Photo Credit: Kārlis Dambrāns
Electric cars are the way of the future and here in America and you can even get a tax credit for buying an electric car as well as possibly some great state benefits as well depending on where you live. So buying one sounds like a no brainer, right?
Figure Out Your Costs
Looking at the cost to operate a Nissan Leaf on a daily basis, fueleconomy.gov shows is takes 30kW for 100 miles and estimates this cost at 90 cents per 25 miles. When I look at my personal utility rates, I am only coming up just under $4.34 for 30kW, or $1.085 per 25 miles in costs. While the fuel costs do work exactly with their estimates based on a price of $3.50 a gallon for gasoline. You can see how a new Nissan Leaf compares to my vehicle lineup here.
I am probably at the $15,000 miles a year mark that I would use this car for. So my “fuel costs” for a Nissian Leaf at this many miles would total to a whopping $540.00 based on the standard rates. Meanwhile my most efficient car will be racking up costs of $1,680, a difference of $1,140 each year. The difference in price will not by itself pay for a lease or a loan, if you can get a lease at $200 / month they seem to be restricted to 12,000 miles a year which at a 15 cent a mile penalty eats up $450 a year. Ouch. One plus side is there are no oil changes and various other maintenance that is traditional to a normal engine, which could easily save you $150 a year when you rack up this many miles. But how do the costs for this compare over a long period of time?
For a side-by-side comparison I put a table together assuming the following:
- Acquisition of a Nissan leaf at the current base model lease promotion. The reason for a lease is if you cannot take advantage of the full tax credit then by leasing you can because the company gives you a discount because THEY take the federal tax credit and lease to you at a discount.
- No state tax incentives. If you live in a state that provides an incentive this could weigh heavily in your decision.
- Assumed an average of $150 a year more in maintenance costs for a gas vehicle compared to the electric. This could be substantially more, the thing is there aren’t many old leaf’s out there to compare to.
- Useful life of both vehicles at 210,000.
- Useful life of a battery at 105,000 due to the warranty expiring at that 100,000.
- Assumed mileage per year is 15,000.
- Assumed used car starts with 30,000 miles so you will have to replace after 12 years. Replacement used car adds $1,000 in depreciation costs for the final two years for comparison*.
- Assumed price of used car is $12,000.
- Avoid the lease mileage fee by purchasing at the end of lease.
|
Year
|
Leaf Cost
|
Used Car Cost
|
|---|---|---|
| 1 | 2,400 initial lease fee |
12,000 acquisition |
| 1 | 2,928 annual costs | 1,830 annual costs |
| 2 | 2,928 annual costs | 1,830 annual costs |
| 3 | 2,928 annual costs | 1,830 annual costs |
| 4 | 12,244 acquisition | N/A |
| 4 | 540 annual costs | 1,830 annual costs |
| 5 | 540 annual costs | 1,830 annual costs |
| 6 | 540 annual costs | 1,830 annual costs |
| 7 | 540 annual costs | 1,830 annual costs |
| 8 | 5,500 Battery Replacement | N/A |
| 8 | 540 annual costs | 1,830 annual costs |
| 9 | 540 annual costs | 1,830 annual costs |
| 10 | 540 annual costs | 1,830 annual costs |
| 11 | 540 annual costs | 1,830 annual costs |
| 12 | 540 annual costs | 1,830 annual costs |
| 13 | 540 annual costs | 2,830 annual costs* |
| 14 | 540 annual costs | 2,830 annual costs* |
| Total | $34,868 | $39,620 |
Other Factors to Consider
Car Insurance
This is a big one. You need to see what the difference is annually between your vehicle options. I would almost say with the cost of a battery replacement reaching $5,500, you may want to keep full coverage on the vehicle for the life of it. You wouldn’t really ever be clunker status until your last year or two on your replacement battery. Insurance varies widely based on the area you live and my state, Michigan, is often one of the most expensive in this area. Plugging in the information for comparable coverage from my Hyundai to the Nissan at Progressive, the insurance would cost $1,586 more every 6 months. That is ridiculous. So if you are looking to get a leaf… make sure you check out the insurance costs, because that is NOT cheap in my state. Also, I did not check into this beyond my current insurance carrier.
UPDATE: Progressive was changing around their website and now I cannot obtain a quote for a 2015 Nissan Leaf, but I got a Quote for a 2014 Leaf and the coverage cost is only quoted at $118.00 more per 6 months. Still, over 14 years this would add a cost of $3,304 if the spread stays consistent.
Power Outages
If you experience a power outage you have no way to “fill-up” you car. And with an average range of 84 miles, if your commute is over 42 or more miles round trip you could be stuck with no way to get to work the next day while a gas vehicle has a much larger range. To avoid this you could look into the cost of a generator, but that is just one more thing you will need to factor into your costs of ownership (but at least there are other benefits for a generator as well).
Battery Capacity
While the battery itself has a warranty until 100,000 miles, you are only guaranteed your Capacity upto 60,000 miles. So depending on how far you need to drive, you could run the risk of needing a battery sooner than 100,000 if you start to lose capacity.
