These “articles” are now popping up about once a quarter. The latest is from the site “Seeking Alpha” which, as best as I can tell, is a major disinformation site for people into shorting stocks. The article, Tesla Model 3 Costs More to Charge Than a Gasoline Car, starts right off with a title that is misleading on its face. Normally, I wouldn’t deign to quibble over such an error, but as the author has either failed to properly research his topic, or simply wasn’t going to let facts get in the way of his agenda, I will make an exception.
Yes, a Model 3 costs more to CHARGE than a gasoline car does, since a gasoline car doesn’t require charging of anything other than its 12v battery, and does that with its onboard alternator, powered by its gasoline engine. The correct title for his assertion would be “Tesla Model 3 Costs More to Fuel Than a Gasoline Car“, which even then would be wrong in all but the most narrow of circumstances.
To save time, I will rebut the writer’s summary.
Investors who take it for granted that electric cars are cheaper to run, need to think again.
And if they do, they would come to the same conclusion. Setting aside, his cherry-picked fuel numbers and bizarre assumptions about battery life, EVs have no transmission, no radiator, no muffler, no catalytic converter, no fuel pump, no water pump, no oil pump, no timing belt, no oxygen sensor, and of course, no internal combustion engine. This means the number of moving parts in an EV drivetrain is about two orders of magnitude less than an ICEV; a dozen or so, versus thousands. Fewer moving parts means less things to wear out and fail. In four years of EV driving I have paid for a set of tires, and a cabin air filter. My results are hardly atypical. So, on to the next assertion.
A comparison between Tesla Model 3 and the three leading hybrid cars of calendar year 2018 from Toyota, Honda and Hyundai proves otherwise.
Our writer then compares the M3 to three hybrids, instead of three gasoline cars. The major point of switching to EVs is to STOP burning gasoline, which produces health/environment damaging pollutants. Hybrids are great, and a step in the right direction, but they still burn petrochemicals, and produce exhaust which damages your lungs and warms the planet. (Oh, and one of the hybrids, the 2018 Honda Insight, won’t be out until the Summer). To compare fuel costs with a just 3 (2 actually) hybrids, but ignore health and environmental costs, is disingenuous at best, evil at worst.
At the current typical Supercharger price of $0.24 per kWh, a Tesla Model 3 is $0.06 per mile. At the current gasoline price of $2.65, the 50+ MPG hybrids are $0.05 per mile.
Supercharger prices vary based on locations, since different states have completely different tariffs for electricity. It can be argued that 24¢/kWh is an average, but even then this ignores the fact that the majority of EV owners charge at home, where the national average is about 12¢/kWh, which means the M3 costs 3¢ a mile to run, not 6¢. Superchargers are used for long distance travel, not day-to-day commuting. The average driver in the U.S. drives 35 miles per day or less.
Then you have to add that the Model 3 has at best half the range and takes at least 10-20x as long to recharge that inferior range.
Yes, the Prius and the Ioniq get around 550 miles on a tank of gas, but again, burning gasoline means damage to people’s health and the environment. How much are your lungs worth? How about you children’s lungs? As to the 10-20x slower, this is technically true, in a narrow range of real world circumstances.
Yes, pumping gasoline is faster than recharging, if you consider only the time from putting the nozzle into the tank and pulling it out. But hey, next time you pull in for gas, time from the moment you pull in, until you pull out. Did you have to wait on a pump? I am guessing depending on the time for day, a fuel stop could be as fast as five minutes, or as long as fifteen minutes. Did you run into the bathroom for nature’s call, or to wash the smell of gasoline off your hands? Did you spill gasoline on the ground, or your shoes/clothes?
Yes, you can drive 550 miles without stopping, which would be almost eight and a half hours at typical highway speeds, but who does that? Most people drive 2-3 hours and then stop for a bathroom break, or food, or because the kids are going stir crazy. These stops average how long? 20-30 minutes? Three hours of driving in an M3 is 130-195 miles, or about 2/3s of the car’s range tops, meaning that when you stop at a Supercharger station for a break, you can replace most, if not all, of your lost range.
I am sure there are masochists out there with bladders the size of a camel’s hump who can drive eight hours straight, but I don’t believe there are many.
Of course, the Model 3 also costs twice as much, and you have to assign an approximate $1,000 per year to battery depreciation, alone more than driving on gasoline for a year.
I was utterly puzzled as to where our writer got this $1000 a year battery depreciation number? Now, it is an inescapable fact that driving ANY new car off the lot causes as 20-30% loss in value the first year, and it continues to depreciate over time. But $1000 a year for just the battery? So, let’s look at his key basis for this statement:
It is understood that you should not have to pay for a new EV battery within the first ten years, if for no other reason because of warranty and general expectations of reliability. However, at some point the day to buy a new battery will come. Perhaps not at the 10-year mark, but otherwise at 15, 20 or 25 years.
In a gasoline car, you are not worrying about the expense of switching out the gasoline tank after a decade or two or three. If you had to do it, the cost would be tiny anyway.
Okay, on average, how many people keep their cars longer than ten years? By this time, your car has accumulated about 150,000 miles, and most people I know are looking for a newer model (whether new or used). So, by his own admission, the battery is not a problem for the expected life of the car. But just for fun, let’s look at the outliers, the folk who keep their car for 15 years. By that time, the battery may have seen its range degrade to the point it needs to be replaced.
However, in a Tesla Model 3, you are talking about a battery close to 80 kWh. We know Tesla said that its cost (by some narrow definition) was falling below $190 per kWh. However, counting all costs and adding a profit margin plus labor, we can safely say that the price (not cost) would be at least $250 per kWh all-in.
So at $250 per kWh, we are talking $20,000 as the total price for the 80 kWh battery, perhaps including installation and disposal, if necessary.
Well, the math makes sense, if one assumes that the cost of batteries will remain the same as it is today, which is a bet I would not take.
In 2010, the average cost of a battery pack was $1,000/kWh. Yet, today it is (using his number) $250/kWh, a 75% reduction in 8 years (more if you factor in inflation). Battery costs are falling as demand increases due to economies of scale. There is no reason to assume that this will not continue for another decade yet. A state of the art PC cost around $8,000 back in the early 80s, yet you can have one (three, or so, orders of magnitude better) today for under $500. It is not unreasonable to expect battery pack prices to fall another 75% in the next 15 years, which means that when our frugal driver is looking for another battery pack for his 15 year old Model 3, it will set him back $5,000, not $20,000.
Oh, and a question for the reader to ponder: How often has the rate you pay for electricity fluctuated wildly from month to month? How often has it almost doubled over the course of a year? It doesn’t happen. Why? Because electrical rates are set by regulatory agencies, not by the utility companies. Gasoline, on the other hand…..
In the end, we find that the entire premise of this article is either ill-informed, or deliberately misleading.
Which is it you ask? Well, I will quote one last key sentence and let you decide:
Disclosure: I am/we are short TSLA.
Well, in the interest of fairness,
Disclosure: I own two EVs.