Fast car charger economics
As you might guess, my recent switch to an electric car is revealing a variety of things to me, so you will be seeing more on that in the coming period.
Electric cars have always been criticised for their range, the slow speed of charging, and the difficulty in finding places to charge. An early joke about the original Leaf was "it has a 2 gallon gas tank that takes 4 hours to fill and there are hardly any stations." Pretty hard to make electric powertrain sound good when described that way.
Update to today, where Teslas, the Chevy Bolt, the upcoming Leaf and several other cars have ranges over 200 miles. Tesla pioneered this and there is indeed a magic number. These cars can handle all your day to day driving in a city with no anxiety. The range is only an issue when you want to do a road trip or have a rare day of particularly long driving.
With a suitable charging station at home, you can simply recharge the car every night. It doesn't matter if it takes 8 hours. There is a solid case that just plugging and unplugging each night is less work and inconvenience than finding and filling up at a gas station once a week. It's also cheaper and more pleasant. In fact, with 200 or more miles of range, you actually have range for almost a week on a single charge, considering the average car in the USA averages only 40 miles/day. This even allows slower, cheaper "level 1" charge which only restores 40 to 70 miles per night. While at first blush, the idea of using a method of charging that could take 40 hours to finish seems completely ridiculous, it actually works fine most of the time because you don't normally drain a car completely with city driving, and nor do you have to charge it full. (In fact, it's better not to.)
But there are still the road trips, and the rare days of very long driving. People want an answer for that. And Tesla built their "supercharger network." They made it much faster than the standards based high-speed charging, though it still takes much longer than stopping at a gas station, and there still aren't (compared to gasoline) very many stations.
With the supercharger and 250 miles of range, you could pause 1-2 times a day on a long drive for the supercharge. While clearly not as convenient as gasoline, drivers adapt to taking slightly longer rest breaks, and getting a snack or doing some shopping to make the breaks only a minor burden. It works. You can take a great road trip in a Tesla and many do. You can't, however take any road trip. You are constrained to the popular routes Tesla had install chargers for, with only modest variation. But for many people, this is not too shabby at all. Gasoline cars are readily available for rent for the other road trips.
Overcrowding
When Tesla began this, they made the supercharging free. They wanted people to really feel these cars were capable of road trips, and free is a good incentive. The superchargers were mostly along the highways and not in cities. As they put some in cities, people got attracted by the free price, not surprisingly, and started using them for general recharging of their car, instead of at home where they had to pay.
This got worse as the number of Teslas grew, and in particular the recent surge in model 3 sales had most of them come with 6 months of free supercharging. The result is that many superchargers, particularly urban ones, are full, with people waiting in line, at many times of the day. Waiting in line is obviously a serious negative, but full supercharger stations also charge you more slowly, since the superchargers are paired and share their power between the two stalls.
This was costing Tesla a lot, so they just announced they will stop the free supercharging perk. They must honour the legacy cars which got it, but they are in a cash crunch and can't afford to expand the network. They have declared the superchargers, when paid for, will be priced at a break-even level, but they recently bumped the price quite high. The new price of 34 cents/kwh in California is 9 cents/mile -- which matches the cost of gasoline for an efficient hybrid car. A big jump from the 3 cents/mile you get with the national average grid price of around 11 cents.
A fast charger is not a gas station
The problem is that when people supercharge near their home, they are not doing electric car ownership right. If you treat the supercharger like your gas station, it's a pretty crappy gas station, with long waits and super-slow fill-ups. You have an inferior experience to gas car ownership. If you do most of your charging at home you get a superior experience. The supercharger should be viewed as a fix to the edge problems of electric cars.
In addition, many people drive a bit out of their way to get to the local supercharger because it's free. But driving still causes depreciation like in any car, with a cost of driving of at least 25 cents/mile. So if you head 5 miles out of your way (10 miles RT) you use up $2.50 of car life in order to save $4 of electricity. Not too smart. (Gasoline drivers are notorious for this, driving several miles to get gasoline for a few less cents/gallon.)
