AAA Says Electric Vehicles Have A Lower Than Average Ownership Cost

3 weeks ago by Mark Kane 38

Chevrolet Bolt EV (InsideEVs/George B)

According to the latest AAA report – 2017 Your Driving Costs, all-electric cars have a lower-than-average driving cost at ~$8,439 per year.

Kia Soul EV

Average for the industry (new cars) is $8,469 annually, or $706 each month.  Which means, at least according to the AAA, EVs have reached parity with the broader automotive market.

We would like to see BEVs on the top of the list (AAA compared the BMW i3, Chevrolet Bolt EV, Nissan LEAF, Kia Soul EV and Fiat 500e), however it seems all-electric cars are not yet close…and here’s why.

The energy costs (under four cents per mile) and maintenance costs ($982 per year) are the lowest in the industry by far, but the result is close to average because of depreciation of $5,704 in value every year on average for BEVs.

As always we have issue with this “5,704” in average depreciation per year, because as always, it seems that the true cost of the EV to the owner is not accounted for. ie) recognizing the stating MSRP of a EV in America needs to be lowered anywhere from $7,500 to $12,500 depending on the point of purchase and governmental subsidies eligible.

As most all all-electric owner in the US knows today, any “affordable” EV with a starting MSRP under $30,000, has only fractional real-world ownership costs compared to the average petrol vehicle. However, the trade-off is that the abilities of that inexpensive EV is still limited compared to its petrol cousins (range and recharging time).

“Without a gasoline engine to maintain, electric vehicles have the lowest annual maintenance and repair costs, at $982 per year. By relying on electricity instead of gasoline, fuel costs are also significantly lower than average, at under four cents per mile. Depreciation, however, is currently extremely high for these vehicles, losing an average of nearly $6,000 in value every year.”

Here are the highlights of the report:

AAA Reveals True Cost of Vehicle Ownership

Average new vehicle will cost nearly $8,500 annually to own and operate

ORLANDO, Fla. (August 23, 2017) – Owning and operating a new vehicle in 2017 will cost a driver an average of $8,469 annually, or $706 each month, according to a new study from AAA. The annual evaluation of driving costs reveals that small sedans are the least expensive vehicles to drive at $6,354 annually, however small SUVs ($7,606), hybrids ($7,687) and electric vehicles ($8,439) all offer lower-than-average driving costs to U.S. drivers. Conversely, of the nine categories included in the evaluation, pickup trucks are the most expensive vehicles to drive at $10,054 annually.

“Determining the cost of a new vehicle car is more than calculating a monthly payment,” cautioned John Nielsen, AAA’s managing director of Automotive Engineering and Repair. “While sales price is certainly a factor, depreciation, maintenance, repair and fuel costs should be equally important considerations for anyone in the market for a new vehicle.”

In addition to analyzing the ownership costs for sedans, SUVs and minivans, AAA’s Your Driving Costs study added four new vehicle segments in 2017 – small SUVs, pickup trucks, hybrids and electric vehicles.

Vehicle Type Annual Cost*   Vehicle Type Annual Cost*
Small Sedan $6,354   Minivan $9,146
Small SUV $7,606   Large Sedan $9,399
Hybrid $7,687   Medium SUV $9,451
Medium Sedan $8,171   Pickup Truck $10,054
Electric Vehicle $8,439   Average $8,469

*Based on 15,000 miles driven annually

To estimate the overall cost to own and operate a new vehicle, AAA evaluated 45 2017 model-year vehicles across nine categories and focused on mid-range, top-selling vehicles. AAA’s annual driving cost is based on a sales-weighted average of the individual costs for all of the vehicle types. Key findings include:

Depreciation

Depreciation — the declining value of a vehicle over time — is the biggest, and most often overlooked, expense associated with purchasing a new car. New vehicles lose an average of $15,000 in value during the first five years of ownership. In 2017, small sedans ($2,114) and small SUVs ($2,840) have the lowest annual depreciation costs, while minivans ($3,839) and electric vehicles ($5,704) are at the high end of the scale.

