive Rear Seating Package
Mercedes EQS12 inchesHyperscreen dash spanning passenger to driver displays

EV innovation seems endless. What futuristic feats can forward-thinking companies dream up next?

Charging Tradeoffs – Time Vs. Convenience

Range anxiety around EV charging fades yearly as infrastructure spreads, battery capacities rise and more Connecticut households add 240-volt Level 2 charge points. But recharge times still vary wildly ranging from overnight top-offs for daily commuting to 20-30 minute quick burst at DC fast charge stations.

Ideally, access to home or workplace charging solves much hassle. But those needing public charging face tradeoffs between charge speed and stall availability. Waiting in line for a fast charger defeats time-saving perks somewhat.

Charging MethodHours To Full ChargeNotes
Level 112-24 hoursBasic home outlet (not common)
Level 24-10 hours240V home / public charge station
DC Fast Charge0.5 hours45 min for 80% battery (less stations)

Extreme cold hampers charge speed and saps range by up to 30%, so winter weather road trippers need extra resilience planning routes between charging stations.

Tesla’s Supercharger network still offers the most extensive and convenient fast charging route coverage. But other automakers and third party providers continue expanding availability along major highway corridors.

Emissions and Eco Benefits

While the financials loom large for prospective EV buyers, the eco benefits carry significance too. Sure, manufacturing lithium ion batteries generates hefty carbon emissions early on.

But comparing overall emissions from manufacturing to end-of-life, EVs yield far cleaner lifetime environmental impacts than gas vehicles. Plus, EV technology improves through renewable energy integration and battery chemistry innovations.

Electric VehiclesGas-Powered Vehicles
Produce zero direct emissions from drivingAverage new passenger vehicle emits 404 grams of CO2 per mile
Manufacturing footprint can improve via renewable energy productionRoughly 1/5th of US greenhouse gases stem from vehicle emissions
Energy grid shifts towards renewable sources will further reduce EV impactsNo emissions regulation of manufacturing plants
Batteries are heavily recycled at end-of-lifeLimited catalytic converter precious metal recovery
Last 300,000 miles with battery replacementComplex engines only last 150,000 miles typically

For eco-conscious commuters and governments setting emissions reduction goals, transitioning from internal combustion to electric propulsion looks imperative.

Investing in the Future EV Market

Thus far, the blog post detailed cost factors for owning an EV yourself. But broader investment opportunities exist as well if you want indirect financial exposure by funding automakers and charging companies set to profit immensely off societies’ mass adoption of EVs.

Major growth runways remain for EV-related stocks as zero-emissions transportation goes mainstream this decade. Let’s explore promising sectors to research.

Sky’s the Limit Industry Growth Expected

Electric vehicles claimed just 3% of new car sales in 2020. Analysts at BloombergNEF forecast that rising to 28% by 2030 before reaching 58% by 2040 on route to displacing internal combustion entirely mid-century.

Meeting that production demand requires automakers to invest over $515 billion in manufacturing capacity for plug-in models over the next 8 years per IHS Markit consultants. So tremendous revenue streams await EV pioneers like Tesla, Lucid and Rivian plus legacy automakers pivoting Ford, VW and GM who combine to produce over 50 new EV models by 2025.

Early movers who innovate reliable models with extended range and advanced features at mass market prices will see their stock valuations multiply if sales and profits accumulate as predicted.

Government Spending Accelerates Adoption

Various federal and state incentives covered earlier grease the wheels for consumer adoption. But enormous government infrastructure investments also help spur EV dominance by expanding charging access for those with range anxiety.

The 2021 Infrastructure Bill earmarked $7.5 billion towards a national charging corridor network aimed at eliminating range anxiety. Another $2.5 billion assists local government’s transitions towards electrified public fleets including buses, trucks and maintenance vehicles.

California mandates all new vehicles sold in-state must emit zero emissions by 2035. Over a dozen other states follow California’s regulatory lead.

With more charging stations on route and purchase incentives sweetening affordability, government policy strongly supports EV advancing to mainstream preference this decade.

