EV Ownership Costs – There are many reasons people consider switching to electric vehicles. Some want to save money, some like the idea of driving something quieter and more efficient, and some – if we’re being honest – just want the prestige of pulling up in a sleek, futuristic new ride.
Whilst the concept may still feel a little ‘space age’, EV driving is actually becoming surprisingly commonplace across Australia. Charging points are popping up in supermarket car parks, along main roads, and even outside your local gym. Everywhere you look across metro and regional areas, one thing is clear: Australia’s EV-centric future is essentially already here. So what’s holding you back, if you’re one of the Aussie drivers that’s still yet to make their green shift?
While there are definitely some more affordable electric vehicle models available on the market today, purchase prices and insurance costs for EVs continue to be barriers for drivers looking to trade their internal combustion engine vehicle for a cleaner, greener model. If you’re serious about making the switch yourself, however, the best approach is to look at how to budget for ownership as a whole – not just the purchase price.
Here are a few considerations to keep in mind when budgeting for the overall realistic costs of your switch to EV driving.
Stay Spend-Savvy with Insurance Costs
Insurance costs can skew higher for EVs when compared to combustion engine vehicles for a few key reasons. For starters, most EVs are still relatively new with higher resale value compared to older combustion engine vehicles. This means that EV drivers are more likely to take on comprehensive car insurance over lower-coverage third party policies.
Some insurers also offer EV-specific benefits, such as cover for charging cables or access to approved repairers. These are the kinds of details that don’t seem important until you actually need them, and then they make a noticeable difference.
When it comes to calculating insurance premiums, electric vehicles are also typically more expensive to insure due to specialised parts and repair processes. For instance, lithium battery replacements can be expensive, so insurance providers factor in these estimated costs when establishing premiums for EV insurance.
The good news is that consumers can shop around for EV insurance policies to find cover that best aligns with their budget and cover requirements. A little due diligence here can help you save potentially hundreds on your EV insurance, allowing for a more cost-effective green switch.
Build a Cost-Effective Charging Routine
Charging is where you have the most control over your day-to-day costs for EV ownership. If you can charge at home, especially during off-peak hours, you’ll keep your daily expenses largely predictable (and relatively low).
Where EV drivers run into issues here is relying too heavily on public fast chargers. These are definitely useful resources in a pinch, but they’re also more expensive to use comparative to home charging. Building a routine around home charging, with occasional top-ups when needed, is a far more budget-friendly approach.
Yes, you’ll need to factor in the upfront costs of installing an EV charger in your home. But with so many options available on the market now, even just a quick shop around across dealerships and electrical service providers can help you snag a competitive quote.
Pro tip: if you do need to use public charging stations, taking advantage of EV charging apps can help you locate cheaper or more convenient charging points while on the go.
Account for EV Maintenance
EVs are lower maintenance, not no maintenance. You won’t be dealing with oil changes or exhaust systems, but tyres, brakes and general servicing still exist. In fact, because EVs tend to be heavier and deliver instant torque, tyres for electric vehicles can actually wear out faster when compared to combustion engine vehicle models.
Battery health is another major cost consideration for EV owners. If your lithium battery needs to be replaced, you can expect costs to range from anywhere between $3000 – $22000, depending on the vehicle make, battery size, and the installation and repair requirements. If your EV is out of warranty, you may be footing the entire cost of lithium battery replacement yourself. And yes, your EV insurance may be able to cover some or even all of these costs, but remember that you’ll still need to budget for the value of your policy excess.
Thankfully, there are plenty of resources available from EV manufacturers and even third-party auto reviewers today that aid in outlining estimated maintenance costs for some of the most popular EVs in the Australian auto market. Familiarising yourself with the maintenance cost estimates can help you secure an EV that truly aligns with your personal budget over the long term.
Finetune your EV Buying Strategy
Like all personal vehicles, EVs are an investment in their own right. Some EV owners may be looking to buy based on resale value so they can upgrade to a new vehicle regularly, whereas others may be looking to buy a car they can drive for years before selling.
Either of these options can make good fiscal sense, so it ultimately depends on what your preferences are as a vehicle owner. Buying to sell can offer some convenience in that you can always rest assured your EV maintains warranty coverage, and that maintenance costs are better positioned to stay low. But given that the depreciation rate for EVs effectively rivals combustion engine vehicles, buying to sell can also hurt your hip pocket with every vehicle upgrade.
If you are keen to keep on driving the most up-to-date EV every year, then maybe purchasing outright isn’t the go: maybe buying with an EV car finance plan is a better fit. Thankfully, virtually all Australian dealerships as well as banks and even non-bank lenders are now offering special rates on EV-specific loans. Depending on your state or territory, you may even be eligible for government rebates on your EV purchase plan.
In any case, it’s definitely worth doing some research to outline the purchasing options available to you, and to gauge depreciation estimates for the EVs on your shortlist.
Purchase your First EV with Confidence
Switching to an EV is a major shift to say the very least, but it doesn’t need to be overly demanding. Building a firm understanding of your budgetary constraints, lifestyle requirements, and your investment strategy (i.e. buy to sell vs. buy to keep), can help you better ensure that purchasing your first EV delivers no unexpected costs, whether it be at your local public fast charger or with your insurance provider.
So once you’re ready to buy, be sure to keep the considerations we’ve outlined above firmly in mind. With a spend-savvy buyer strategy in hand, you can make sure your EV shift stays sustainable on all fronts.