Should you buy an EV or ICE car — a cost comparison
Until a few decades ago, when you were in the market for a new car, you had to only choose between a petrol or a diesel engine. Today, with the uproar of EVs in the market, every car owner must decide if it’s the right car for their needs. On one hand, an electric vehicle (EV) is comparatively more expensive than an internal combustion engine (ICE) car. But on the contrary, EVs offer cheaper fuel annually and lower maintenance costs, which may make up for their higher sticker price over a long period of time.
When you compare the costs of both cars, in some situations, EVs can be cheaper to run. However, you must look at the total cost of ownership (TCO) — wherein some components can be more expensive for EVs, like tyres, while energy is cheaper. Here are the factors to consider:
Depreciation Rate | Electric cars usually depreciate faster than ICE vehicles. The replacement cost of an ICE car is around 2.5 lakhs to 3 lakhs for an average model, after maybe 7–8 years. However, for an EV car, if the battery has run its life and technology has advanced, you might not get any good value from your car. The maximum resale value may be around Rs. 50,000 to Rs. 1 lakh.
Energy and Fuel Costs | When you charge your EV at home, your electricity bill will rise, but the cost depends on where you live and when you charge. Did you know that charging your car overnight can save 30% on that charge? Also, public charging stations can be more expensive than charging at home. In the case of an ICE car, the fuel costs depend on the petrol or diesel rate — but if you don’t travel more than 20 or 30 km per day, you might not feel the pinch.
Convenience | The greatest advantage of an ICE vehicle is convenience — there are petrol pumps all over the country, even in the most remote areas. With electric cars, you might not find charging stations as easily everywhere. Plus, the battery may run out sooner than you think. It is expected that in the next 1–2 years, electric cars will travel 400 to 450 km on one charge, and then convenience won’t be such an issue.
Maintenance | Electric cars have lower maintenance and repair costs than ICE vehicles, almost 11% lower. They also have fewer moving parts than ICE cars and thus, servicing costs are drastically reduced. However, sometimes, general wear and tear, tyres, brakes, battery repair, etc., can lead to additional costs.
Tyres | Since EVs run on batteries, their tyres need to be stronger to carry the weight of the batteries, too. They need strong tyre compounds and a stronger sidewall. Sometimes, this can lead to additional expenses, especially when you need to change the tyres.
Insurance | Another important aspect to consider is the insurance premium for EV vs ICE vehicles. EV insurance is usually higher than that for petrol cars since the vehicle is costlier due to new technologies and high-capacity batteries that raise the IDV. Also, some parts are extremely expensive to repair or replace — like the battery.
Here is the break-up for better understanding:
For most car owners, EV cars are ideal only if you’re driving 30–40 km or more every single day. Factors like sustainability and low carbon emissions are more like a priority and choice than a matter of overall cost. Considering the rate at which EVs are developing, it may be a good idea to wait for a few years before you invest in an EV car to get maximum benefits.
Talk to our experts at FinVest to know more and leverage our financial planning services in Pune to truly make the most of your new car!
