Working stiffs gain $100,000’s shifting to EV

This article invites you to take a closer look at EV’s. Not to save us from Climate change, but to save you money. If the use cases discussed don’t fit your vehicle use, pass the link on to someone who might benefit.

About 10% of drivers use more than 1000 gallons of gas per year, it is estimated these uses account for 30% of gas consumption, so yes as a side effect shifting to EV will affect pollution as well as save money. Let’s look at three use cases- uber drivers, independent contractors using a truck in their business for electrical, remodel, plumbing services and so on plus commuters driving more than 50 miles from home to work to save money on housing cost.

One note, these are back of the envelop calculations so feel free to research the assumptions. These are snapshots of EV and gas power data as of November 2021 and projections for 2023 in the Pacific Northwest.

And as a warm up to this issue, consider that the Mercedes luxury car in the 90’s was one of the most popular cars for taxi drivers in Europe. Why? Lower maintenance cost. Or consider the recent experience of Berea Police Department in Ohio where they saved $7,000 in fuel costs after just 6 months of using #Tesla #Model3 cruisers https://driveteslacanada.ca/model-3/berea-police...

The uber driver use case- $349,107 saved over 40 years

The typical uber driver drives 50,000 miles per year. Hertz recently announced they plan to rent Tesla Model 3 EV’s to uber drivers for $330 a week, including maintenance and insurance. How does this make sense? Assume gas is $4.00 a gallon. Assume the uber driver currently uses a new car purchased for $25,000 with an EPA miles per gallon of 40 MPG.

Cost of gas per year is 50,000 miles x 1 gallon /40 miles times $4.00 so $5000 per year.

For electrical cost, assume a level 2 charger at home offers $0.10 /per kWh cost or 50,000 miles x .250 kWatts per mile times $0.10 per kWh or $1,250 per year.

Cost for the EV energy assumes 250 watt-hours/mile. In the Northwest cost per kWh is $0.10. Of course, this varies by region as does the cost of gas. The 250 watt hours / mile is what my Tesla model 3 achieves. Hold on you might say, you are comparing a $50,000 EV to a $25,000 gas/hybrid, That is not reasonable or is it?

Ok, I need to take a moment and explain why and what $25,000 EV’s are likely to offer and when. Tesla is moving to a new battery manufacturing process that includes using lower cost materials. The new batteries will use a lithium-iron-phosphate (LFP) chemistry rather than nickel-cobalt-aluminum. The new materials are less expensive, but they also offer a longer life. This is really important for our $30 an hour uber driver as you will see below. The current batteries use more expensive material that offers higher energy density. For the lowest cost and maximum useful life, the new LFP battery is the one. The new LFP battery won’t fit in EV’s for 400 mile plus range (too big) so high end Tesla’s will continue to use nickel-cobalt-aluminum.

What range does our uber driver need? Assuming 50,000 miles / 50 weeks x 5 days /week or 200 miles per day. The EV needs at least 200 miles range. However, when you drive an EV using a bit of zip, a bit of a lead foot, faster acceleration than you might for conserving fuel, the rated range will actually be around 85%. So the range needs to be 200/.85 or 235 miles.

There is one more consideration. The new Lithium Iron Phosphor (LFP) battery offers exceptional life, up to 1,200,000 miles. It also tolerated charging to full every day without loss of life. Battery range is lost over time and end of life is when the battery range is 80% of the original. So, ok lets go for 1,200,000 miles of life. We need 235/.80 miles at the beginning of life so 294, 300 miles for round numbers.

These batteries are already being used in Tesla’s manufactured in China and sold in China and Europe and a smaller unit volume in the US in Q3 2021 with 262 miles of range. They are also used in EV’s manufactured and sold for $20,000 in China by other vendors. Chinese EV manufacturers are test marketing higher end EVs in Norway and have a plan to enter US markets within 2 years.

Ok, so we need 300 mile range for our uber driver and a guess for Tesla new low cost line of EV’s. If the base model is $25,000 with 262 mile range, I am guessing the 300 mile range option will be possible and 20% higher then the base model (based on percentage mark ups in Tesla’s mid range model 3). So $30,000 for the 2023 low cost version and, with a federal tax credit of $8000, a new price of $22,000. The tax credit assumes versions of the low cost EV are manufactured in the US.

The maintenance cost of EVs is projected to be $300 less per year for the average driver compared to gas cars. Why? EV have 90% fewer parts. Ok the average miles driven in the US is 13500 per year. For 50,000 miles I will assume 50,000/13,500 times $300 savings or $1111 per year for savings in maintenance.

The ball park end of life for gas cars is around 13 years or 175,000 miles. So our uber driver might be buying a new gas powered car every 175,000/50,000 or 3.5 years.

