Electric Cars Help the Climate. But Are They Good Value?

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By The New York Times

Published 1 year ago on

July 29, 2024

Electric vehicles offer benefits like slow battery degradation, potential savings on maintenance and fuel, but they may depreciate faster than gasoline cars, making resale value a consideration for buyers. (Shutterstock)

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Electric vehicles cost more to buy than gasoline cars, and they may lose value more quickly. Even for people eager to own a car with no tailpipe emissions, it’s reasonable to wonder whether it makes sense to buy one now.

The answer may well be yes, but there are a lot of factors to consider, many of which depend on your driving habits and how important it is to you to reduce your impact on the environment. And because electric vehicles are a new technology, there is less certainty than for gasoline-powered vehicles about how the numbers will shake out over time.

Here’s what we know.

Is Battery Longevity a Problem?

Most electric cars haven’t been on the road that long, so it’s hard to say definitively how long batteries will remain usable. Lithium-ion batteries, the kind used in virtually all electric vehicles, do lose range over time.

But the degradation is very slow. Electric cars from Tesla and other automakers have software that does a good job of protecting batteries from excess heat or voltage that can cause damage, especially when charging.

Automakers usually guarantee electric vehicle batteries for eight years or 100,000 miles, and most will replace a battery if it loses more than 30% of its capacity during the warranty period.

One thing to note: Batteries will still work in freezing weather and extreme heat, but their range could be temporarily reduced.

Anecdotally, there are plenty of examples of people driving electric cars hundreds of thousands of miles. The chances that a battery will degrade to the point where it needs to be replaced are less than 1% for electric vehicles built in 2016 or later, according to data from Recurrent, a firm that tracks the used electric vehicle market.

“All indications are that batteries should last longer than the cars themselves,” said Liz Najman, director of market insights at Recurrent. “Certainly they should last for the average life of a gas-powered car.”

And because electric vehicle batteries contain valuable metals like lithium and cobalt that can be recycled, even a completely spent battery will still be worth something.

What About Resale Value?

Prices for used electric vehicles have fluctuated wildly. In 2022, when electric cars were popular and hard to find, some models were selling more on the used market than they had when new. Now that there are more than 100 electric vehicle models available, resale values for some models have plunged.

On average, electric vehicles depreciated by 49% over five years, compared with 39% for all vehicles, according to iSeeCars.com, an online auto sales site. But a number of one-off factors contributed to the drop, notably steep price cuts by Tesla for its new models..

“Why would you buy a car used when you can get the same car new?” said Karl Brauer, executive analyst at iSeeCars.

Hertz helped create a glut in the market when it decided to sell 30,000 cars from its EV fleet because it was losing money on them. The proliferation of new electric vehicle models from Hyundai, Kia, Ford Motor, General Motors and others have created intense competition and driven down prices.

But there are signs that prices for used electric vehicles are stabilizing. Newer models with longer-range batteries have held their value pretty well, according to John Helveston, an assistant professor at George Washington University who has studied the market for used electric vehicles. Depreciation rates are “moving in the direction of convergence” with gasoline vehicles, he said, “but we’re not there yet.”

Leasing is one way to avoid the risk that an electric vehicle will plunge in value or be rendered obsolete by newer technology. When the lease is up, any depreciation is the dealer’s problem.

Or buy a used electric vehicle that has already depreciated. By some estimates, used electric vehicles now cost less than used gasoline cars. “If you’re interested in an EV, it’s a great way to go,” Helveston said.

How Much Can I Save on Fuel?

People naturally focus on sticker prices when shopping for cars. The average price of a new electric car or pickup was $56,371 in June, according to estimates by Cox Automotive, compared with $48,644 for all vehicles.

But many people will recoup that difference from lower maintenance and fuel costs. The Environmental Protection Agency estimates that an electric Ford F-150 Lightning pickup costs $1,100 per year to charge, less than half the annual cost to tank the most fuel-efficient gasoline-powered F-150.

Of course, actual savings vary depending on current gasoline prices, local electricity rates and driving habits.

Maintenance costs are usually lower because electric vehicles don’t need oil changes and don’t have spark plugs or mufflers that must be periodically replaced. They have fewer moving parts to break down. Electric vehicles do, however, tend to wear out tires more quickly because batteries are very heavy.

How to Value the Environmental Benefits?

Some of the benefits of electric vehicles are hard to put a dollar value on. Many people will enjoy the peace of mind that comes from driving a vehicle that generates far fewer greenhouse gases and other pollutants. (Though they are not without environmental impacts.)

Over its lifetime, a midsize electric sedan with 300 miles of range produces half the greenhouse gases as a comparable gasoline-powered car, according to a study published in November by Argonne National Laboratory that took into account emissions from mining, manufacturing and electricity generation.

Electric vehicles produce none of the nitrogen oxides and other pollutants that cause asthma and other respiratory problems. And many people enjoy the swift acceleration and quietness of electric vehicles, as well as the convenience of charging at home if you have your own driveway. Whether it’s worth paying a higher sticker price for those benefits is a matter of personal preference.

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This article originally appeared in The New York Times.

By Jack Ewing
c.2024 The New York Times Company