Battery Producer Stocks Also Set to Surge

Are Electric Vehicles A Good Investment
Are Electric Vehicles A Good Investment

The batteries powering electric vehicles and storing renewable energy represent the highest value components in the supply chain. Lithium cells require specialized engineering and complex manufacturing with rare earth mineral material sourcing.

Top battery producers like Panasonic, LG and Samsung supply automakers today. But investor intrigue and stock growth surrounds emergent players like QuantumScape promising next generation solid state cells enabling 500+ mile ranges and lightning fast charges.

Battery manufacturers race to enhance energy density, shorten charge times and improve battery management systems. Since battery packs make up 30-40% of total EV value, storage innovations remain tied directly to growth projections.

Expect consolidation and vertical integration in coming years though as EV makers seek to control their supply chains. Tesla bought its longest tenured battery partner Maxwell Technologies in 2020 to produce its own cells in-house. Volkswagen plans six 40 GWh battery plants across Europe supply their EV portfolio into the 2030s. Startup Lucid pre-ordered batteries from LG Chem through 2030 valued around $4.4 billion.

Clearly cells form the beating heart of EVs. So battery material and production stocks should surge in kind as annual EV sales rocket past 20 million by 2040. Invest or risk getting left behind.

Since no EVs run far without ample conveniently located power outlets, building public and home charging infrastructure keeps pace with auto manufacturing scales up.

President Biden’s infrastructure package includes $7.5 billion just for charging station expansion, but estimates suggest upwards of $50 billion gets spent this decade as 400,000 public ports get installed nationwide by 2030.

Leading charging hardware producers like Blink, ChargePoint and EVgo trade publicly while competing fiercely over real estate like shopping centers, hotels and highways to lock down charging corridors connecting regions. Network effects take hold as more sites join integrated apps showing drivers stall availability and pricing options.

Home charging also must evolve from single family solutions towards equipping multi-family apartments and condos at affordable costs. So all facets of charging equipment face soaring demand driving positive stock outlooks.

The Bottom Line – Are EVs Worth Investing In?

We’ve covered numerous factors regarding EV costs, comparisons to gas cars, owner experiences and market growth outlooks. Let’s boil down the pros and cons impacting EV investment appeal looking out the next 5-10 years.

Forecasting Factors Favoring EVs

  • Purchase prices and TCO metrics look attractive factoring incentives
  • Lower “fuel” costs from home charging add up quickly
  • Maintenance savings probable compared to gas vehicles
  • Resale values forecast to remain higher than ICE rivals
  • Torque acceleration and nimble handling enhance driver appeal
  • Advanced tech features suit modern lifestyles
  • Renewable charging and greener manufacturing further boosts eco status

Based on those trends, electric vehicles look positioned to increase market share rapidly in coming years. The total cost math supporting EV investments will only tilt more positive over time as production scales dramatically cutting sticker prices while technology enhances.

Lingering Headwinds Around Adoption

However, EV evolution faces speedbumps needing attention before sales growth attains exponential hockey stick status. Specifically:

  • Charge times remain slower than 5 minute gas fill ups
  • Upfront cost premiums still deter mass market buyers despite rebates
  • Range anxiety persists lacking nation-wide fast charging infrastructure
  • Battery supply chain constraints create order backlogs
  • Electric grid capacity requires expansion to meet charging demands
  • Commercial trucks and heavy equipment lag cars adopting EV tech

Yet companies and governments are investing hundreds of billions combined to fix those adoption hurdles over the next decade.

So while EV domination faces justified skepticism today, clear paths exist to address concerns keeping electric vehicles from claiming 90%+ market share as countries mandate ICE phaseouts. Patience remains prudent but momentum favors this revolution reaching its optimistic potential.

FAQs

Are Electric Vehicles A Good Investment
Are Electric Vehicles A Good Investment

Do Electric Vehicles Hold Their Value?

Early indications show electric vehicles retaining value better than internal combustion engine vehicles so far. According to Edmunds analysis, EVs keep around 65% of original MSRP after 5 years compared to just 51% for gas vehicles.

