Are you thinking of taking the plunge and buying an electric car? It’s important to consider all the costs that come with doing so, from electric car insurance to the cost of preparing your home for an electric car. Keep reading to discover a list of hidden costs that come with owning an electric car, as well as some ways that going green can save you money.
Extra costs that come with driving an electric car
First, let’s kick things off with a list of extra, sometimes unexpected, costs that may arise from owning and driving an electric car:
Right off the bat, it’s important to note that electric cars, on average, are more expensive than gas-powered vehicles. Some experts estimate that an electric car will set you back roughly $10,000 more than a gas-powered car. Why are electric cars more expensive? It comes down to various factors. First, they are still somewhat of a novelty, which allows electric automakers to charge a higher price for them. Second, the cost of the minerals used to create EV batteries is higher, which also contributes to their more expensive price tag. Some of the minerals in question include lithium, nickel, graphite, cobalt, and manganese. While the higher purchase price is one expense that buyers should be prepared to pay right now, as EVs become part of the mainstream, this price disparity is likely to be reduced.
Road use fees
Some, though not all, provinces in Canada charge road use fees to drivers of electric vehicles. This is in lieu of a gas tax, which some provinces collect to help fund road repairs. Saskatchewan is an example of a province that requires EV drivers to fork over an annual road use fee amounting to $150. However, other provinces, like Ontario, do not charge any such fee. Instead, drivers only have to pay the regular vehicle permit and licence fees that apply to all drivers.
Increased car insurance premiums
If you drive an electric vehicle in Canada, then you can expect to pay a little bit more for auto insurance. For example, car insurance in Toronto will likely be more expensive simply because the value of your car is greater. Plus, since EVs are still a relatively new phenomenon, repairing these types of cars can be more difficult and costly, with not all auto body shops having staff that are trained in EV repairs.
As such, drivers of electric vehicles can expect to pay a higher insurance premium than those with gas-powered vehicles. That said, it’s worth noting that some insurance companies in Canada now offer a car insurance discount to drivers of electric or hybrid cars as a way of incentivizing the public to be more environmentally mindful. For other ways to cut auto insurance costs, check out this list of 5 ways to save on car insurance.
Charging on the road
Although there’s no question that the cost of charging an electric car is cheaper than buying gas, you may still end up paying more than you thought if you regularly charge your EV on the road. This is because public EV charging facilities are significantly more expensive. They also vary in how they charge customers, with some charging by the minute and others by the kWh of electricity used.
It is worth noting that DC fast chargers are typically the most expensive type of charger, though they are also the most effective, charging EVs up to 100 miles in just ten minutes.
Charging at home
Charging your electric vehicle at home is certainly cheaper than charging it on the road, but that doesn’t mean that it’s free. EV owners must prepare for the increased utility bills that come with owning and charging an electric vehicle in their homes. First, if you opt to charge your car at home, you will first need to have an EV car charger installed, which may cost upwards of $2,500. It is also important to note that most EV charging stations have a lifespan of ten years, so you should budget to replace your charger after a decade.
In addition to these fees, if your home does not have the electric system to support an EV charger, you will also need to pay to upgrade your system so that it can accommodate the right type of charger. While most homes have a standard 120-volt outlet, which suits a Level 1 EV charger, this likely won’t be sufficient if you drive your car regularly. A Level 1 charger can take up to 36 hours or longer in the winterto fully charge an EV. So if you drive on a daily basis, you will need to ensure that your home’s electrical system supports a Level 2 charger.
Replacing the battery
You may have assumed that an electric vehicle car battery is around the same price as a standard car battery, but this couldn’t be further from the truth. Electric vehicle batteries are far more expensive than standard car batteries, costing anywhere from $10,000 to $20,000 to have replaced. EV batteries typically have lifespans of 100,000 miles, which means you should be prepared to replace them at some point, especially if you take long road trips. There are ways that you can maximize the lifespan of your EV battery, such as by avoiding DC chargers, which degrade battery life.
