May 27th, 2019

Why You Should Sell Your Car and Buy An Electric Vehicle

When I was younger, I realized a very important financial life lesson. There are two ways you make money in life. The first way is what most of us do every day. Getting up early and dragging ourselves to our weekly job. The second way is through investing.

In my opinion investing is the easier and most efficient method of financial stability in life. It is how my wife and I have been able to generate an enormous amount of wealth and stability that we would not have been able to afford with our weekly jobs alone. So why don’t more people become investors?

To invest you need to first save. This is where most people struggle. While I can’t help you make more money in your job, I will on occasion point out possible things you can do to cut down on expenses and increase your investible income.

Look For Big Expenses

Our cars are one of the biggest recurring expenses most of us have in our lives outside of mortgages and rent. Finding ways to cut down on this expense can generate a significant amount of extra investible income. Luckily technology today has given us some interesting options to consider!

Electric vehicles (EV’s) have grown in popularity over the last decade after the release of the first mass-produced North American EV, the Nissan Leaf. Today EV’s can travel hundreds of miles on a single charge making them practical alternatives to gasoline vehicles for most of our daily tasks.

For those of us looking to save money the big question is are they cheaper than traditional combustion engine vehicles today? To answer this question, I developed a spreadsheet you can download here.

Running The Numbers

My wife and I own a 2006 Nissan Frontier. While it has been a great truck, it does cost us a significant amount of money to own and operate. With gasoline and maintenance, we spend around $2,000 per year alone. This does not factor in insurance and registration which drives the cost up even further.

In our area we can purchase a used 2013 Nissan Leaf for around $6,800. This vehicle has a range of around 80 miles which works well for our daily transportation needs. The battery life for these vehicles is around 100,000 miles which means the used Nissan Leaf we are looking at will need its battery replaced in approximately 40,000 miles.

Gasoline costs around $3.40 per gallon while electricity is about 12 cents per kilowatt-hour (KWh). For those not familiar with electric vehicles, a KWh can be thought of as the equivalent to a gallon in gasoline cars. You need so many KWh’s of electrical energy to “fill-up” your electric car.

Maintenance costs for cars are difficult to predict, however, EV’s are generally cheaper with less moving parts than a gasoline engine. Standard maintenance costs for gasoline engines are 6 cents per mile and 4 cents per mile for electric drivetrains.

The gas mileage for our truck averages 21 mpg. By comparison a 2013 Nissan Leaf gets around 2.94 miles per KWh of charge. Plugging in all these values to the spreadsheet we come up with the following results.

Amazingly, trading in our truck for a used Nissan Leaf will save us around $2,000 in 10 years. That’s even including replacing the battery pack in year 6 which will give the leaf another 10+ years of useful driving life!

If you are interested in looking at whether an EV is right for you, plug in your own numbers and see what type of money you might save. If you don’t believe the numbers you can read more here as well.

Happy Savings!