Maintenance and repair

To calculate annual maintenance and repair costs, AAA examined factory-recommended maintenance, replacement tires, extended warranty costs and services associated with typical wear-and-tear. New vehicles, on average, will cost a driver $1,186 per year to maintain and repair.

The inevitable costs associated with maintenance and repair should be an important consideration for car shoppers, as a recent AAA survey found that one-third of U.S. drivers could not afford an unexpected repair bill. AAA Approved Auto Repair facilities offer free vehicle inspections, AAA member discounts and a 24-month/24,000-mile warranty for AAA members. Visit AAA.com/AutoRepair to find a nearby facility.

Fuel

Fuel costs vary significantly by vehicle type, ranging from 3.68 cents per mile (electric vehicles) to 13.88 cents per mile (pickup trucks). New vehicle owners, on average, will spend just over 10 cents per mile – about $1,500 annually — to fuel their vehicles.

For gasoline-powered vehicles, AAA recommends selecting a TOP TIER gasoline, as its independent research found it to keep engines 19 times cleaner, improving vehicle performance and fuel economy. AAA cautions drivers that using premium-grade gasoline in a vehicle that does not specifically require it is an unnecessary expense.

Electric Vehicles

New to the Your Driving Costs study in 2017, AAA found that electric vehicles have lower-than-average driving costs at $8,439 per year. Without a gasoline engine to maintain, electric vehicles have the lowest annual maintenance and repair costs, at $982 per year. By relying on electricity instead of gasoline, fuel costs are also significantly lower than average, at under four cents per mile. Depreciation, however, is currently extremely high for these vehicles, losing an average of nearly $6,000 in value every year.

A recent AAA survey revealed that 1-in-6 Americans are likely to choose an electric vehicle, the majority motivated by their lower long-term ownership costs.

“Although electric vehicles can have higher up-front costs, lower fuel and maintenance costs make them a surprisingly affordable choice in the long run,” said Nielsen. “For even lower costs, car shoppers can avoid high depreciation costs by selecting a used electric vehicle.”

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38 responses to "AAA Says Electric Vehicles Have A Lower Than Average Ownership Cost"

  1. EVTCO says:

    Never really cared about depreciation of my vehicles when looking at TCO, because always figured in driving it till it is practically dead, or maintenance costs became more than a new monthly car payment. Always happy to even get $1k-$3k trade in. Drove my 2007 Pontiac Vibe for 10years and 150,000 miles. Traded it in for a used 2014 Spark EV for $8k. My monthly payment for the Spark EV is less than what I putting into the Vibe for gas. Not to mention what I was putting in for oil changes and other needed maintenance into the aging car.

    1. speculawyer says:

      “My monthly payment for the Spark EV is less than what I putting into the Vibe for gas.”

      That is AWESOME. Even with some of the new short-range EVs, you can get leases that around the price of cellphone bill.

      1. Mark.ca says:

        So true! My eGolf payment after deducting all credits and gas savings is …$7! Yes, seven dollars! The car that got replaced was a gas sucking ”99 Lexus RX but still…

    2. Confused says:

      So you traded in the Vibe early then.

    3. Peter says:

      These numbers are not correct.
      My Tesla is three years now 80.000 miles and only wipers, cabin air filter and one set of tires.
      That’s all.
      Value ? I will keep it till I die.

  2. Someone out there says:

    The depreciation of older EVs has more to do with technical obsolescence rather than wear&tear. Who wants to pay any serious money for an old 86-miler when new cars are 200+ miles for the same price (as new that is)?

    1. alohart says:

      Anyone who doesn’t need a 200 mile range and doesn’t want to drive a larger, heavier car because of its large battery pack, like me.

    2. Mark.ca says:

      200 miles means nothing to a second car.

  3. L'amata says:

    These guys Must be a Bunch Of “Einsteins” to figure that one out ….R O T F L M A O …

    1. Prad Bitt says:

      Agreed, AAA (and CAA) makes a lot of profit on boosting cars in the cold season…
      They are in an obvious conflict of interest since electrics and hybrids ALWAYS start All the time.

