Should you buy an electric car?

Should you buy an electric car? This was a very good suggestion from a reader to review. An honestly, I am pretty interested in that question too. Time to find out!

Should you buy an electric car?

Actually the answer to this question, in most cases, is no. Why? Because in countries like the Netherlands, with its good public transport and cycling facilities, you don’t really need a car. Heck, it’s better for your wallet, the planet and your health if you don’t get a car at all! Not even an electrical one.

Should you buy an electric car? Coolest one ever, period.
Should you buy an electric car? Coolest one ever, period.

But I realize that in certain situations it is very convenient to have a car. No one likes to ride a bicycle in the rain and/or during strong winds. Not everyone wants to make the time to cycle longer distances (on say a speed pedelec; love the Stromer ones!). Sometimes you have several people that need to get somewhere, preferably at the same time :-). Or, distances are getting too far and/or public transport does not get you there efficiently. So whatever excuse you have, let’s see if you should buy an electric car, shall we?!

Electric Car Options & Costs

What electric car options do we have in this cheesy country? The ANWB (Dutch Car Association) made a great list, which I summarized here below into a table and a graph (range vs price). I’ve also included the test results from the ANWB based on 4 years operating @ 10.000km/year, which includes the depreciation (done in 2017). Suddenly our Prius does not look that bad!

Should you buy an electric car? The Data Overview
Should you buy an electric car? The Data Overview
Should you buy an electric car? The Data Plot
Should you buy an electric car? The Data Plot (Range vs Price)

Couple of notes:

  • This list does not include all electric cars (or models) available. But it does appear to give a good overview of ranges and prices.
  • The price of the Model 3 Tesla was based on this post. It was not available on the ANWB site. Not all model options will be available here in the Netherlands either!
  • Yes, for a relatively “small” extra charge you can get a larger range. Which for most models will drop the overall Euro/km range ratio. Problem is I don’t have all the data and didn’t want to invest the time. Plus, the already “expensive” prices will get even worse! But if you want to do the research & math, please do let me know the results 🙂
  • I ignored all battery rental options, what way the cars can be charged and how fast. Just to keep things simple.

Which one to buy?

Looking at the graph and the table, you get the best bang for your buck (Euro) with the Renault Zoe. This one has the cheapest purchase price per km range, and you have quite some range too with about 300km. The Hyundai’s are also appealing considering the purchase price per km range, as is the Ampera.

Based on the total operating cost for 4 years @ 10.000km per year , you better get the Citroen C-Zero. But this actually a bad example calculation as you only keep the car for 4 years. For the noted prices you can private lease a car for less money (including fuel)! Not as environmentally friendly perhaps, but better for your wallet for sure!

Despite being expensive, the Model 3 is actually reasonably well priced if you look at range for your Euro. I can certainly see the appeal here. I know petrol powered cars that have similar ranges! But boy, almost €59.000! That’s more than two years of net (after taxes) mean wages here in the Netherlands, ouch. Not really an electric car “for the people” just yet 😉

Case Study: Renault Zoe

Ok, so let’s assume we go for the Renault Zoe. No rental battery either, full on purchase of the car. Let’s assume the car lasts 15 years and you drive 12.000km per year (180.000 total). The battery survives this long too without needing replacement (albeit your range certainly will suffer!). We also assume 3 new set of tires. Fuel costs are €0.205/kWh for green electricity and usage of 0.105kWh/km. No road tax and only mandatory insurance (with max no-claim discount). Maintenance is assumed to be about 1/2 of a regular petrol car. No inflation included!

This get’s us te the following:

  • €32.890 purchase costs
  • €3.000 residual value
  • €3.875 “fuel”
  • €600 in tires
  • €2.500 in maintenance
  • €3.600 in insurance (average rate of €20/month)
  • Grand total: €40.465 = €0.225/km

This best compares to the Renault Twingo in terms of size and capacity. Let’s assume €1,55/l for fuel. Fuel consumption 4.2l/100km (combined cycle). Two sets of tires (less torque and weight = less wear and tear). Same/similar level of maintenance and insurance. Road tax is calculated at €416/year (951-1050kg car weight – province of South Holland). In that case you get this:

  • €10.990 purchase costs
  • €2.000 residual value
  • €11.718 fuel
  • €400 in tires
  • €5.000 in maintenance
  • €2.160 in insurance (average rate of €12/month)
  • €6.240 road tax (South Holland)
  • Grand total: €34.508 = €0.192/km

Result Review

This does not look good, does it? Looks like electric cars (or at least these ones) are still more expensive for the average consumer! But obviously fuel prices, electricity prices, maintenance and taxes will play a role in the future and could tip it into favour of the electric car. Too bad environmental damage is not able to be calculated into the equation… Would probably be a easier calculation in that case.