One more issue. When is the end of useful life for an EV. It is expected that the new type of battery will have 1,200,000 mile life, the motor is expected to exceed the life of the EV. EV have a higher resell value in large part due to expected longer life. You can research this issue. I am going to ball park end of life for the EV at around 12 years or 600,000 miles and assume no end of life resale value. So the uber driver would replace the EV every 600,000/50,000 or 12 years.

Let assume our uber drive is 25 years old and plans to be an uber driver until age 65.

In 40 years:

Cost of fuel difference = $5000-$1250 = $3,750. $3750 per year x 40 = $150,000

Maintenance cost difference = $1111 times 40 = $44,440

Cost of vehicles

Gas — replacement very 3.5 years. Assume end of life value 0.0. Total number of vehicles 40 years / 3.5 = 11.4 units or $20,000 x 11.4 = $228,000. (The last 1.5 years assumes selling the last unit at 50% value).

EV- replacement every 12 years or 40/12 = 3.3 purchases so 3.3 x $22,000 = $73,333

Over 40 years replacement cost savings= $228,000 — $73,333 or $154,667

Total savings: $150,000 + $44,440 + $154,667 = $349,107

An uber driver who switches to EV at age 25 will have $349,107 more money in his pocket by age 65 then he would using gas vehicles.

Some important notes:

EV’s will continue to improve in price and performance at a much faster rate then gas as the technology is new and investments by all vendors are very high, with a race to ever higher value for the customers and shift to the lower cost electrical power and better performance of EV’s.

The fuel savings assumes the EV driver has access to at home charging. This is important for two reasons. First, he plugs in at home like his cell phone, goes to sleep and the EV is ready the next morning, just like his cell phone. 5 seconds per day, no need to travel to public charging and lose an hour of work time. Second, this allows the driver to access the low cost of electrical charging, the same rate he would pay for running his lights or stove. Public charging cost is about 3 times the home rate, so fuel savings would drop to zero.

It is also possible to use high speed charging for 20% of the range (about 5 minutes a day) and lose 20% of the fuel savings but lower the replacement cost by 20%- so same total savings if you don’t lose money from lost earnings due a short stop.

An independent contractor uses a truck for work and saves $180,880. over 40 years.

Ball park independent contractors drive 25,000 miles a year. The mpg rating typical for a pick up truck is 24 MPG. The EPA rated MPG ratings projected for new EV trucks is about 65 MPG for Ford F150 lightning, Tesla Cybertruck, Chevrolet Silverado EV, Rivian R1T, Lordstown Endurance…

For 25,000 miles per year or 100 miles a day, a 250 mile range electric truck is sufficient for 1000 pound of load. If towing and higher weight, the range may need to be higher.

Gas cost: 25,000 / 24 MPG times $4.00 per gallon = $4166

Electrical cost: 25,000 / 65 MPG times $4.00 per gallon = $1538

Savings over gas fuel costs = $4166 — $1538 = $2628. Over 40 years $2628 times 40 = $105,120

Savings on maintenance- I have not seen many articles on this topic. Will just guess it is the same as an EV compared to a gas car so $300 per 13,500 miles x 25,000 miles or $555. Over 40 years $554 times 40 = $22,160

A swag for replacement cost over 40 years is every 10 years for trucks and every 15 for EV’s. Assume the price of both gas trucks and EV’s = $40,000. 4 gas trucks purchased, 2.66 EV’s or $53,600 over 40 years.

Total savings fuel, maintenance and replacement cost over 40 years using an EV truck = $180,880

An IT worker, living 50 miles from Seattle, saves $24,658 over driving a cool BMW gas car.

In Europe Tesla is out selling all the cool gas cars such as BMW, Volvo and so on. Why. It is more fun to drive. For our IT worker, the purchase of the EV is more about fun then utility. I would assume he will want a shinny new vehicle as often as a gas or electric vehicle. So, assume no replacement cost advantage. There is evidence that EV hold their value better than gas but I am going to ignore this.

Driving 100 miles per day x 250 days = 25,000 miles per year.

The likely EV purchased will have more power, faster zip than the previous model for the uber case. Assume 350 Wh per mile for electric efficiency. A typical BMW MPG is 30 MPG highway, which reflects our IT commuters’ trip from Thurston county to Seattle.

Fuel savings:

gas cost = 25,000/30 MPG times $4.00 per gallon = $3,333

Electric cost = 25,000 x .350kWh x $0.1 /kWh or $875

Fuel savings: $3333-$875 = $2,458

Maintenance savings = 25,000 / 13500 time $300 = $555

Total savings= $2458 + $555 or $3013 per year or 40 x $3013 = $24,658

Conclusion: For people that use their own light vehicles to earn their pay, it will be important to consider an EV and they will need access to level 2 charging at home for maximum savings.