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Electric Cars Are Suddenly Becoming Affordable
(www.nytimes.com)
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this post was submitted on 03 Jun 2024
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There is currently a bizarre anomaly in the market due to several massive rental car companies dumping their rolling stock. The tech isn't yet there and there are a lot of interesting issues with depreciation.
What about electric car technology "isn't yet there?"
My main two concerns are battery replacement (and affordability of replacements including a third party market for compatible parts) and battery restoration/recovery. Alternatively, if we could massively increase battery life span (not a single charge - but how many charge/discharge cycles they can survive) that might also allay my fears - but I think the first one is better.
You want 'resilience'.
Added to my lexicon!
Why do you think the cyclic life of current or 10 year old batteries is not already good enough? Do you know how often they fail? How much they degrade after 10 years?
The US DoE puts EV battery half-life at 8-12 years for most current vehicles. That's insanely short compared to ICE.
Do you have the link for that? Many old Model S' are still getting well over 50% of their range; closer to 85-90%. The only way I could see that being is if a large portion of the batteries in the sample were Nissan Leafs which were air cooled and degraded horribly in extreme heat or extreme cold.
Yeah, I can't do that. As little as I drive, they would last longer, but still. I'll be retired or close enough in 12-years, won't be able to afford a fresh battery. My ICE convertible and truck are 02 and 04 models and run fine.
Knowing there's a hard limit on usage, with a wildly expensive repair at the end, that's tough to swallow. I can keep my 04 F150 running forever. (For certain values of forever.)
It's not a hard limit, it's a variable capacity reduction over a decade that estimates a maximum 50% reduction in range, similar to the lost efficiency of an ICE engine as the tubes , pipes and cases erode.
You add in the far lower fuel/repair/ maintenance costs and that optional new battery is costing you less than you're paying in gasoline, oil changes or other basic and common maintenance.
I drove Camry for 15 years with minimal repairs and after 180k miles I was still getting roughly the same mpg and range as when it was new. It was still going fine when I got rid of it becuae our vehicle needs changed, but even if it hadn't a complete engine rebuild at 300k (if needed) would only be a few thousand dollars or less.
Working down to half the range over a decade and then needing a very expensive repalacement battery is not comparable in any way. I really hope the battery tech keeps improving.
It's comparable in that optional battery maintenance is currently the same price as the average cost of repairs you made on your Camry plus the cost of gas for a decade.
Even if battery tech weren't simultaneously improving and getting cheaper every couple of months, ev costs are already at least comparable with ICEs.
As battery tech improves and efficiency rises, the price is going to keep getting cheaper.
I wasn't talking about cost, I was talking about the ability to travel a comparable range on a charge. Does battery maintenance keep it at 95% of the original range at 15 years?
Less maintenance and cheaper charging is actually a selling point for electric cars, and I am not disagreeing with that. But a used 15 year old car that has a far lower range than new and will most likely need a new expensive battery replacment within a few years is not the same as a 15 year old car that performs like new and won't need a massive repair in the near future.
No more than ICEs stay at 95% of the original range at 15 years.
Your argument is based on accepting a hypothetical best case scenario for a random ICE to the worst case scenario for a random EV.
"A used 15-year-old ICE car with a cracked head gasket isn't the same compared to an electric car that's managed to retain near its full capacity".
No, of course it isn't.
EVs are already cheaper over time, are already comparable at MSRP, and their range and efficiency isn't static like ICE cars.
Range anxiety is real, but it boils down to anxiety; range is still there and only improving.
Shoot, the aptera is going to recharge passively from solar 40 miles a day, and they have thousand mile ranges on a charge.
In fuel costs alone, an EV owner is saving about $1,000 a year.
After a decade, you can get that extra 20% capacity back with a new battery for cheaper than you would have been spending on your ICE car that cannot be refurbished in the same way.
Just adds up.
Based on my last two cars apparently being hypothetical best case scenarios, sure.
I look forward to electric cars range continuing to improve, but as long as I live somewhere that range actually matters half of the year I'll take the current ranges as they work in reality into consideration.
Naturally.
Most people appreciate innovation after it becomes common rather than when it becomes practical.
If your 15-year-old cars have the same MPG and have never needed a repair, yes, your cars are performing to a degree that has never been recorded.
I’ve got 112k miles on my Tesla and still get over 250miles on a full charge, and that’s not running it to empty… just as far as I push it on a road trip. I could probably make it 275-285 easy. Never had a problem with range and have had minimal maintenance costs compared to all of the ICE vehicles I drove over 20years I drove ‘em.
Congratulations!
Thanks! It’s been great since I left the ICE world. I can only hope to help others take the leap!
How long should a battery last compared to an ice engine… and how much should it cost to replace? If you actually look into the statistics, battery packs (at least on Teslas) last longer than ICE motors by a factor of 2 to 5. And their replacement costs are currently around 2x, but will come down over time. Regardless, I’d never replace a battery pack, just like I’d never replace an ICE motor.
