Driving an electric vehicle helps the environment by reducing pollution, but it also saves money. Even at today’s depressed gas prices, the fuel savings from driving an electric car really add up.
There are a variety of ways to look at fuel cost savings. In 2017 the price of gasoline in California has averaged $3.04 per gallon. Let’s start with that.
DOT: U.S. Department of Transportation
EIA: U.S. Energy Information Administration
EPA: Environmental Protection Agency
As the table shows, based on today’s gas prices, we end up with a savings of $17,966 in lifetime fuel costs. That assumes you will always fill up the gas tank at the current price, but is that likely? According to McKinsey, nearly $400 billion dollars of oil project development spending has been deferred since oil prices dropped in mid-2014. If that creates an oil production deficit in 2019 or 2020, all the proud new truck and SUV owners could be in for an unpleasant surprise. Even without a gasoline price spike the U.S. could see higher gas prices soon. We have experienced several years in a row with below average gas prices. This raises the question. What has been the recent average cost of gasoline?Over the last 10 years, 2008 to 2017, the average price of gas in California has been $3.46. Add in the new 12 cent per gallon gasoline tax that goes into effect November 2017, and we can expect even higher gasoline average prices of $3.58. At that price, using the same assumptions from the table above, you end up with electric vehicle fuel savings of $23,323 over the life of the car.
The EV fuel savings pays for the electric vehicle
Whether you decide to believe the $17,966 or the $23,323 lifetime fuel savings number, you still end up with fuel saving alone paying for your vehicle. According to Truecar, customers in California have been purchasing the 2017 Nissan Leaf for $27,586.
After subtracting the incentive savings off the price ($7,500 Fed tax credit and $2,500 CA state rebate) people have only been paying $17,586 for their new electric vehicles, just below the lifetime fuel savings.
A table for pessimists and optimists
All of this is great, but what happens if the price of gasoline goes up… or down… or sideways? There is a table for that too.
For every fifty cent increase in the price of gas, the money saved by driving electric increases by $4,960. Breaking even on fuel costs means buying gasoline for just under $1.00 per gallon or the approximate equivalent to just the taxes and fees. When adjusting for inflation, $1.00 per gallon is 32% lower than gas prices have ever been. At the other end of the spectrum, gas at $5.00/gallon equals $40,078 in lifetime fuel saving. It is safe to say that if we ever see gasoline that expensive, car companies will not be able to make electric vehicles fast enough.
An individual who buys a new electric vehicle will usually end up making back their investment through fuel savings, but a guaranteed way to make back one’s investment is through buying a used EV with just a few thousand miles on the odometer. Even though the Fiat 500e is the fastest selling used car, people can still get great prices on them. Blue Book value on a 2014 Fiat 500e with 30,000 miles is less than $8,000. Lifetime fuel savings would pay for that vehicle twice.
Over the last 10 years. We have seen the California average annual gas price fluctuate from a high of $4.08 to a low of $2.73. It is impossible to say what the price of gas will be next week much less 5 years from now. We do know that even though gas prices are below the 10 year average, fueling vehicles with electricity provides significant savings. Better yet, none of this analysis takes into account the superior savings available through rooftop solar. That’s most likely the reason 48% of EV owners in California either have or plan to install rooftop solar. Cleaner cars, using cleaner power for lower costs, it’s time to make the switch to electric.