  4. KenZ says:

    Someone help me out here: how does driving an EV cost $982/year in maintenance? At 15k miles, that’s tires every other year, some windshield wipers, and in the case of my Leaf I’ve gotta get the airbag sensors and the wiper fluid pump replaced. But those last two are like once in a four year type expenses.

    I’m figuring annual maintenance is half that. Of course I agree with @EVTCO: I’m driving this thing into the ground. When it hits 150k miles, residual value of what will likely be a 50 mile range 11 year old vehicle is $0.

    1. SparkEV says:

      I think high price is for Tesla.

    2. Michael Sedler says:

      I agree. In more than three years of owning my leaf I have replaced the wipers and cabin air filter. So less than $100. Those maintenance estimates are inflated by about 90%.

      1. Mr. M says:

        Good to know that you represent the average car.

  5. Chris O says:

    So with all the incentives, discounts, bargain basement lease deals this analysis in which high depreciation on EVs and bizarrely high theoretical maintenance cost are the equaliser with ICV running cost is basically utter nonsense.

    Since AAA says it it will be circulated wildly no doubt so it won’t do EV image any good. Which was the point in the first place?

  6. Kosh says:

    “recognizing the stating MSRP of a EV in America needs to be lowered anywhere from $7,500 to $12,500 depending on the point of purchase and governmental subsidies eligible.”

    Mark – you (and everybody else) needs to STOP saying this and thinking about this way.

    It’s a TAX CREDIT. Not cash in hand. I just did a rough calc. The Fed tax credit will save me just $2100 on my taxes. So to me, it is just $2100 cash in hand, NOT $7500.

    It DOES NOT reduce the cost of the car by $7500.

    1. unlucky says:

      It’s a tax credit, not a deduction. If you pay at least $7500 in federal taxes it saves you $7500 in federal taxes.

      1. Kosh says:

        Ah… you correct sir, I stand corrected! Thanks for clearing that up.

    2. Why Not? says:

      I think you are confusing a tax credit with a tax deduction. What you are describing is a tax deduction, i.e. you are taking $7,500 off your reported income.

      For EVs you are getting a tax credit, which means you are actually getting $7,500 taken off your tax bill. Of course, you still have to pay the full price for the car, but you will get an actual $7,500 savings in taxes whenever you file your next return. Assuming you owe that much in taxes of course.

    3. philip d says:

      If you make $30,000 a year as a single filer you will have a federal tax liability of 25% or $7,500. Not to sound glib but if one is only making $30,000 a year they probably shouldn’t be buying any car that has a starting MSRP of $30,000 anyway.

      Having said that I don’t know why they didn’t write the credit so that any unused portion of the credit could be carried over at least one more tax year. Many state zero emission vehicle tax credits do this so I don’t know why the federal one doesn’t.

      1. zzzzzzzzzz says:

        Single filler earning $30k TAXABLE income has $4,040 federal tax liability at most. Likely less after itemized deductions.
        https://www.irs.gov/pub/irs-pdf/i1040tt.pdf
        $30k taxable income means gross income MINUS $6,300 standard deduction, minus $4,050 exemption, etc.

        1. BenG says:

          Thanks for keeping it real, zzzz

  7. Don Zenga says:

    AAA is a pro-oil company which opposed Ethanol so much.

    Now they are doing analysis on electric vehicles. Definitely there will be some tweaks in it.

    First of all, they have ignored the $7,500 tax credit.

    Second: the maintenance charges they applied is $982 which is way too high. You have only a tire rotation 2 – 3 times a year which should cost around $100.

    Third: Which electric vehicle are they talking about. You cannot take an expensive EV like Model S and compare it with standard sedans.

    Just ignore this study and do it on your own using a spreadsheet and you can come out better.

    If the cost of EVs goes down, it will push the cost of regular gasmobiles also down soon.

  8. BillT says:

    This analysis really only applies to cars kept 5 years or less in which case depreciation swamps all other costs. But, their yearly maintenance / repair costs seem nuts in that case for both ICE and EVs:$4,500 over 5 years / 75,000 miles? That is at most 2 sets of tires and for an ICE 15 oil changes. There should be few if any out of warranty repairs or other maintenance items for either an EV or ICE in the 1st 75,000 miles of its life. In my case I keep my cars 10+ years so energy and repair costs dominate my total expense.

