Lifetime cost comparison for buying an electric car

Mid last year the Thriftyskates needed to replace one of our cars. It needed a repair I, Mr. Thriftyskate, could not fix despite several borrowed tool kits and an entire weekend in the garage. When a local mechanic’s shop quoted the costs of the repair, it almost equaled the trade-in value of the car. But before falling into another years-long financial commitment we needed to know how different cars could compare cost wise. Not just the purchase price, but the total, all-in, “everything but the kitchen sink” lifetime cost. The Thriftyskates needed a lifetime cost comparison to buy a car.

And so began the task of finding the right cars to compare. There were a few must-haves other than 4 wheels and an engine. At the time Miniskate was on the way so “baby space” was a key factor for any car under consideration. 

The requirements were:

-Reliability

-Purchase price

-Maintenance costs

-Energy costs

-Back seat can fit an infant car seat

-Trunk can fit a stroller

That was it. There were no criteria for silly amenities such as leather seats, cruise control, rear-view 3-D hologram laser imaging or magic anti-fog cloaking device. These were features I hardly used on my old car so there was no need to have them in my new car. In fact, I wanted less features. Less things to break, less things built into the overall price, less distractions to think about. Let’s add that in the requirements right now actually:

-Less crap

Not my cars dashboard
Where is the windshield defrost button?

There was still one psychological hurdle I was trying to overcome though.

Even with all of those inputs there was still a part of me that thought I would miss driving a highly-tuned premium-fueled ultimate driving status symbol. Why I was driving ones of those in the first place is another story. I searched the terms “most horsepower per dollar”. That led me down a rabbit hole which seemed suspiciously like a competition for the “most expensive” title.  I’ve been wise long enough to know they are all money traps. 

Eventually I came to the realization that every production car is designed to travel on a public road. Those roads have speed limits and safe-driving laws. Therefore, owning a car which could vastly exceed those restrictions was illogical. Why pay for that much car when I couldn’t use it?

I searched for “best used cars” without too much success either. Buying a car was an opportunity to make a large, financially sound decision. I didn’t have the luxury to make a mistake. There were many cars out there and most of the results didn’t give me enough details about the thing I really wanted to know. Given the number of remaining miles on a car, the purchase price, operating costs, total miles driven and ending trade-in value, what is the best option based on price?

Nowhere did I find an answer to that question. There are a few websites out there that come close but each misses the mark. Plus I wanted a flashy graph. Sure, I could have bought a low-cost used Toyota or Honda and called it a day. That wasn’t enough. I needed to know exactly how much this car was going to cost me over its lifetime in an easy to understand number.

Without a resource, I did what any thrifty person would do. I created my own resource: a spreadsheet.

I’ll show you the exact spreadsheet I used. But, before I do, I’ll explain a little bit about it.

Not all options are equal. How could I compare the cost of a used car, with that of a new one? The used car although less costly than the new one had more miles on it already. Then there was the calculation for varying MPG ratings. The method I used to overcome these issues was an overall cost-per-mile calculation. Add all of the costs then divide by the number of miles reasonably expected to drive. Lifetime cost comparison.

I identified 5 different options:

-New fancy pants car

-New ho-hum car

-Used ho-hum car

-Used Nissan Leaf

-Used Mitsubishi i-MiEV

At this point I had already narrowed down to one specific car – the Mitsubishi i-MiEV. From here on out I’m going to stop with the “i-”. Just MiEV, here we go. This little guy kept appearing in my search results. I had only seen images of it, but in my estimation it was exactly what I wanted. Minimalist with a healthy dose of thrifty.

An instant classic
An instant classic

After doing a bit of research, I stumbled upon some electric vehicle (EV) statistics. The MiEV was at the bottom of the sales numbers for 2012! Not very popular in the US. That surely must mean something?

There’s a long list of misconceptions surrounding EV’s. Too many to address here. I researched almost none of them before buying though. That sounds irresponsible, but I did the one thing that mattered. I researched issues related specifically to the make, model and year: Mitsubishi, MiEV, 2012. I looked at car reviews, blog posts and forums. There didn’t seem to be any outstanding problems just normal car stuff. I made a gut decision, figuring if there were no critical issues, this car was a serious option.

Why no Craigslist car?

I wasn’t willing to take the risk. I almost sold my old car with multiple mechanical issues on Craigslist. I ended up not doing so because I couldn’t in good conscience sell it to another individual without disclosing all the problems.* That made me realize there were probably less ethical people than me out there. I couldn’t afford to mistakenly buy a lemon nor did I want to deal with another clunker. The time required to pursue either option was more valuable than the money I could have potentially saved. Plus, you’ll see in a minute that it probably wouldn’t have even made much of a difference money wise!