Depreciation is to be expected no matter what type of car you buy. As most of us know, experts say that a car depreciates in value the second it's driven off the lot, and this pattern continues throughout its lifespan, with a major drop of between 15% and 25% in value in the first year alone. That said, depreciation is even worse for electric cars, so you should expect the value of your EV to go down up to 60% in the first five years. Thus, when it comes time to eventually sell or trade in your electric car, you can expect to get even less for it than you may have with a gas-powered vehicle.
Higher repair costs
Since electric cars are still somewhat of a novelty in Canada, not all auto body shops and car dealerships are trained in repairing EVs, and those that are, charge higher rates for repairs. In addition, the cost of certain parts for EVs, such as batteries, is more expensive than traditional cars, which also translates to more expensive repairs. Some studies have indicated that owners of electric SUVs can expect to pay 50% more for repairs than owners of gas SUVs. That said, regular repairs and maintenance are crucial, especially if you want to ensure your safety and the longevity of your vehicle. Find out more winter car maintenance tips and summer car maintenance tips by contacting BrokerLink today.
Modifications and add-ons
Although purchasing a modification or add-on for your vehicle is entirely your choice, many EV owners are swayed by some of the new, state-of-the-art offerings available to them. For example, Tesla offers a self-driving option, along with a range of other cutting-edge features. However, adding them on to your vehicle can drive the price up by as much as $20,000.
Again, the choice is yours as to whether you want to upgrade your trim level, but doing so might be harder to resist with an EV than with a traditional gas-powered vehicle, so it may be worth budgeting for.
How to save money on an electric car
We’ve given you a rundown of the hidden costs that come with owning an electric vehicle, but what about the ways that driving an EV can help you save money? To provide a fair analysis of electric cars, we outline a few examples of ways that driving an EV can cut costs in the long and short term:
Take advantage of the hybrid or electric car insurance discount
First, if you drive a hybrid or electric car in Canada, then be sure to ask your insurance provider about any discounts that may be available to you. Some insurance companies offer zero-emissions discounts to those with EVs, which could lead to automatic insurance savings.
Research other EV incentives
Look into other incentives that your municipal, provincial, or federal government may offer you in exchange for driving an EV. In an effort to motivate motorists to reduce their carbon footprint, many governments now offer financial incentives, such as tax breaks or discounts, to people who swap their gas-powered cars for electric vehicles.
Find free EV charging stations near you
You might be surprised to learn that you can charge your EV for free in places all over Canada. Nowadays, free EV chargers can be found on university campuses, at hotels, and outside office buildings. You could choose to purchase an EV that comes with a free charging plan courtesy of the manufacturer. Audi, Hyundai, Kia, Volkswagen, and Porsche are just a few examples of auto makers that offer free charging for a set period of time after purchase.
Choose an EV with a high safety rating
The second way to save money on an EV is by choosing one with a high safety rating. Since insurance companies take into account how safe your car is when calculating your premium, if you buy an EV with a high safety rating and lots of safety features, you might qualify for a cheaper car insurance rate.
Buy an electric car with a long battery warranty
Buying an electric car with a long battery warranty may also allow you to cut costs. Since replacing an EV battery can cost up to $20,000, if you prioritize buying a car that has a battery warranty, you could save a lot of money when your battery eventually needs to be replaced. Many electric vehicles sold in Canada have minimum battery warranties of eight years or 100,000 miles, whichever comes first.
However, some models and manufacturers, like Tesla, may offer warranties of 150,000 miles. If a luxury EV that comes with an automatic long-term battery warranty is too expensive, you may also have the option of buying an extended warranty that covers the replacement of your EV battery for an additional four years of 50,000 miles.
Purchase an electric car that has a high resale value
If you are planning on replacing your EV in a few years, then you should carefully consider which EV models offer the highest resale value. This can allow you to earn more money when it comes time to sell. Generally speaking, some of the most luxurious and sought-after brands are the ones that have cars with high resale value, like Tesla and Audi. To help your electric car retain as much of its resale value as possible, make sure to have it regularly maintained. Battery conditions, maintenance history, safety and driver assistance technology, and more will all be factored into its estimated worth when you sell.
Charge your electric vehicle during off-peak hours
The time you choose to charge your electric vehicle may also impact how much your car costs you. To keep costs low, consider charging it during off-peak hours. These hours vary depending on where you live. However, generally speaking, if there is a lower demand for electricity in your area, then your EV will be cheaper to charge. Examples of this include overnight, particularly between the hours of 11:00 p.m. and 7:00 a.m.