That being said, the Guardian wrote a piece about operating costs of electric cars vs their petrol/diesel powered versions. In this case the VW golf. Turns out the original research can be found here and focussed heavily on the taxation part. Taxation, as you can see above, also has a major impact on our case study, albeit I only looked that operational taxation cost in the from of road tax. Turns out that (without maintenance costs, insurance depreciation effects), an electric Golf is indeed cheaper after 4 years, albeit marginally. Still, promising results I would say.

Environmental Impacts

Making a car costs immense amounts of energie. Making electric cars is even worse due to the batteries. That being said, when the electric energie is produced in an environmentally friendly way (solar, wind, tide, etc.) the overall environmental impact seems less than of that of a regular car. How long it takes for this to be true depends on the size of the car and battery. Based on Swedish research, a Nissan leaf (with 30 kWh battery) needs 2,7 years. A Tesla S (with 100 kWh battery) needs about 8 years (based on 12.000km/year driving).

Also this cradle-to-grave research done in the US is quite interesting. It also clearly points to the lower overall emissions of EV’s compared to regular petrol cars. But it’s heavily affected by how the electric energy is produced, obviously. Still, you probably should buy an electric car for this reason!

Should you buy and electric car?
Should you buy and electric car? Not actually a fully electric car, but gosh is it pretty! Saw this beauty in Prague

The good thing is that batteries get better, and it’s not unlikely that they will also need less energie to be made per 1 KWh of capacity. This will ultimately drive down the overall environmental impact of electric cars. That being said, a smaller car will always be better. So don’t buy an Jaguar or Telsa, but focus on the Leaf, Smart, Zoe, I3, Golf of Ioniq (or similar) if you still want to help the planet. Even better, buy and (electric) bicycle and actually use it!

Do you have an electric car? How do you like it? Any feedback?

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20 Comments

  1. Interesting post! As a former electric driver, I would like to point out one assumption, which can effect the operating costs for electric cars.
    You are assuming all kws to be loaded at home, for 20,5 cents.
    But in reality, you also need to load on public chargers, which can greatly increase the price you have to pay. Especially if you need to use the fastchargers, prices can soar. I remember loading for as much as 59 cents per kwh…

    I would really like an electric car, because the ride is brilliant. But for now, I’m waiting for better batteries and lower prices.

    1. There is never one solution! Having some technologies supplement each other might not be such a bad idea. Do you know how efficient the conversion is from electric energy to hydrogen? Curious to see how efficient hydrogen is vs electric cars (in terms of overall energy use).

      1. I just read it’s not very efficient, but it seems our Southern neighbours have develloped a solar panel that generates H2. That would be great to fill your car with homegrown hydrogen… 🙂

      2. That would be cool! Truth is, we need multiple sources of green energy anyways. So if this technically works, and it’s economically working, why not!

  2. the electric cars are still deducted in Holland? because in Belgium a lot of freelancers declared as professional expenses and deducted 120% from taxes.

    1. If you use it as a company car, you get a lower tax burden (adding 4% instead of around 22% of the value of the car to your income taxes). If you use it privately, you don’t pay any road taxes (see also case study example). As far as using it as a business expense, I’m not sure as I don’t know the rules for this (and since it does not affect me, I’m not really interested either).

  3. Too bad you haven’t included car sharing. For many people that probably would be the most economical and ecological option. People that don’t own a care and are looking to buy a car shouldn’t be tempted to buy. The best thing is not buying one.

    It would be best for the environment to focus more on sharing. Cars are a status symbol. Why would you need a huge a** car like a Tesla (or even a Zoe) if you (1 person) only need to get from one place to another to get to work? When you look around in a traffic jam you see mostly 1 person per car. Think of all the (road)space you’d save when vehicles get smaller (max 1-2 person vehicles). There are allready examples of electric “small urban vehicles” like the Renault Twizy, electric Smart Fortwo, concept cars of big car manufacturers and other startups.
    I’d love to see people owning (rather not owning but sharing) a small urban vehicle to get to work and sharing or renting a bigger (electric) vehicle when you need to get somewhere with more people when public transport or cycling/walking isn’t an option.
    More roadspace means more capacity that can be filled up with more people. More capacity leads to more demand (aanbod schept vraag). That is why widening roads only works for a small amount of time before traffic jams start to appear again. Mass adoption of small urban vehicles would result in a huge road capacity compared to the current situation.