Getting the true number for incremental miles is difficult. Usual estimates for per mile cost of a fancy car range 60 to 70 cents/mile, but that includes time based costs as well as per-mile based costs. See the comments for more details. 25 cents/mile seems like a reasonably safe number.
How to find a balance
I think Tesla could have solved this problem without giving up on the perk. As I wrote, superchargers are there for road trips and special days. You don't want to supercharge every day -- it causes more degradation of the life of your battery than regular charging does. If you supercharge too much, Teslas are programmed to cut you off for full speed supercharging forever. But people are foolishly doing it in their home towns just to save the money. Some are also doing it because they don't have any charging at home or work. They may not own a parking space or garage. At the present time, I believe that electric cars are not ready for people who can't charge at home or work on a mostly-daily basis, but people are buying them.
The answer is to give free or discounted supercharging only at superchargers not near your home. The car knows where you live (it parks there most nights) so you can't fake your address. Let people feel good about taking road trips and not worrying about power, as the network was designed to do, but let the people driving close to home use the superchargers only for unusual situations, and pay for it when they do.
Legally, this would only be applied to new cars going forward, since a deal is a deal. But it would actually benefit those older owners simply because the crowding would go away. It might also cause a price benefit. While Tesla has not confirmed this, I suspect that when they say they are running the superchargers "not as a profit center" they mean that the revenue from paying customers is matching the costs of the superchargers, not the "revenue" from people with free supercharging. If so, this means the people paying are subsidizing those who get it free, and this causes the gasoline level prices.
Superchargers today also charge the same price all day, while electricity actually varies a great deal during the day. Most Tesla drivers supercharge from 5pm to 9pm, which is unfortunately in the peak zone of electrical demand. Almost nobody is charging after 11pm when the cheap power becomes available. It could make sense to offer free supercharging, even locally, after 11pm.
Pay to skip the line
Another option which would raise the ire of those who got lifetime supercharging would be to let those who are paying go to the front of the line. In this event, people with free supercharging could elect to pay or wait or would probably do less local supercharging. This could be implemented by having people indicate the desire to supercharge and pay when they arrived at a station with a line. With such people waiting, free stalls would only work for those who registered in that queue, until the queue is gone. (People could block stalls in anger, but I suspect this would backfire.)
Robocars
Of course, once cars can move themselves at night, you won't need charging in your house at all. The car will head off to a charging location nearby to charge itself at some reasonable rate. In fact, the charging rate will depend on demand. The car has all night (or all day if you don't need it until commute time) so it will be the number of stalls available that governs the charging rate. We can't have supercharging in our houses, because most houses only have 24kw or 48kw of total power available to begin with. Drive-in stalls will all have lots of power.
And of course, some day, Tesla could implement automated movement at superchargers so you did not have to wait in line.
Comments
FKA Anonymous
Wed, 2019-01-23 06:41
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Just charge for it
IMO it makes the most sense just to charge everyone for supercharging at a market rate. Giving a certain group of people subsidized charging just causes inefficiencies. It was a good gimmick to get people to boost adoption during the early stages, but it's not a good long-term plan. If you want to go on a road trip, you'll have to pay a lot more. The case for plug-in hybrid-electric vehicles for such people might be a good one.
Charging at your house (or wherever you park overnight) is probably always going to be the most efficient, even once robocars are available. In crowded cities I suppose you'll have dual-purpose parking and charging facilities, but in the suburbs or rural areas it's likely to be most efficient to just park, and charge, at home (or wherever you are during off-peak electricity hours). Running a charging station is invariably going to have overhead, plus driving to and from the station uses at least some energy.