Why no new electric car?

That purchase price was approximately between the new fancy pants car and new ho-hum car, so I guesstimated the result to be somewhere near the middle of those two. No need for extra calculations.  

Why consider an electric car at all?

My workplace generously offers free EV charging. You’ll notice I did calculate electricity cost in the spreadsheet for times I would need to charge at home. In addition, Mrs. Thriftyskate drives a gas powered car that has plenty of range for long road trips. Lastly and most importantly, I was inspired by Tim’s post over at Wait But Why

The battery will be dead in a few years and the car will be worthless.

That’s a statement I have heard from many people including EV owners and it’s never phrased as a question. It’s put as an absolute. I already accounted for that scenario in the spreadsheet anyways. Zero value at the end of ownership. There could be an entire blog post about why that’s not true.

Why not lease?

We’re in it for the long term. We did not want to put money down and make payments on a car that we didn’t own. 

Enough questions, here is the spreadsheet:

What Mr. Thriftyskate's dreams look like
What Mr. Thriftyskate’s dreams look like

That was the exact spreadsheet I used. If it made your palms sweaty, here is the summary:

-New fancy pants car: $0.54 / mile

-New ho-hum car: $0.39 / mile

-Used ho-hum car: $0.32 / mile

-Used Leaf: $0.31 / mile

-Used MiEV: $0.27 / mile

Wow. Even if I bought a Leaf, which I think is a fancy pants EV, it’s still less expensive than a used gas car. And the MiEV is about half the cost to drive compared to a ridiculous new car!

For me it was the best of both worlds with the MiEV. I could buy a reasonably priced car with none of the useless driver-distraction features.

After a short deliberation the Thriftyskates became proud new owners of a used MiEV. It’s been about 7 months of ownership and everything has been going well. Note that I haven’t become stranded on the side of the road due to a depleted battery because I have carefully planned my trips.

Despite the success so far I see 2 long-term difficulties:

Replacement parts. As I mentioned this was a low US-sales volume car. I anticipate a high degree of difficulty finding replacement pieces when stuff begins to break. I may need to special order parts specific to the car when the time comes. Luckily though, I’ll have some advance warning about worn tires or brakes.

My driving habits. Particularly, my bad ones. I really need to reign in the last-minute merging and hand gestures. I drive a very consistent route at almost the exact same time of day during the workweek at rush hour. Again, this was not a popular car to buy. My observations have confirmed this as I have seen exactly 2 others on the road in the past 7 months. The body style is fairly unique as well. All of this makes the car easy to identify. I am 99.5% positive people recognize me on a daily basis.

Despite these issues I am still confident the decision was the right one.

I had a few minor battles with myself over the details prior to buying. Some of the areas I argued with myself about:

I can’t be bothered to remember to plug-in my car to charge!

Stopping for a 10 minute gas tank fill-up every few days is way more inconvenient. It takes about 1.5 extra minutes to plugiin. I plug my cell phone in every night. My car is at least as important as my phone, so I can surely remember to keep it charged.

Why did you put a fancy pants car on the spreadsheet when you knew you didn’t want to spend that much money? You purposely induced the reference point effect to justify your decision!

Guilty. I was never going to pick that option, but it still served a few purposes. I wanted to know just how bad of a decision I could have made. Also, to understand approximately how bad of a decision I had been driving for the previous 12 years. Third, I needed to convince Mrs. Thriftyskate just how low the lowest cost option was. Fourth, and this was unintended at the time, to hopefully convince one of you readers not to buy a fancy pants car. For the last time, they depreciate the minute you drive off the lot. Just no.

Where did you get all of the assumptions/inputs?! These are inaccurate! You have dishonored my family!

I made reasonably informed estimates along with best guesses based on experience. This exercise was purely to prove a used electric car was a feasible option. My insurance guesses are probably over-insured and they don’t account for decreases in premiums over the years as the car ages. And the cost of gas is incorrect now that oil prices are down. And the cost of electricity doesn’t increase for inflation. Here is a visual that should illustrate why those inaccuracies don’t matter:

I've always wondered what the breakdown looked like in bar chart form
Smaller bar = bigger bank account

I’ve always wondered what the breakdown looked like in bar chart form.

Imagine a shift in any of the categories. That shift amounts to a marginal impact. For example, even if the maintenance cost is 50% low/high it is a small proportion of the overall cost.

As the months and years roll by I’ll continue to revisit this topic. There is a wealth of data yet to be generated to analyze in the future. The purchase of the MiEV is shaping up to be quite a cost-effective decision. One I would excitedly make again.