    1. It all depends on how long that battery will last! If I would know that, it would be a better comparison. But I could not find much about it. I did find that Renault guarantees the performance of the battery up to 160.000km or 8 years (up to 66% efficiency). That’s why I (arbitrarily) cut it off at 180.000/15 years.

  4. The Model 3 will become more popular once they start shipping the “regular” version to The Netherlands. Currently we only have the more expensive long-range version.
    As a company car the Model 3 isn’t as interesting anymore since they changed the tax on company cars. The 4% “bijtelling” will only be up until 50k, everything above is taxed at 22%. For an average purchase price of 65-70k (yes, you will want to put on some options) the tax is getting close to what a petrol or diesel powered 40k car would cost.

    I would be interested in seeing this analysis based on 4 years and 40,000 per year instead of 10,000. I expect the price per km to drop significantly because there’s more km driven for the same overhead costs, on the other hand, how do batteries cope with such usage and should you reserve a crap ton of money for a battery replacement every 4 years?

    1. Keep in mind that the regular version of the Model 3 has “only” 345km range and won’t be much cheaper due to all the taxes. Not sure if it will sink below the €50k mark as would be useful for company cars. Time will tell indeed how this will work out.
      Good point on the heavier use and performance of the battery. I’ve not looked into this and thus not sure what the effects would be. But if you have to start replacing batteries, it’s not going to be fun, because those will be several thousands! That being said, just find a way to not have to drive 40.000k per year, that’s insane anyways!

    2. I’ve actually calculated the difference between my current Volvo V40 (priced €39.140 in 2015) and a Model 3 long rage priced €68.818 if I configured it the way I want if I drive 20k a year.

      When I buy a Model 3 (as a business car) the total monthly cost is about the same with the 4% and 22% “bijtelling” for the Model 3 and not having to pay wegenbelasting as my Volvo that has 15% until 2020.

      But I left out:
      – Any maintenance costs (the Model 3 needs less maintenance, Volvo costs me about 600 a year in maintenance)
      – Any tax returns I can get (like BTW and investment returns I can get)
      – Any clean investment subsidies I can get (MIA) from the government.

      So actually the Model 3 has more financial benefits for me. So even without taken those in account for the same monthly cost I can drive a car that’s new, electric and way cooler. 😉

      1. I probably will make the calculation including maintenance cost etc. sometime, but it really is hard to guess how much maintenance will be on the Model 3 and as a freelancer it’s also kinda hard to predict how much money I’m gonna make and how much taxes I will have saved in the end. Also I have already convinced myself I need a Tesla haha.

        I already have a test drive planned for April 2nd and also will be discussing any trade-in options with Tesla on that day. So after I get a decent offer from Tesla, I probably want to let my accountant have a look at it, who will argue that waiting another year will probably is the best thing to do (because of cheaper versions etc.) and than I probably will place an order the day after .

        But to get back on topic of this post, as a (one man) business it is still quite interesting to drive an electric car (in The Netherlands), especially when you stay below a 50k price. As a private person, I’m not so sure.

        And yes, not owning a car is always cheaper and will help you reach any saving goals much, much quicker. Luckily I’m in a position where I can afford having a cool car and save a lot of money to reach my FIRE goals.

      2. Lucky indeed! Have fun with the test drive in April. Curious to know how it goes! Perhaps a guest post?! “Should I buy a model 3 Tesla?” 😉
        But I think you are right, privately owning an electric car is still only for a few people and not even sure whether it’s acutally any cheaper in teh long run. Business wise it’s probably not a bad idea!
        Just a thought, why not a youngtimer? A nice BMW 5 or 7 Series, or luxury Merc/Audi? This might even be more financially interesting for your business?! I know a few who do this and they save tons of money.

      3. Is that you actually buying the car as a business, or you leasing the car through your business? Because in the latter case you should also factor in the operational lease price, which for the M3 will be way more than the V40 ;). That’s where I was thrown off. I currently lease an Astra, for a relatively small lease amount and medium taxes. The Tesla M3 would be twice as expensive just in the operation lease…

      4. Its financial lease (So technically it’s buying via a loan, like buying a house). You’re referring to operational lease (like renting a house).

        It’s cheaper to do operational lease if you look at monthly payments, and you don’t have any maintenance cost or insurance cost etc, but after a period of 60 months you’ve payed a lot, and still the car isn’t yours.

        I like the concept of owning something in the end 😉

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