If you run the numbers down to a per mile cost, EVs… especially Teslas… outlast and are significantly cheaper to operate than any ICE vehicle on the market. There is a huge amount of disinformation out there around EVs.
That’s not to say everyone can afford to spend the money (or get the loan) to go electric up front… but if you can manage it, it will pay off in the long run. I’ll never buy another ICE vehicle as long as I live. It‘d feel like I’m flushing money down the toilet.
I’ve always driven gasoline vehicles until repairs are more expensive than replacement, which has meant 10-15 years. At that point they’re worth almost nothing, which also means I don’t need to get too worked up about getting a good deal.
Average battery life span used to be shorter due to early leaf’s not having active cooling
I hope EVs are similar, and read stories online about Tesla batteries lasting 12-15 years. Assuming that pans out, EVs are already no different from gasoline vehicles.
I’ll let you know in 15 years
So tired of hearing about battery replacement as if having a $10,000 thing that breaks in your car after 10 years is somehow unique to EVs. Ask Chrysler owners how many transmissions they've put in their car, or Subaru owners how many engines they've put in theirs. I bet the average battery pack is lasting far longer than either of those.
What issues with depreciation? Can you list actual models and prices to back your claim because it seems like most people are bitching about the high prices of EVs.
I'm a BEV advocate, but even this is an easy one. In 2022 a Tesla Model 3 LR cost $52k while you can get the exact same car new today for $47k. This is even just MSRP. That $47k car is even $7500 cheaper for most people.
Tesla Model Y LR from the same year, 2022, is even more dramatic. It was $67k and now costs $49k.
I don't really see this as a bad thing if we want people with lower incomes to get off ICE cars, although I can see how people who paid those prices would be annoyed. Expecting cars to hold their value or depreciate slowly seems overly optimistic in general, as they are inherently depreciating assets and should never be seen as investments.
That's not depreciation that's just a response to the highest interest rates we've seen in 20+ years and dwindling sales numbers.
This is no different than the monthly sales we used to see on every car prior to COVID but this was somewhat obscured by the nature of the dealership model and having to haggle on the actual price of the car.
Of course its depreciation. Its the very definition of depreciation. An asset was worth more at a point in the past than it is today. The reason for the value loss is irrelevant.
The definition of depreciation is:
The MSRP going down isn't depreciation as you're referring to a brand new item that you haven't even purchased and hasn't been used.
Prices shot way up during COVID and now they're coming back to reality in response to higher interest rates and slowing sales across the entire automotive market, not just with EVs. Housing prices have come down too but again that doesn't mean depreciation, it's just a response to interest rates being 2-3x higher than they were just a couple of years ago and sale prices adjusting accordingly (you're still paying more overall with interest).
The context here is that "people are concerned about depreciation," but why would people be concerned that they're able to buy these cars new at a slightly cheaper price to begin with? Most people prefer to pay as little as possible for things, which is the whole point of companies having a sale on their products.
Look at the first half of that sentence. Thats the same idea I posted with my definition:
" Its the very definition of depreciation. An asset was worth more at a point in the past than it is today."
You're getting hung up on the "wear and tear" thing because that's a regular way that cars lose value over time, but its not the only way. A Picasso painting continues to slowly deteriorate over time but its value continues to go up because there is a market for people wanting his paintings. This would be an "appreciated asset" even though it still gets wear and tear.
Because many people buy cars with the expectation of only owning them for a couple of years and then selling them for something newer. If the value of their EV dropped by 50% in two years of ownership instead of dropping perhaps 20% of specific ICE cars, the they would be concerned about the depreciation. Even people that don't sell so quickly want an asset that retains its value in case it gets totaled (and they need to buy a new replacement) or in case they need to sell it for emergency liquidity.
Okay assuming we do go with your definition, the 2019 Model 3 LR was $36,000, meaning they've appreciated by $11,000 over the last 5 years. Once again this disproves your point.
The 2022 numbers you picked were the absolute peak of COVID era pricing, but they're still selling for more than they used to, meaning they aren't depreciating at all.
I'm not sure where you're getting $36k for the price of a 2019 Model 3 LR (in 2019). This link seems to show it at $43k, but the real price is irrelevant to your point, so I'll agree with your $36k for this discussion.
If you can find someone that will give you $47k for your 2019 Model 3 LR, then yes. The market value of an asset isn't determined by guidebooks, but by what someone will give you for it if you're selling it, or what you have to pay for it to buy it for yourself.
I have a 2022 Model 3 LR. I have zero faith that today anyone would give me what I paid for it even if it had zero miles on it. Why would they when they could buy the 2024 for less money? What I paid for my car is irrelevant to what it will sell for today.
If you're looking at whether your asset appreciated or depreciated, there are only two numbers that matter:
If someone will pay you more than you paid, that asset appreciated. If the best you can do is someone paying less than you paid for it, that asset depreciated. That's the literal definition of appreciation and depreciation.