Thrifty score: 22/40

*Ultimately some unlucky person probably ended up buying the car through auction. But with a few changes of hands in that process I plead ignorance-is-bliss hoping there was at least some level of due diligence along the way for a thorough inspection.

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What being thrifty means to me

Aside from the title of this post sounding like a middle school writing assignment, here we go with my thoughts on thriftiness.

 

I have always had an inclination towards actively saving money. Not in the sense of stashing away unspent money into a savings account for long term keeping, but rather, trying to save money at the moment it’s being spent. I’ve had weak moments or even weak years but minimizing excess spending has always been at the core of my personality whether it was ordering a water when out to dinner to save a few dollars or performing my own car repairs to save a few hundred dollars. I’m thrifty.
In my view, there are four main components to thriftiness: financial awareness, planning, action, and consistency. Those four components are integral to the way Mrs. Thriftyskate and I approach our finances and our life.

VennDiagram4

The financially gooey center

 

Financial Awareness

 

Money is a finite resource that I have the power to utilize wisely and effectively. Awareness of this basic fact motivates me to optimize my financial decisions through the other three components in the diagram above: planning, action, and consistency. Because of its importance to all of the other factors, financial awareness is depicted as a grey circle encompassing the other three components. Financial awareness should be the easiest component to grasp as it requires little understanding of the government treasury system, stock market dynamics, or any other esoteric subject. However, I have seen time and again that it is a difficult concept for people because it requires taking responsibility for one’s finances and avoiding emotional financial decisions.

 

For me, becoming financially aware was one of the most straightforward parts of my thriftiness journey. It’s easy to pause for a moment and think about what I’m spending money on, however, it’s another thing to actually take action with that thought – I’ll get to that in a moment.

 

Its very possible to not have financial awareness and still make good financial choices. However, making good financial choices without financial awareness would leave me without a long-term plan or an understanding of the importance of those choices for my future. What is the purpose of creating and implementing a great financial strategy if I don’t understand the context? Why be thrifty if it doesn’t have meaning? Without that awareness, I believe the other elements lose their meaning.

 

It would make sense that my next three categories of planning, action and consistency come in order. Not true! There’s a reason I drew that nifty Venn diagram the way I did.

 

Think about about it. All of those things can exist alone, all together or in any combination. At the center is the sweet spot of being thrifty.

 

More on planning and action later. Mrs. Thriftyskate and I have plenty of that to share. Let’s end with consistency.

 

Consistency

 

Good spending actions become good spending habits. That is consistency. If I make only a handful of good financial decisions throughout the the year, I might have saved some money but the actions probably didn’t amount to very much. This is an area where I still struggle. Bringing my lunch to work everyday is a grind; it feels good to go out every so often. You know what feels even better? The knowledge that I haven’t spent money on an over-priced, high-sodium, low-nutrient, bland-tasting lunch that I won’t even remember in a couple of days. I remind myself of this frequently. Keep up the consistency until good financial decisions become habits and stay in the ooey gooey financially sweet spot center.

 

This is where our journey continues. By continuing to make positive financial decisions Mrs. Thriftyskate and I further our progress towards a future of financial freedom.

 

What about investing?

My philosophy on investing is it should be included in a budget just like any other expense. Therefore, thriftiness should also apply to investing. When I buy assets such as stock, bonds or index funds I apply the same principles above.

 

We budget wants, such as hobbies or entertainment. Investments should be at least as important as wants. Investing will allow us to be financially secure and one day financially independent. My security and eventual independence are at the core of gaining more freedom. So, yes, investing is baked into my ideas on being thrifty.

 

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Introducing the Thriftyskates

My husband and I are relatively frugal. Some have even accused us of being cheapskates due to our frugal ways. However, we like to think of ourselves as “thrifty” instead of “cheap”, so for purposes of this blog we’ll call ourselves the Thriftyskates. We are working professionals in our early 30s living in a high cost-of-living area in California.

Back when we started dating, we were both trying to improve our finances after making some minor financial missteps in our 20s. As we moved in together, got married, and combined our finances we became more and more serious about optimizing our savings and investments. Eighteen months ago, Mr. Thriftyskate made a spreadsheet to calculate how much we would need to retire and showed me that we could retire in about 15 years if we continued living in our current home or 10 years if we moved to a lower cost-of-living area. Based on this realization, we started to develop our plan for achieving financial independence. The birth of our daughter, Miniskate, in July 2015 motivated us to get even more serious about our financial goals.

Abandoning the assumption that we need to work until age 65 and questioning the conventional trappings of success has been incredibly freeing. In this blog we plan to share our own financial journey and hopefully provide inspiration for others interested in following a similar path. We will track our spending and investment performance, share our strategies for saving money, and discuss whatever else seems relevant and interesting. Welcome!

 

 

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