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This is a better analysis than most. Most analyses by Consumer Reports etc try to compare 5 year costs. But when you try and do that, your answer becomes dom
by bryanlarsen 2y ago
This is a better analysis than most.
Most analyses by Consumer Reports etc try to compare 5 year costs. But when you try and do that, your answer becomes dominated by the trade-in value of a 5 year old EV vs a 5 year old ICE. That's a really hard, highly political task.
Lifetime cost eliminates that and gets down to true costs.
The 5 year value of the car shouldn't be in the calculations IMO. It has no impact on lifetime costs -- since it's subtracted from the costs of the original owner and added to the costs of the second zero, netting to 0.
Also, people buying 5 year old cars tend to be more cost sensitive than those buying new cars. The value of a used car is primarily in the cost savings, so as consumers become more familiar with the costs & benefits of EV's, the trade in value should converge on a price which makes lifetime cost analysis and 5 year cost tradeoff analysis give similar answers.
- frumper 2y agoNowadays, people probably haven't paid off their car in 5 years either. Average new car loan is 68 month term. https://tucson.com/news/nation-world/business/personal-finance/average-length-of-a-car-loan-nears-70-months/collection_fe4ce6aa-dd6d-5b41-a88e-41144d112527.html#1 https://tucson.com/news/nation-world/business/personal-finan...
- bryanlarsen 2y agoAnecdotally, many people start considering trading in their cars once their loan is no longer underwater, not after it's paid off. Myself, I'm hoping to enjoy not having car payments as long as I can...
- spicybbq 2y agoYes, the used EV market is still young. The oldest Model Ys are from 2020, and Model 3s go back to 2017. Consumers do not have much experience with used EVs, so they are cautious and prices are low. As time goes by, if older EVs prove to be reliable, used prices will go up. There is already evidence that battery replacement is rare: https://www.motortrend.com/features/ev-battery-lifespan-degradation-replacement-cost-study/ https://www.motortrend.com/features/ev-battery-lifespan-degr...
- Marsymars 2y ago> As time goes by, if older EVs prove to be reliable, used prices will go up. I’m not sure they will - if there remains a cohort of people who keep buying a new car every x years regardless of the mechanical reliability of their old car, and there aren’t many old cars getting taken off the roads (because they’re highly reliable), it’s plausible that the value of old cars gets pushed down from the oversupply.
- bryanlarsen 2y agoIt could be that the price of used cars goes down due to oversupply, but the price of used EV's relative to the price of used ICE vehicles goes up. I'm fairly confident the price of used cars is going to go down. Who's going to buy a 5 year old Camry for $20k if the price of a brand new equivalent EV is $20K?
- Marsymars 2y ago> It could be that the price of used cars goes down due to oversupply, but the price of used EV's relative to the price of used ICE vehicles goes up. Maybe? I think the best driver of that would be regulation that internalizes the externalities of gas cars, but that doesn't seem to be workable politically. > Who's going to buy a 5 year old Camry for $20k if the price of a brand new equivalent EV is $20K? That's a bit of a funny example, because a lot of the value in a $20k used Camry is in the fact that it says "Toyota Camry"... so really, the only "equivalent" EV for $20k is going to be a $20k mid-size Toyota EV. I think we desperately need cheaper EVs, but I don't see a short-to-mid-term reality where Toyota starts selling an EV Camry for 30% less than the current hybrid Camry MSRP. For used pricing to come down, EV vs ICE is nearly irrelevant - we just need cheaper new cars of whatever people are buying, and I don't see anything especially promising to bring down the cost of new cars.