Dude, you're all over the place. You're now comparing used car prices to new car prices when previously you were comparing new car prices from prior years to new car prices from today.
If I go out and buy a 2024 Model 3 LR for $47k, how much depreciation have I incurred? Previously you said it's at least a few thousand dollars because they cost more in 2022, but now you're saying it only matters what today's purchase price is compared to what I could sell it for used. You can't have it both ways.
I am all over the place because I'm trying to show you what matters is where you come from what you paid for it versus how much you can sell that item right now to determine if its appreciating or depreciating.
Slightly more than $7500, as that is the amount of the tax credit. Any buyer that is in the market for a 2024 Model 3 LR has the choice to buy it directly from Tesla for the $47k with all of the trust and benefits (possibly preferential pricing on financing). So you'll likely have to discount yours by a couple thousand for someone to take the risk you didn't do something to the car in the short time you've owned it.
So my estimated final answer to your scenario is: Your 2024 Model 3 LR is now worth 37,500.
I'm not seeing where I said that. Can you link/quote my words where you're seeing that?
Okay I see, you're getting stuck on a minor point for this part.
In economics there's a concept call substitution. Lets say you have THE ONLY Model 3 LR ever made. Lets also assume the tax credit never existed because that just makes this even more complicated (and doesn't change the outcome). If someone wants a Model 3 LR they have no choice but to buy it from you. If they only wanted a Model 3 LR, and no other car would suit them, then there would be zero substitution options open to them. They'd have to pay you what you're asking regardless of how high or low that price was.
However with Tesla Model 3 LR there are lots of options for substitution. If they simply wanted a Tesla, and you had the only Tesla Model 3 LR ever made, they would laugh at you if you asked for the $52k you paid in 2022. They would happily buy a 2024 Model Y for less money directly from Tesla. So worse for you in this scenario, you don't have the only Tesla Model 3 LR ever made, so if your theoretical buyer wanted a Tesla Model 3 LR, they could put your 2022 (assuming yours had zero miles) where you're wanting to get your full $52k back next to a 2024 which only costs $47k from Tesla.
The buyer will probably choose the 2024 for $5k less than your 2022. They see no value in paying an extra $5k for your 2022 because they are substituting a 2024 instead. So how much would you have to discount your 2022 before the buyer will buy yours over the 2024? $5k? No. That puts your 2022 and Tesla's 2024 at the exact same price. So you'll have to go even lower because the buyer can get, as an example, the Highline refresh on the 2024 which the 2022 hasn't. So you'd probably need to knock another couple thousand off at least to make your 2022 be priced at $45k to be below the 2024 at $47k.
Since you paid $52k for the Model 3 in 2022, and you've now sold it for $45k, you had depreciation of of $7k. Again this scenario excludes all tax credit because it just complicates the explanation and doesn't change the outcome that the 2022 has deprecated.
What? I'm talking about buying it from Tesla. You pay them $47k and then at the end of the year receive a $7500 credit making your purchase price $39,500. I'm not referring to buying a used car at a new car's price.
Right here in your initial comment:
What does this have to do with depreciation on EVs versus depreciation on any other vehicle? 1 of 1 cars are so rare that they're completely irrelevant when talking about the other 250 million cars on the road in the US. Again, you're comparing the MSRP of the 2022 model year versus the MSRP of the 2024 model year to claim depreciation while also ignoring my point above about the 2019 model year being much cheaper than both. While it is true that someone who paid more for the same car isn't going to get as much out of it on the used market, this is in no way unique to Tesla, EVs, or any car on the market.
The whole basis of this argument was someone claiming that EVs suffer from 'extra' depreciation and I was simply asking for some real numbers to back that claim up. All of your number mirror that of any other car on the road because a car with wear and tear on it isn't as valuable as one without (the very definition I quoted above).
You have to refer to the possible selling price of your, now used 2024, used car. Thats how you determine how much depreciation has occurred.
I explained all of that in the post. Where is your question?
Not extra, but 'disproportionately large' depreciation across the board for BEVs. Sure there are many ICE cars depreciate just as quickly or even worse, but not all ICE cars. Thats the point that poster was making.
And you got them.
You're still hung up on the less than prevalent "wear and tear" after we've been over that. You're missing the forest for the trees.
I give up. Take a basic Accounting 101 course and post back here with the results of your argument with your professor about how appreciation and depreciation are calculated.
Good luck!
Depreciation is a concern. If you buy something while the technology is improving, the resale value is going to tank as the technology matures. What you have to look at is what the cost is per mile you drive, minus the cost you can sell it for. But, fast-forward another 5-10 years and consider what an ICE vehicle will sell for on the used market. When EVs reach maturity, you won’t be able to give an ICE vehicle away without paying to dispose of it. We aren’t there yet, by a long shot, but it’s coming.
Just make sure you time it right.
Why is depreciation an issue? Don't you want a cheap car?