(I don't agree that there is a large "depreciation" cost; people generally don't drive their personal vehicles until they break down and the difference in resale value of a car with 10,000 extra miles is small. Looking on Edmunds, the trade-in value of my vehicle goes down $420 if I go from 40,000 to 50,000 miles. 4.2 cents a mile.)
brad
Wed, 2019-01-23 13:29
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Depreciation cost
It's not clear that the difference in cost of adding 10,000 miles is that small. Most people do not keep cars until they die. Most resell them, and so take the depreciation cost and the number of miles on it makes a difference. An interesting question with the Tesla is that, since old cars get new features via software, the difference between the year models may be less in hardware. We'll see.
You pay for maintenance, insurance, repairs and of course energy by the mile. If you don't have an insurance company that varies costs with miles you probably should. In theory insurance should be strictly by the mile, though it is not yet.
How old is the car you looked up? Yes, for older cars the depreciation goes down. For cars in their first 5 years it is a fair bit higher, and all these cars are young.
For now the problem is that Tesla did give away lots of free supercharging, and they are cutting costs so won't expand their supercharger network as fast as they plan on their map. Their map was full of stations marked "late 2018" and pretty much none of them came online and they all say "sometime in 2019" now.
FKA Anonymous
Wed, 2019-01-23 18:37
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depreciation
I gave a quote directly from Edmunds. We can plug in different values if you'd prefer. My car is 7 years old. The average new car buyer sells their car after 6 years. That's what matters to people who are going to keep their car for a fair amount of time and then trade it in: how much less the car is worth when they resell it. So my situation is fairly typical, and the values that we plug in shouldn't be for a car more than 6 years old. (A 2014 Tesla Model S with 40,000 miles has a trade-in value of $29,411, compared to one with 50,000 miles that has a trade-in value of $28,021. So the marginal cost per mile is only $0.14 on a luxury car that cost over $70,000 originally. The car went down in value $40,000 over six years, but only a small fraction of that is because you drove it.)
I don't pay for insurance or repairs by the mile, and the maintenance costs that I do pay for by the mile are small. Paying for insurance by the mile makes sense for some people, especially in California, and I might save a very small amount by doing it here, but not much (and after factoring in the cost of the monitoring equipment, it'd probably be a loss). A theory that insurance should be strictly by the mile is a bad theory. Most car crashes are within 5 miles of the home. 77% are within 15 miles or less. While it's true that there's a relationship between miles driven and insurance claims, that relationship is simply not linear. Not even close. "Motorists in the 25-30 thousand annual kilometer range drive 6 times as much as those in the <5 thousand kilometer range, but only have about 2.4 times as many crashes." https://pdfs.semanticscholar.org/6688/810eea4824fe3b97a6d9a8264b5c952b605e.pdf This is why virtually no insurance companies charge strictly by the mile. It's a bad idea.
The marginal cost per mile of driving is nowhere near $1/mile. The main cost of driving is the cost of the vehicle, which, for the average car owner, goes down over time much more than it goes down per mile.
As far as new Teslas getting new features, my understanding is that Tesla has only promised that safety and security software updates will be available free of charge. So keeping up with the latest (non-safety/security) software features will be another cost that is measured over time, and not by the mile. Unless Tesla decides to charge for software features by-the-mile, which I guess is something they may decide to do.
brad
Fri, 2019-01-25 01:19
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By the mile
Each person sells their car at a different time. Those miles in the first year cost more than those in the 5th. Yes, the final calculation is done when you sell but you don't know what that is in advance.
Are you sure you don't pay for insurance and maintenance by the mile? Most insurance companies vary their rates based on how much you drive. Some only in big chunks -- heavy vs. light driver. State Farm, the largest company, has a plan that varies with every 1,000 miles I think. No monitoring equipment, they just email you to send the odometer every 6 months.
The statistic that most crashes are within 5 miles of the home is true because most driving is within 5 miles of the home. Yes, there are different risk number or each type of road -- highway miles are lower risk than urban ones. Prices per mile are reasonable averages. If you're not driving, you are not incurring driving risk.
