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In Part II of our discussion about electric cars we take a look at charging, the cost of electricity, and the price of EVs.
In Part 1 of this story, we dealt with some of the questions people have about electric cars. But there are many others on the list, so let’s get started.
Q. Does my electric company offer “incentives” via dynamic pricing that make it more affordable to charge during the night vs. during the day?
A. Some do. Some don’t. There are hundreds of utility companies all across America and each one has its own pricing structure. Many do offer what is called “time of use” rate structures that charge more for electricity when demand is high and less when demand is low. In general, rates between 10:00 pm and 6:00 am tend be the lowest.
Q. Do any EVs have a “smart sensor” that align with my electricity provider to charge at the most beneficial time periods in a 24-hour cycle?
A. The general answer is no, they do not. But most EV owners have an EVSE device, which stands for electric vehicle supply equipment, more commonly known as a home charger. There are literally dozens of companies that make them and they all have features and benefits that vary from one manufacturer to another. Almost all are designed to operate on 240 volts.
Some are “dumb” chargers. You plug them into a wall outlet (some are hardwired directly to your breaker panel) and then plug the charging cable into your EV. Every electric car can be programmed to charge at certain times and to set how much the battery should be charged. Contact your local utility company to learn about their pricing structure and then manually program your car to charge when rates are low.
Or you can buy a “smart” charger, which means one that connects to the internet. These all have apps that allow you to start and stop charging via your smartphone. Others go a step further. They monitor the grid to find the least expensive time to charge and start charging automatically when rates are low. They recognize requests from utility companies to temporarily pause charging when necessary. Some also monitor weather information and start charging in advance of a possible grid interruption so you have a full battery charge if you need it during an emergency.
Here’s another very cool thing about electric cars. You can set them to precondition the interior so it is toasty warm in winter or comfortably cool in summer. You tell it when you expect to start driving and it will do the rest. No freezing steering wheel or icy windshield. Can your gasoline-powered car do that?
Q. I hear reports of concern about California’s power grid in the news. If everyone in the US went out and bought an EV in the next year, could the power grid support it? If not, what level of effort would be required to modernize the grid for proper accommodation?
According to Statista, the amount of electricity used in the United States has doubled since 1980. More and more homes and commercial buildings are adding air conditioning, particularly as heat waves become more common. Utility companies sell electricity. It’s what they do. They are constantly monitoring the demand for electricity and making plans to meet it.
A few days ago, I wrote a story on this topic and I encourage people to check it out. Here is a relevant excerpt from Axios:
“EVs aren’t what’s straining the grid. California had roughly 680,000 registered EVs as of July 1, per S&P Global Mobility, accounting for less than 1% of the state’s total electricity demand. Even if there are 5 million EVs by 2030, they will account for about 7% of annual electricity usage and 1% of peak demand, according to the California Air Resources Board.”
The recent heat wave in California did strain the grid to its maximum capacity, but the cause was not people charging their electric cars. It was a spike in demand for air conditioning. Once authorities asked people to turn off or turn down their electric appliances, the emergency was over in less than 5 minutes.
Utility companies are embracing new technologies that will allow them to better manage the grid. Smart electrical panels are coming into use that allow better control over energy usage. And the batteries in electric cars can also provide stability to the grid as vehicle to grid technology becomes more common. Far from breaking the grid, electric cars may save it by making it more resilient
Q. Should I expect the price of electricity to fluctuate in a way that is similar to what happens with gas? Is it possible that my electricity provider could one day increase the cost of my monthly bill by 30-40% due to “unprecedented demand” or “stress on the grid”?
A. The short answer is no. Electricity rates are regulated, whereas the prices of coal, oil, and methane are not. Just this year, the price of gasoline doubled and the price of methane (incorrectly known as “natural gas”) soared by 165%, according the federal government. The US Energy Information Agency is predicting the cost of electricity will rise about 3.5% by 2023.