What factors support higher resale values for EVs compared to gas rivals? For starters, the advanced battery packs and electric drivetrains require far less maintenance with fewer fluids and moving parts to service or replace. Regenerative brakes see less wear too. So durable engineering and long-term reliability help preserve EV value.

Secondly, buyer demand continues rising faster than inventory levels, especially for Teslas. Low supply fuels higher resale prices. As more automakers ramp up EV production this decade, resale values may adjust downward but remain competitive with gas counterparts which depend heavily on scrap commodities pricing.

Is It Worth Investing In EV?

Depending on your strategy, investing dollars towards electric vehicle technology looks promising from several angles:

Ownership – Purchase incentives plus cheaper home charging and maintenance make EV total cost of ownership attractive over 5+ years of driving despite higher sticker prices currently.

Auto Stocks – Massive EV investments by automakers signal confidence about sales growth trajectory through 2030. First movers like Tesla and Ford already claim billions in revenue. Legacy players like Volkswagen and GM commit billions retooling factories since they can’t afford to cede the market to disruptive rivals.

Battery Technology – Battery storage capacity and charging rates dictate range and convenience which determine mainstream adoption. Leaders like Panasonic and emerging players like QuantumScape should see valuations surge over the next decade fueling the electric mobility revolution.

Charging Infrastructure – Government funding and collaborations between EV automakers, utilities and real estate groups spark expansion of charging station networks essential to servicing EV growth. EVgo, ChargePoint and Volta Charging operate publicly traded stations.

So yes, EV technology merits investment dollars whether targeting ownership cost savings or the seismic industry sales growth forecasts in coming years.

Are Electric Vehicle Stocks A Good Investment?

Electric vehicle technology remains early on the S-curve adoption model, so despite progress this past decade, exponential growth still lies ahead. Between government emissions reduction mandates, consumer incentive programs and developing nations industrialization, EV sales are projected to hit price parity and outpace gas vehicles during the 2030s.

BloombergNEF analysts forecast electric models claiming 58% of new car sales by 2040. That translates to disrupting a $2 trillion global market. So yes, stocks linked to companies manufacturing EVs plus the components, charging networks and critical minerals supply chains look poised for immense growth based on sales and revenue expansion ahead.

Leaders like Tesla, lithium producers Albemarle and Livent, and charging hardware makers Chargepoint and EVgo seem positioned in the EV ecosystem’s “power centers” set to capture disproportionate value creation.

Do Electric Cars Have A Future?

Electric cars certainly face an uphill battle still to fully disrupt entrenched internal combustion vehicles which make up 99% of cars on the road today. However, the trajectory favors EVs based on environmental regulations, technology enhancements and proliferating charging infrastructure reassuring consumer adoption.

Manufacturing experts actually consider the simpler electric drivetrains more reliable than complex gas engines – needing fewer fluids, belts and hoses while requiring less brake and suspension maintenance too. Declining battery prices coupled with expanding fast charging networks alleviate range anxiety as well.

So yes, between favorable total cost of ownership math and government policies like California mandating all new vehicles sold run emissions-free by 2035, electric cars feature extremely promising outlooks replacing a majority of gas models by mid-century. Their future holds electrification.

Many more investors and first-time car buyers ask common questions about electric vehicle viability. Please let me know if you would like me to cover any other specific EV topics. I’m happy to share more details or data addressing top ownership considerations.

Conclusion – EVs Merit Investment Dollars

To summarize, while edge cases and budget restraints vary by individual needs, electric vehicles largely prove their worth by solving pain points around saving money, minimizing environmental harm and enhancing performance.

Test drive conditions don’t perfectly match your circumstances. But the consumer and industrial trends point toward EVs delivering on their promises knocking internal combustion off its century-long perch while enabling investors to profit immensely off this mass migration.

So for eco-conscious commuters and opportunistic shareholders alike, electric vehicles warrant serious investment consideration before the 2020s conclude and emissions-spewing engines land on history’s scrap heap.