Almost all cars have maintenance schedules done by the mile, though some will recommend things like timing belt be done after "75,000 miles or 7 years." We don't know enough about Tesla maintenance, it might end up being much less.
You don't have to charge linearly by the mile. Some companies would like a GPS device to then know the risk of each mile you drive and price on that.
I don't claim the marginal cost is $1/mile. Rather, what I said is that for an expensive car it can approach 50 cents. It is of course an average, and differs on each mile.
One thing that's been subject to debate is battery depreciation. Earlier it seemed like it might be a lot. It was on the Leaf. Tesla has learned a lot and seems to be doing better.
But anyway, drop it to 30 cents/mile - which I think is a low number for a $50K new car -- and it still can be foolish to drive very far out of your way to get free electricity.
FKA Anonymous
Fri, 2019-01-25 08:22
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By the mile
It is not true that most driving is within 5 miles of the home.
30 cents is high, but not ridiculously so.
Obviously at some point it is irrational to drive to get free electricity.
brad
Fri, 2019-01-25 13:36
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Most driving
While there are other factors close to home, the strongest factor in why most accidents are near home is because you drive there more. At least this ESurance article thinks so:
It will be good to figure out a good way to calculate the true incremental cost per mile. It is lower on the highway, to the extent that I have felt that cost per driving hour might be a better metric. (Most other vehicles are depreciated based on engine hours.)
It's been well documented that gasoline car drivers will drive out of their way to save a small amount on gasoline, when the cost is clearly silly -- either in fuel burned, or total incremental cost of driving, or of course human time. It is not surprising for electric car owners to do the same thing.
Electric car deprecation is hard to predict right now:
So the number today could turn out to be very wrong in the future.
FKA Anonymous
Fri, 2019-01-25 14:10
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Miles
Maybe most driving is within 25 miles of the home. It is not within 5 miles of the home. Most crashes are, though.
What this says is that the relationship between crashes and miles driven is not linear, a fact which makes intuitive sense.
The exact numbers would be interesting, and I'm sure the insurance companies have a good estimate of them.
brad
Fri, 2019-01-25 14:20
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Most crashes
Do you have a cite for the 5 mile number? I have seen much lower numbers on 5 miles. And of course, the real number we would want to see is the ratio between crashes in a region in driving in a region, and further to compare it with other, similar regions. The driving close to home is mostly not highway, while the driving far from home is much more highway. I am wary of misleading statistics. For example, if stats say, "accidents are most likely near home" but in reality it's just saying, "accidents are more likely on city streets" then it's misleading to talk about home proximity.
FKA Anonymous
Fri, 2019-01-25 15:14
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Miles
Phillip Helbig
Wed, 2019-01-23 13:23
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depreciation
I agree about the depreciation. The market cost of a car is fit well by an exponential decline. As noted above, we are not talking about the average depreciation cost, but only the supplemental depreciation cost, down at the end of the curve. (Sort of like quoting the tax on the last cent you earn overestimates your average tax rate if there is a progressive income tax.)
Russell de Silva
Wed, 2019-01-23 14:34
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Agree, just charge full price for it
Agree, incentives almost always produce perverse side effects in addition to or even instead of what they are trying to achieve.
Charge the price which a for profit charging station would charge. This will be high because the throughput is so low.
People who can charge overnight at home will do so because of the high price of trickle charge.
People who don't have access to a car parking space will just pay more because that is a trade off of living in the inner city.
A fair price at fast chargers will also mean that it is feasible for apartment buildings and or city parking lots to equip a few spaces with trickle chargers at a cheaper price than fast chargers.
Long term fast charging is surely a niche, and charging stations as an analog to gas stations likewise.
In the short term if I were Tesla I would pay for parking buildings to install a few trickle chargers and reserve them for Tesla users.