The more nuanced answer is, “It depends.” For people in Europe, which has relied heavily on cheap methane from Russia for decades, this winter could see extraordinary increases in their utility bills since the flow of gas from Russia has been cut off. The new watchword for all nations is “energy independence.”
The US is blessed with sufficient natural resources to meet all our energy needs. The price of electricity may rise over time, but it has never experienced the extreme price volatility that is common for oil and gas.
Ford F-150 Lightning, image courtesy of Ford.
Q. It seems that the average cost for a “typical” gas-fueled car these days is $35-$40,000. At what price point does a more expensive EV come out as comparable? It is $60,000? Something else?
A. According to Cox Automotive, the average transaction price of a new car in the US in May, 2022, was $47,128. Here are some starting prices for popular gasoline-powered vehicles:
Here are the starting prices of some popular electric cars:
The price of new cars — all new cars — is shocking to many people, but it is fair to say electric cars sell for more than comparable gas-powered models. For more on this topic, I refer you to my CleanTechnica colleague Paul Fosse, who eats, sleeps, and breathes dollar signs and decimal points.
He found the total cost of ownership of his Tesla Model 3 after 4 years was about equal to that of a well optioned Toyota Camry. He also found that while his car cost about the same as a BMW 3 Series sedan, his total cost of ownership was 40% less than the BMW.
Now we all know that figures lie and liars figure. A big part of the TCO analysis is depreciation, a factor that can fluctuate substantially over time. We can analyze the past, but we can’t predict the future. Right now, electric cars hold their value better than virtually any gasoline- or diesel-powered vehicle. Will it always be that way? No, of course not. But it is that way today.
All we can say is, based on current experience, the total cost of an electric car will balance out the higher initial selling price in 3 to 4 years. And if TCO is the only thing that floats your boat, that’s good news. But there are intangible, non-economic benefits that factor in as well.
If you drive an electric car, you will never visit a gas station again. You will learn the joy of one pedal driving, which feeds electricity back into the battery when you slow down. You will experience the quietest, most peaceful driving you have ever known.
And you will get to kick the gas-powered car next to you at the stop light to the curb when the light turns green! Compared to a typical gas-powered car, the acceleration of an electric car is a joy to behold. Toe the throttle and there is no spooling up of the turbo, no lag while the clutch engages, or the transmission shifts. There’s only immediate forward progress, the kind that pushes you back in your seat and plasters a big wide grin all across your face. What that is worth only you can decide.
Q. What impact does the new Inflation Reduction Act have on a purchase decision? If I buy a $60,000 EV, how does that affect the price I pay?
This one requires a careful reading of the new law, which gives generous benefits to vehicles manufactured in America (Canada and Mexico are consider part of America for the purposes of the NRA).
Starting January 1, 2023, the batteries and the materials used to manufacture them will need to be sourced from North America or a country the US has a free trade agreement with. Here’s the list — Australia, Bahrain, Canada, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Israel, Jordan, Mexico, Morocco, Nicaragua, Oman, Panama, Peru, Singapore, and South Korea.
China is not on the list, but China dominates the global market for battery materials and battery manufacturing. The NRA is spurring companies to restructure their supply chains, but that will take years to happen. Right now, most EVs from Hyundai and KIA do not qualify for IRA incentives, but the government of South Korea is mighty unhappy about that and is pushing the US government to relax the rules until they can get factories built in the US and reconfigure their supply chains.
For more on this topic, please see this article written shortly after the NRA was passed by Congress. In short, if the car you are considering qualifies, you will get up to a $7,500 tax credit when you buy. We are not accountants or tax experts. Your best source of accurate information is a qualified tax professional. It shouldn’t be that way, but it is and we have to deal with things as they are. As Julius Caesar might say, caveat emptor.
Once again, the word count indicator is telling me to wrap this up for now. See you soon for Part 3 of this important discussion.
Steve writes about the interface between technology and sustainability from his home in Florida or anywhere else the Singularity may lead him. You can follow him on Twitter but not on any social media platforms run by evil overlords like Facebook.
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