Car Rentals
With a range of only 84 miles you may need to rent a car for longer trips. This should be something to consider if you are used to driving to places on vacation or somewhat far distances to visit family or friends that is just out of your range. The added cost of rentals can eat you up if it is something that needs to be done on a frequent basis.
Maintenance Costs
The maintenance spread between the two vehicles may be understated or over stated. There is just not much history on the costs of replacing parts on the leaf. There are alot of known items though, like barely any fluids used, lack of gaskets, no exhaust and belts. Alot of things that work in it’s favor. Then you have different systems for breaks which could be potentially more costly. The thing is it is really hard to quantify this being their first model year was 2011. So time will tell if the assumed spread of $1,800 a year is great enough. I did separately include the cost of the battery since that is a cost only for the electric vehicle much like the fluids and other items are costs only for a generic gas vehicle.
Other State Tax Incentives
Your state may give out a great incentive for purchasing an electric vehicle. While looking into the costs of a Nissan Leaf I ran into an old post regarding the excellent benefits for an electric vehicle in Georgia. So if you are interested, don’t forget to check to see if there are any deals where you live.
Energy Cost Inflation
I think you can say it is a given that both electric rates and prices at the pump will both rise over the next 14 years. But if both raise at the same percentage rate, the Nissan Leaf will gain a greater spread in annual costs over time making it a better value. This is something to remember as prices rise over time that you are at least experiencing inflation on the lesser of the two options if you choose to buy an electric vehicle. So the lesser of two evils in this aspect!
Conclusion
The initial spread of just under $5,000 in savings for buying a Nissan Leaf seems like it will be eaten up very quickly by other costs for myself, such as car insurance or car rentals. Maintenance may give me a slight offset in my favor, but that insurance quote was just brutal. Obviously, you should shop around for car insurance, especially when making a significant change. I did not shop around because I was just trying to get a general idea of the difference and it will probably not be cheap wherever I go. If you happen to live in a state that provides excellent tax benefits for owning a vehicle such as this it may still pay off in the long run for you. But as for me, those additional costs and concern’s outside the side-by-side comparison bring me to decide that a Nissan Leaf would not save me money.
first time im hearing of the Nissan Leaf. What a strange direction to take for a name. I like the amount of effort you’ve taken sorting out costs etc
Thanks Toby! It did take a bit of time to get together, but as I said there are still some unknowns out there. I did the best to lay out what it would cost me to switch to the Leaf for comparison purposes so others can use it as a good baseline for their own personal comparison.
I read another post on this too, but the person got a huge tax credit for buying, as I remember. As for us “older folk”, we’ll just stick with our gas-powered vehicles.
Oh, I am sticking with gas powered. I cannot imagine going out and getting one without checking the insurance, that would have given me a heart attack for that rate increase! Granted if you can combine the deal with some excellent state incentives then it may still work out.
I don’t think I will go electric just yet because I like to wait until more companies start making electric cars with better millage range. This in turn will probably drive prices down. I’m glad that we are heading in that direction because it has the potential to be a lot cheaper and it’s better for the environment.
Hey Aldo,
Yea I think that we are moving in the right direction. But right now they are very well subsidized with the federal tax credit of $7,500. Hopefully there will be new competition to help improve the cars before that dries up, but other companies probably want to let others test the waters. To my understanding TELSA wants to make a cheaper electric vehicle and hopefully that will help reign in their costs a bit.
Interesting analysis, Kipp. Mr. FW and I are trying to figure out what car we’ll buy when our 18-yr-old Frugalwoods-mobile bites the dust. We considered the Leaf but came to same conclusion you did–probably wouldn’t be a cost-savings in the end.
Yea, the savings are greater the more you drive. My wife has a 50 mile round-trip commute, so if you aren’t getting in the miles, you are just paying for depreciation.
Why is insurance that much more expensive??
That is a VERY good question, I cringed seeing that quote! I just went to check again to make sure and progressive changed their site a little and now putting in the information they “Cannot provide an online quote at this time”. Gee. Thanks. So maybe it will decrease? I will have to check back next week to see if they have their kinks gone and do an update if it is significantly different from the first time.
Two of the CPAs at my wife’s work have the Leafs and love them. Her boss even had a charging station installed at the office. In Georgia, we have a tax incentive that, once applied, cancels out the cost of the lease for the year. Of course there is insurance to buy but the cost of electricity is minimal compared to gas.
Hey Brian, I had already started looking into this topic when I saw the link from your college post. Look in my section about “Other State Tax Incentives” and you will see where I linked to that
so that people are reminded to check out the state options. Michigan doesn’t really have much of a benefit unfortunately.
Electric cars are very interesting and I have been doing some research. Just like hybrid cars, my conclusion is that electric cars are not worth the cost right now. Until the price come down, I think I’ll stick to gas cars.
Same here, but it really depends on the tax incentives. Some states are better than others… also fuel prices. Some states are higher than others as well.
I hope we get to the point where alternatively powered vehicles make the most sense all around. And I commend you for the very thorough analysis. Job well done!