  9. speculawyer says:

    If there were another oil price spike, EVs would really take off. Of course, any such spike probably wouldn’t last long since decreased demand would bring prices back down. But just suffering another such volatile swing would probably push a lot of people tired of dealing with such price volatility.

    1. Mark.ca says:

      At 1% there is no dent in demand. Actually some analysts suggest that even at 10% it would still not matter as long as the population boom continues. Let’s not forget that oil is used in pretty much everything not just to make transportation fuel.

  10. Hank S. says:

    They really should publish the average of what people actually pay…not the amount that the most naive person would pay. I mean, how much of that cost comes from the “comprehensive extended warranty” that they are including?

  11. Nathan Kovac says:

    There is an easy way to eliminate the high depreciation rate. Buy used.

    I just bought a 2013 Nissan leaf for $8,500 due to that depreciation. For a car with almost no costs that is a bargain.

    1. BenG says:

      That is a sweet deal. I thought of a used Leaf too, but ended up with a Volt. 2012 Premium with 34k miles, cherry condition, purchased last summer for $14k. My only maintenance so far is that the EVSE charging cord failed recently … YouTube showed me how to take it apart and repair, which I spent about $100 on tools and supplies and it’s working again. I need to rotate the tires.

      Used Leafs should be getting even cheaper given that $10k discounts are available in various locals. With federal tax credit that brings a brand new 2017 down to ~13,500.

      1. William Edwards says:

        I tried to buy a used Leaf… the dealer here are selling ones with bad battery packs, but not so bad as to get a replacement. Of course, they do not advertise the pack is bad. You’ll just be led to believe you have 80 miles of range when you would be lucky to get 30 in cold weather. 8-(

  12. William Edwards says:

    Depreciation is a magician’s trick to convince people to fleece vehicles, I mean lease vehicles.

    Depreciation has ZERO to do with the cost of a vehicle from where I sit. I purchase a car, use for 10+ years and eventually it needs to be replaced. My ONLY costs are the PRICE, OPERATING and MAINTENANCE…

  13. Don Zenga says:

    https://www.tesla.com/support/maintenance-plans

    4 year maintenance plan for Model-S costs $ 2,400 for AWD and $2,325 for RWD which comes out to $600 / year. So where is this $982 coming from? Is this something that is charged for Porsche Panamera Plugin which costs $99 K. Panamera’s sell in a much lower volume besides it has an engine as well.

    So AAA takes the highest maintenance charge among plugins and applies it to every EV. Don’t you feel its very unfair?

  14. gorr says:

    This study is bogus at best. We all know that half or more ev drivers keep their gas car in reserve for longer trips

    1. gorr says:

      They also didn’t account the level 2 charger required or the solar panels needed on your roof and didn’t say anything on electricity bills because the electricity add to the overall house electricity bill and they omitted to add these costs. Another fake studies published by the climate gang.

      1. Mark.ca says:

        The study is bogus for using false maintenance costs for ev. Other than that, you seem lost and overly medicated. Needed solar panels?! Needed L2 charger?! Many like myself added panels to cover household consumption and filling up an ev is just icing on the cake….but then a blind troll such as yourself will never be able to see that!

  15. SteveSeattle says:

    I’ve had my Volt for nearly 4 years and my maintenance costs have been zero. Will need 2nd oil change soon, but that shouldn’t be too expensive.

  16. hpver says:

    The lease on our Spark EV was basically free after state and local rebates. That’s three years of driving for the cost of insurance, registration and electricity. Nowhere near $8K per year.

    Our Bolt EV cost us a little over $22K out the door after all discounts, rebates and incentives. We plan to drive it for at least eight years, probably 10. Maintenance should be minimal of course. Total cost will be nowhere near what AAA says.

    We have good local rebates, but even without those the AAA numbers are way higher than what most people will actually experience.

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