FKA Anonymous
Wed, 2019-01-23 19:20
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What they were trying to achieve
It's interesting, because the more I think about this, the more I start to think that these high-range electric cars don't make all that much sense for most people. If I drive less than 50 miles a day 95% of the time and only drive more than that 18 days a year, I can rent a car on those 18 days and pay much less than the $10,000+ I save buying a low-range EV over the entire life of the car.
In that sense, Tesla may have done a really smart thing offering free supercharger access, because it made it less likely that people would make that sort of calculation.
Russell de silva
Wed, 2019-01-23 23:26
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I mostly agree
I think the only thing getting in the way of having a short range car and renting a longer range one for long trips is that most people take those trips during the holidays. Here in NZ that tends to be after Christmas. That could make a very large demand peak meaning much higher prices.
Obviously I haven't modelled this with real data :)
FKA Anonymous
Thu, 2019-01-24 16:54
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Good point
That's a very good point. It might make sense for individuals now, but wouldn't make sense if everyone switched today.
For a family with two (or more) cars, it might make more sense for one car to be a long range car and the other car(s) to be short range car(s). Still, it might make sense for families with only one car to forego the long range car.
Truly driverless vehicles also will change the calculation a lot, once they're affordable for the average car-buyer. Among other things, they'll likely give families incentives to go from multiple cars down to one (or even none).
Yet another option is to use a plug-in hybrid.
Doggydogworld
Thu, 2019-01-24 10:54
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Cycle life is an issue with
Cycle life is an issue with short range BEVs, though. It's not clear a small battery saves that much over a 150-200k miles vehicle life.
FKA Anonymous
Thu, 2019-01-24 16:43
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Hmm
Does that assume that there are no technological advances over the life of the battery? Even if a smaller battery only lasts 50K miles and you have to replace it once or twice, the replacement batteries will likely be a *lot* cheaper as technologies will have improved a lot.
That said, good point. It might not be as big of a savings as I had guessed.
brad
Fri, 2019-01-25 01:23
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Making it easy
While there has been much talk of it, little has been done on this. For people buying short-range cars, what they want is a truly seamless and easy experience of getting the long range car (battery or gasoline) when they need it. To do that, you just need depots in the major directions, in range of the short range car. Ie. Hertz locations would do more than fine. And you need seamless handoff -- you drive up, park in the arranged empty space next to your long range car, plug in your short range car and get in the long range car to drive off without needing to talk to any person, like Zipcar or other such, but even more seamless.
Note that even as good as this, some people will crave their own car being able to handle it. Otherwise, yes, it is silly to carry around all that extra weight on all the short trips just to be able to do the occasional long one.
Doggydogworld
Thu, 2019-01-24 10:58
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Demand charges are a bigger
Demand charges are a bigger problem than time-of-day energy charges for anyone offering a fast charging network. You can ameliorate demand charges with on-site storage, but that adds ~10 cents/kWh. Fast charging is not cheap, no matter how you do it.
Of course Tesla Semis will charge at Megachargers for 7 cents/kWH, lol.
brad
Fri, 2019-01-25 01:25
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Demand charges
Delivery charges vary by time of day as well, of course. But people who buy a lot of electricity -- like a truck charging station -- cut deals at pre-negotiated non-retail prices. In some places delivery is so expensive that solar and storage make sense.
FKA Anonymous
Sat, 2019-01-26 12:30
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2016 Chevy Volt LT, 15000
2016 Chevy Volt LT, 15000 miles: $15,672. 25000 miles: $15047. 6.25 cents/mile.
brad
Sat, 2019-01-26 14:24
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OK
So that's a car about 60% the cost of a model 3 and 40% or less the cost of a model S. So 10-15 cents/mile might be a reasonable number for the Tesla under this model, though the battery makes it more complex.
You can look at Edmund's nubmers for the Model S which show higher maintenance costs than I hope to have -- 8.5 cents/for maintenance and 3 cents for repair.