Charge your electric vehicle using solar panels
If your home already has solar panels, you may have the option of charging your EV using your current system. This would cost you nothing. However, if your home is not already equipped with solar panels, then you would need to factor in the cost of installing them, which usually starts at around $5,000.
Research and buy an EV with a long battery range
Just as researching and buying an EV with a long battery warranty is important, so is researching and buying an EV with a long battery range. Why? The truth is that EVs with longer battery ranges are often cheaper to own and operate in the long run. This is due to the fact that you will get more bang for your buck, with the long battery range taking you farther despite the same amount of charging and electricity. It is important to note that battery size is not the only factor that matters when calculating range. Two EVs could have the same battery size but have different ranges since it comes down to how efficient the vehicle is, which, in part, is determined by its weight and amount of wind drag. Ultimately, if you want to make the most out of your EV battery, buy a car that is known to have a long battery range.
Pay for your EV car insurance policy upfront
Paying for your EV car insurance policy upfront instead of in monthly installments could save you money. Many insurers charge extra administrative fees the more payments you make, so if you opt to make one lump sum car insurance payment rather than twelve smaller payments, this could translate to more money in your pocket.
Choose high deductible amounts for your electric car insurance
The deductible amounts you choose will have a significant impact on how much you pay for electric car insurance. If you want to cut insurance costs, you can do so by choosing high deductible amounts. For example, when adding third-party liability coverage or accident benefits coverage to your no-fault insurance policy in Ontario, selecting a deductible that is $1,000 or more will usually result in cheaper premiums than if you choose a deductible of $500. Keep in mind that you can always raise or lower your deductible later on.
If you aren’t sure which option is best for you, speak to a BrokerLink insurance advisor or pick one for now and change it when your policy is up for renewal.
Contact BrokerLink to discover more about the cost of owning an electric car
There are so many benefits that come with owning an electric car. Not only do they reduce your carbon footprint, but may offer state-of-the-art technology and safety features. That said, owning an electric car in the 21st century comes at a price.
In some respects, it can be more expensive than a traditional gas-powered car, so it’s important to be aware of this before buying. If you have more questions about the cost of buying or charging an electric vehicle or how much electric car insurance costs, contact BrokerLink today. We are a full-service insurance brokerage that can help with all of your auto-related inquiries. Whether you want a free electric car insurance quote, need help calling your insurance company after a minor car accident, or want tips on how to cut insurance costs, we are here. Reach out and get started today. You can contact BrokerLink online, over the phone, or in person at any of our 200+ branches across Canada.
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FAQs on electric car hidden costs
Is electric vehicle insurance required in Canada?
Yes. No matter what type of car you drive, whether it’s an electric vehicle, a hybrid vehicle, or a traditional gas-powered vehicle, car insurance is required throughout Canada. More specifically, you will need to purchase a policy that complies with local laws in your province. For example, in Ontario, all electric car insurance plans must contain no less than $200,000 in third party liability coverage, as well as uninsured motorist coverage, accident benefits coverage, and direct compensation - property damage coverage. If you drive without purchasing car insurance, you can face serious consequences ranging from expensive fines to the impoundment of your vehicle and the temporary suspension of your driver’s licence.
What insurance company offers the best auto insurance coverage for electric vehicles?
There is no single insurance company in Canada that is known for having the best electric car insurance. Rather, it depends on your needs and budget. Only you can determine which insurance company has the best plan. To find out which insurance plan aligns with your driving habits, research the insurance policies offered by the companies near you and obtain free quotes for each. Compare these quotes to discover which insurer offers the most comprehensive coverage at the most affordable price. You can also research the insurance company’s reputation and processes before selecting a policy.
Should I buy an electric vehicle or a gas-powered vehicle?
You will need to do your research and consider the pros and cons of both when deciding between an electric vehicle and a gas-powered vehicle. The reality is that buying a new car will be a major expense no matter what type of vehicle you buy. Review your finances and make sure you understand the hidden costs that come with both electric and gas-powered car ownership.
If you have any questions, contact one of our local branches.