Leasing or buying an electric car could be cheaper over the long term than owning a gasoline vehicle, depending on where in Canada someone lives and how much they drive.baona/iStockPhoto / Getty Images
With the surge in electric cars on the market in recent years, more people are considering making the switch. But electrics are expensive – and it’s still not clear if drivers will recoup the high purchase price from the savings they’ll get by switching to electricity from gasoline.
Then there’s the question of the battery. Many are under warranty for about eight years, and will need replacing at some point after that. Battery costs range from $5,000 to $20,000 – the price of a brand new, low-end gas car.
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But, depending on where in Canada someone lives and how much they drive, leasing or buying an electric car can be cheaper over the long term than owning a gasoline vehicle, says Josipa Petrunic, president and chief executive officer of the Canadian Urban Transit Research and Innovation Consortium, which facilitates collaboration on electric-vehicle research.
The more a person spends on gas, the more they save by using electricity instead; and those living in provinces with cheaper electricity, such as British Columbia, Manitoba or Quebec, stand to save even more.
“The battery’s the big thing,” says Dr. Petrunic, who lives in Toronto. “Your battery will degrade over time and you’re stuck with that asset that’s degraded. … That battery replacement will kill your savings.”
That’s one reason Dr. Petrunic leases an electric car. She made a $7,500 down payment on her Tesla Model 3, and has a four-year lease, during which she pays $550 a month. That adds up to about $34,000 for the vehicle.
She says the average driver in Ontario, who commutes to work regularly and charges their car once a week, could spend $390 to $480 a year on electricity if charging the car during the day at mid-peak rates but only about $78 to $84 a year if they charge their car overnight, when electricity is much cheaper.
Her lease gets her a Tesla TSLA-Q without the $50,000 price tag to own one, includes regular maintenance, and avoids the purchase of a new battery – and while she did have to pay to install a charger at her condo, she can use it for successive vehicles.
She says a Lexus could be considered a comparable car to a Tesla – and those cost about $50,000 at the low end. But even a more mid-range gasoline vehicle, such as a Toyota RAV4, is still at least $32,000 to buy. She says the average driver spends between $3,000 and $5,000 a year on gas, adding up to at least $12,000 over four years.
Dr. Petrunic says that makes a clear case for the leased Tesla – not to mention a less expensive, leased electric vehicle.
“On the electric-vehicle market, I would never own a car myself,” she says, noting car share and public transit, where they are available, are still far more affordable – and environmentally beneficial – than owning a car.
There’s no guarantee of how long an EV battery will last. The majority of those in a recent study were driven more than 160,000 kilometres and still had at least 90 per cent of their original range left. That said, the study’s author cautioned that individual vehicles vary and the data continue to evolve.
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Moataz Mohamed, an associate professor of civil engineering at Hamilton’s McMaster University, has written several papers about electric vehicles. He says it’s not clear that owning such a vehicle is currently cheaper than a gasoline car, particularly given that many used gas cars retain significant resale value without the added investment of a major part such as a battery.
He recommends that people waffling between a gas car or EV try comparing them using the U.S. Department of Energy’s vehicle cost calculator tool, which he says is one of the most scientifically rigorous available.
He also notes that vehicle battery ranges are modelled based on what, in most parts of Canada, are spring-like temperatures. Drivers in places that get warmer than 25 C and colder than minus 5 C – which covers most of Canada in summer and winter – often find they are charging their batteries more frequently, and thus using more electricity, than they expected.
That’s because “[air conditioning] will consume a lot of energy,” Dr. Mohamed says. “In cold weather, in order for the battery to perform, it must heat itself.”
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London, Ont., resident Eva Henning, 67, needed a new car recently after her 22-year-old Toyota Camry finally died. After weighing her options, she went with a gasoline-powered Mazda CX-5.
She went with gas because she worried about finding charging stations along the way to Toronto, where she travels often. She was concerned also about the resale value, how long it would take to charge, and how the battery would perform in the cold.
“In the big picture, we’re not sold on everyone going to electric cars,” she said. “It’s such a complex combination of factors that it’s not just price.”
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