Expensive electric car purchase

Munich, 23 June 2020

As an experienced expert in the field of intelligent charging and energy solutions, The Mobility House has set itself the goal of taking a closer look at widespread fairy tales surrounding e-mobility and questioning them. Fairy tale number five takes a closer look at the costs of purchasing electric vehicles. 

An overview of all fairy tales can be found here.

Once upon a time…electric cars were expensive!

Due to the higher purchase prices, many suspect a general cost disadvantage of electric cars. However, when taking the latest Corona economic stimulus package of the German Federal Government into account, which among other things also provides for a higher environmental bonus, it becomes obvious that this is no longer the case. Especially when considering the total costs over a longer period of use, the electric car is ahead of the pack: according to a study by the Forum for Ecological-Social Market Economy (FÖS), the cost advantage of electric cars averages around twelve percent, mainly because of the significantly lower operating and car workshop costs as well as tax advantages. The basis for the calculations was the subsidy of purely electric cars with 6000 euros from 2020 onwards if they cost less than 40,000 euros net. Taking the recently increased environmental bonus into account, the cost advantage is even greater.


Lower purchase price thanks to innovation premium

The subsidy for the purchase of an electric car, the so-called environmental bonus, will increase from 6000 to 9000 euros until the end of December 2021. The new subsidy rates can also be applied retroactively for vehicles registered after 3 June 2020. However, the bonus, which is listed in the economic stimulus package as an "innovation premium", is only available for electric cars that cost less than 40,000 euros net. In the segment of small cars, internal combustion models sometimes cost only a good half of a comparable electric car. Now the prices are converging, for some e-cars such as the Smart ED or the VW e-Up they are dropping to a good 12,000 euros. Popular electric cars in the 30,000 euro price range, such as Opel Corsa-e, Peugeot e-208, Renault Zoe or the VW ID.3, are available for as little as 20,000 euros thanks to the innovation premium – and are thus on the same level as combustion engines with similar equipment and performance.

A study by the German automobile association ADAC also found cost advantages of electric cars compared to combustion engines in several vehicle comparisons over several years of use. For example for the BMW i3, the VW e-Golf, the Mercedes EQC, the Teslas Model 3, S and X and the Porsche Taycan – even without taking the higher subsidies into account.

Batteries will become cheaper

The higher purchase prices of electric cars stem from the relatively high cost of the battery, which currently accounts for about 30 to 35 percent of the total cost. The electric powertrain, on the other hand, is significantly cheaper than the conventional powertrain. Since the prices of batteries are constantly falling, experts expect that in a few years the purchase prices of electric cars and internal combustion engines will converge even without purchase price subsidies. According to Bloomberg, this could already be the case in 2022. The cost advantage of electric cars will then even increase. 

Reduced maintenance and repair costs

Due to their design, electric cars also have the advantage that they have fewer parts that could break down or must be replaced at certain intervals. Time-consuming oil changes, the replacement of wear parts such as the exhaust, glow plugs and clutch as well as air and fuel filters are no longer necessary in electric cars. The brakes are also less strained and need to be replaced less frequently, since electric cars decelerate considerably when recuperating via their engine in order to recover energy for the battery. This also saves money for rim cleaning supplies.

All in all, the maintenance and repair costs for electric cars are a good third less than those of a comparable vehicle with a combustion engine, as the Institute for Automotive Economics (IFA) calculated several years ago. According to the experts, after eight years there is a cost advantage for electric cars of around 1300 euros even for a small vehicle. Other advantages such as free parking, loading and parking spaces in the first row, the use of bus lanes or a higher speed limit, as is permitted on some Austrian motorways, are also an added bonus.