In his zeal to evangelize for electric vehicles, President Joe Biden promised last week that “a typical driver will save about $80 a month from not having to pay gas at the pump.” He even called this “the most important thing my plan will do right away.”
If that’s the “most important” thing he’s doing, then his plan to “lower gas prices at the pump” is just a sad lie. But as for the claim that an EV will save you a bunch of money, it is very misleading, relying on you not thinking things through very well. For example, how often do people buy new cars currently? Is it practical to go out and buy new cars in response to world events? Are there costs of owning brand new cars — e.g., much higher insurance rates — than just keeping your old car on the road for a few more years and biting the bullet on gasoline?
We have a nice explainer out that looks at some of the details about associated expenses (the higher cost of EVs) and perks (tax credits, lower cost of maintenance, no gas, etc.). Depending on a number of factors, yeah, you might save something in your monthly budget … compared to purchasing a brand new gas-powered vehicle. But here’s the thing: You will never save more buying an EV than you will keeping your old car on the road. When Biden talks about the “typical driver,” you have to remember that the average driver is not in the market to buy a new car at any given moment. Based on the stats I was able to find, the average American buys fewer than 10 cars over his or her lifetime.
The average age of all light vehicles on the road today is something like 11.8 years. The average frequency of new car purchases is somewhat less than that because some families buy a new second or third car. Still, at any given time, most people are not on the cusp of purchasing a car.
I own my current car outright. It’s an older car that I bought used. It has some maintenance costs, and I have gone to the local junkyard to find a few cosmetic replacement parts. My kids think it’s very uncool. But it’s a lot cheaper to own my car than it would be to shoulder the monthly payment on a Tesla, plus pay about eight times as much for car insurance as I do right now. Also, there’s some peace of mind in owning a senior citizen car. I don’t have to worry about people putting slight dings in it with their shopping carts because, hey, it’s 22 years old and it already showed its age when I first bought it. I’m not that worried over debates about whether waterless car wash solutions might damage the paint. I don’t have to obsess over waxing it. It’s been pretty reliable, and I have no plans to replace this car until my mechanic gives it last rites.
I may not be the “typical” American, but my situation is not that unusual. Most people figure that maybe they’ll buy electric next time — I know I might — but even then, it won’t be for whatever minuscule savings they can get. It will be because of convenience and because their children keep getting on their case and telling them electric vehicles are cool. (Okay, well, maybe that’s just me.)
But for most people at this particular moment, the purchase of an electric vehicle would be a pure luxury expense — every penny spent is a penny lost. It is not a practical option for most people to run out and buy an EV in response to world events. This is especially true right now, because the cost of new cars has risen 20% in less than a year. Unfortunately, those seeking to escape Biden’s high gas prices, should they take his advice, will run smack into Biden’s general inflation problem.
I point this out not to be pedantic about a financial question but to illustrate just how out of touch Biden and his White House have to be to tell you that this is a good way to save money. They might as well tell everybody to improve their finances by having their sons take huge retainers from major Chinese energy companies. This just isn’t how real people live.
