The EV Amortization Problem

Guest Post by Eric Peters

You can amortize the cost of almost any car  . . if it’s not an electric car.

Gas (and even more so, diesel) engined cars will usually run reliable and without major expense for at least 15 years  – even if not treated particularly well.

And that’s more than long enough to pay off such a car before it reaches the Money Pit stage of its existence.

Most new cars are paid off after about 6-7 years, depending on the loan and interest rate. And once you’ve paid off the car you’ve still got a car with lots of life left in it. Leaving aside the cost of fuel, routine maintenance and the occasional repair you have free transportation.

Probably for at least as many years to come as it took to pay for the car itself.

Electric cars don’t amortize as favorably, for two reasons.

First, their initial cost is much higher. The least expensive ones like the Nissan Leaf and Chevy Bolt cost between $30,000 and $35,000 – which is considered the “entry luxury” price point for new cars and at least $10,000-$15,000 higher than the cost of current gas-engined economy cars, which sticker around $15,000-$20,000 or so.

This means it takes longer to pay them off (unless you paid cash) and their cost-to-depreciation ratio is higher. All electric cars on the market are essentially luxury cars – because of their higher up-front costs. And luxury cars almost always depreciate faster and harder than other cars.

Second, they don’t last as long.

Electric car touters make much of the fact – and it is a fact – that an electric motor is simpler than a gas (or diesel) engine, which has many moving parts vs. very few in the electric motor. An electric motor will usually last a very long time and usually requires little or no maintenance.

Absolutely.

But EV people regularly fail to tout the fact – and it is also a fact – that the electric batteries which are as essential to the functional viability of an electric car as the electric motor are very complex, have a chemically limited lifespan and are very expensive to replace.

Rechargeable batteries can only be recharged so many times before they begin to lose their ability to hold a charge. Their lifespan therefore depends on charge/discharge cycling; the more often it’s done, the shorter the useful life of the battery.

Also, the shorter the range of the electric car – which creates a secondary problem because even the longest-legged EVs start out with comparatively short best-case ranges vs. non-electric cars. When the RV’s battery pack’s capacity is no longer best-case, the already shorter-than-most EV range will become even shorter.

Which means having to recharge more often… which starts a negative feedback loop of more discharge/charge cycling and shorter and even shorter battery life.

A point will be reached when the electric car becomes functionally useless because its aging battery can’t hold much charge anymore and because of this, the car can only be driven briefly before it needs to be plugged in again.

If it can be driven at all.

It will be like a gas-engined car that has to be limped from gas station to gas station only instead of waiting five minutes to refuel, you’ll be waiting for the minimum of 30-45 minutes or longer it takes to partially recharge the geezing battery pack.

Assuming, of course, there isn’t another EV ahead of you at the “pump” – in which case, you’ll have to wait 30-45 for him to recharge before you plug in.

This will happen well before 15 years, too.

After six or seven years of daily/regular use – of heavy discharge/recharge cycling –  a decline in battery efficiency will almost certainly become noticeable. Even Teslians are noticing it. But outside the “community,” it’s not being talked about much. The car press has yet to cover it at all.

Consumer Advocates are curiously silent.

This is dereliction of duty at the least – assuming these “advocates” really do care about the “consumers” they claim to represent. It seems doubtful, given the facts – which are not in hiding. They’re just not being talked about.

The public is being grossly misled – by omission – about the real-world service life (and real-world lifetime costs) of electric cars. Part of this is also because almost all of the electric cars currently in use are the second cars of affluent virtue signalers, who do not use them as everyday transportation.

These cars are like my garage queen antique muscle car – which goes out when it’s nice and only when it’s convenient and which I don’t depend on for reliable transportation, day in, day out.

Wait until people find out about the inherently limited service life of an electric car’s battery pack – and about the fact that its life is a function of how much it’s used.

And wait until they find out what it costs to replace an electric car’s battery pack. Which might as well mean replacing the electric car itself – because the typical EV battery costs in excess of $10,000 to replace. The higher-performance batteries in EVs like the Tesla Model S can cost twice that (see here).

It’s an economic and functional time bomb built into every electric car.

It’s also real-deal “planned obsolescence” – the thing Consumer Advocates used to accuse carmakers of engineering into pre-electric vehicles. But even a rusty Yugo can be kept on the road for a lot longer than a six-figure Tesla – and the Yugo itself could be rebuilt for the cost of replacing an electric car’s battery pack.