Thanks Kirsten! I think we will get there, the question is how good of a deal they will be without the government incentives. Right now that is the thing that makes them competitive, so I hope there is alot of innovation here before those go away.
I live in a climate that isn’t very conducive to electric vehicles at this point (Li-ion batteries don’t love winter temps – heck, even Pb-acid aren’t great in some areas during the winter and they’re not powering the car).
I love the concept of electric and hybrid vehicles, but they’re not there yet. The energy densities need to go up (better, higher capacity electrode materials for one) before the range can get there. That said, many don’t buy these cars because of a cost differential. Those early adopters are environmentally-minded and are willing to pay the premium. If we are looking for full conversion from gas, then yes the price will matter more. But it’s still niche (relatively).
I agree Alicia. Actually I don’t know what climate IS good. It sounded like warmer environments were leading the capacity dropping, which is an issue apparently somewhat fixed with newer models. So the best place is probably northern or middle of America, get too far south and you have issues that way :).
I have been slowly but surely transferring all of my gas-engine purchases to electric, and I do believe that I will end up with an electric car sooner than later.
In the short term.. I have been considering purchasing an electric mower, as my gas mower is on its very last legs..
Hey Jefferson,
I do think that in the future we are shifting more towards electric everything, the question is when? It really depends on the innovation, but we are just starting to see viable options which is exciting.
Interesting on the electric mower, too big of a lawn for a manual mower? I would have gone manual if my dad wasn’t feeling generous and bought me a mower.
My coworkers are leasing their Leaf for around $150 a month. The down payment is $2,500, but the rebates cover that. So their only expense with the Leaf is insurance, which is slightly higher. But they don’t have to pay for gas, and charge their cars for free in the parking lot. It’s a pretty good deal. I would rather have a Tesla though, but that’s not really affordable haha.
Hey Henry,
I have heard of the rebates, specifically Georgia as I mentioned in the post, that will pay for the lease amount. $150 a month sounds like a good deal, I just went off the current promotion of $199 / mo. Charging their cars for free is another good deal, as you can see that add up to over $500 a year. Hey if you rent and have utilities included in your rent, it may not be a bad deal either! Granted I won’t consider the generosity of others paying for your electric to continue forever :).
Hi there! A buddy of mine recently bought a Nissan Leaf in Texas. It is a nice car, he let me sit in it! However, the math worked out quite a bit better for him. He gets a rebate from Texas and he was also going to use the Nissan Leaf for his commute instead of his large truck. His monthly payment is now less than what he paid in gas per month and he has the truck to haul stuff when he needs it. Additionally, he works at a place with charging stations, so he doesn’t pay for the electricity.
From what I have said it seems like he has gotten ahead, but we’ll have to see how long the battery actually lasts. He also has a higher insurance bill, which eats into his success “margin”.
Take care!
Hey ILG,
Yes, state benefits can play an important factor. I did my comparison to a traditional gasoline car that get pretty good gas mileage so the savings weren’t nearly as high as replacing a truck. The reason is he could have gotten a gas car instead.
Work paying for electricity is hard to beat, I think Luke1482 mentioned that is the deal they got as well as state incentives. Unfortunately it is a bit of a regional event.
I heard a rumor the federal government wanted to up the credit to $10,000 but until it is official I am not banking on it. With an extra $2,500 spread I would consider it, right now the variables are a little too much for me to consider the move.
Thanks for stopping by!
I agree. I don’t really like the range of the battery. I will probably not consider it until the batteries can hold charges that are much longer and the entry level price is much closer to a similarly equipped economy car.
Take care!
My mom has this car and there’s something else you didn’t factor into all of this. Time.
My mom commutes to work in the bay area, during regular business working hours the traffic is horrendous. It can easily take an hour to get 25-30 miles. But being able to get into the carpool lanes my mom’s commute suddenly gets cut almost in half. If you use this as a commuter car you might actually be on the road a whole lot less time which will technically save you on your fueling costs, but more importantly give you more of your time in the day, and what’s that worth?
Obviously this changes depending on where you live but I know that the time saved out of my day because of this car would heavily weigh in my decision too.
Hi Zee,
Very good points and it isn’t something I considered because, well, my state (Michigan) seems to lack commuter lanes. At least around here. I would also say that people should check their states laws, if all electric vehicles can just go in a commuter lane or if you are still restricted to having a passenger no matter what type of car.
Regional benefits matter! My state is probably too much invested into the traditional car companies to give incentives to electric cars :).
Haha yeah, I’m sure your state doesn’t really like seeing the slow shift to electric vehicles. I just hope industries see the change coming and adapt instead of cling to what they know. I think it’s better for the consumers too if the industries adjust to the times. We all know the story of Blockbuster video and other traditional rental places getting killed because they didn’t want to adjust until it was too late.
Well I think they are slowly shifting. Chevy has that Spark with an electric version, and Ford has the electric Focus. So they are moving in the right direction. But we need to innovate our infrastructure here… not too bike or electric car friendly. Problem is money in a state losing population!