Since I didn't say what type of Tesla might cost 50 cents/mile, I could use the expensive X but let's compromise on the model S. There I think we can safely say:
So that's 36.5 cents/mile plus battery degradation of both kinds, less 2 cents/mile for the free energy going to the supercharger for 34.5. More for an X. Less for a 3.
So what is the cost of battery degradation? Early numbers were quite large. If you look at used Nissan Leafs with battery degradation they take a major hit. Teslas seem to be doing better, so I don't know the answer. Long ago, when battery packs cost $30K-$40K in a P85 or P100 if you presumed a lifetime of 160,000 miles you got a seriously scary number -- 25 cents/mile straightline in the extreme. However, today packs are more like $15,000 and lifetime is expected to be much more, perhaps 200,000 miles and some residual value. Some of this is in the overall depreciation you cite above. But even at $15K in 200,000 miles it's 7.5 cents straightline, more than that whole Volt. We'll see.
So my statement of 50 cents is a bit high for pure incremental cost of a mile. It's closer to 35, probably -- we need to learn about the extra degradation of supercharging to get the better number. Less in a model 3. And I forgot to add the value of your time, which for many Tesla owners is much more than the money they save from free supercharging. Today, superchargers are not located with the convenience of gas stations. We tolerate it because we have no choice. (I would never pull off the highway to buy gas at gas stations located where many superchargers are.)
FKA Anonymous
Sun, 2019-01-27 07:12
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Triple counting
1, 2, and 6 are mostly counting the same thing. Battery degredation costs are maintenance costs, the need for sooner expensive maintenance is the main reason that mileage matters, and the maintenance needed from 10-25k miles on an electric car is minimal.
I think 35 cents is still much too high.
brad
Sun, 2019-01-27 13:37
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Not triple counting
The source number you provided was for a hybrid car. Though they have batteries, degradation is not the same issue and doesn't seem to depreciate the car as much. When a BEV loses useful range, it can make the price of the car plummet -- see the leaf. As such the "regular depreciation" needs the addition of the special battery degradation depreciation. And 6 and 7 are different - you get battery degradation with ordinary use of the car (particular with fast acceleration and high current charging) but a whole new level from supercharging.
I don't see why you say 2 is the same as 1. Edmunds breaks it out so I broke it out. They calculate this from bills people got getting service on their cars. It is what it is, and it's higher than I expected on their Model S report.
Maintenance doesn't yet fix battery degradation. When people buy electric cars, they ask how much of the battery has been lost, and the more is lost, the less they will pay. There is a limit. If you start losing too much of the battery, you are carrying around a lot of weight to no purpose. So a battery degraded to 75% is worth less than 75% of a new battery to people.
However, if you disagree with Edmund's numbers -- what does your own research show? At present I have yet to see a survey of used car prices for electric cars to help us. We should have that for the model S right now. The Model S seems to have some cachet that keeps its value high, while Leafs have dropped quickly, so data on that will be interesting. And to see if it changes when there are competing cars. Right now there are not really competing cars to the model S. In fact, the model 3 is the main competitor I would say. When the E-TRON and Jaguar and a few others come out, the model S will have competitors.
FKA Anonymous
Mon, 2019-01-28 09:54
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Resale
I don't disagree with the Edmunds numbers. I disagree with your interpretation of them.
The need to replace a battery periodically is, I think, maintenance, just like the need to replace tires periodically or the need to replace motor oil periodically. But if not, what would you characterize it as, repair?
In any case, if the car is sold before the replacement is needed, then the cost is reflected in the lower resale value.
Yes, I looked up a hybrid. I also looked up the Chevy Bolt and it showed 6-7 cents a mile in lower resale value.
brad
Mon, 2019-01-28 12:08
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Bolt
Who has numbers for the bolt yet? I wonder why they have numbers for the Bolt and not the much older Tesla S?
Sites that do car total-cost-ownership always break it down into depreciation, maintenance and repairs. Maintenance is taken from the car's scheduled maintenance calendar which says, "At 30,000 miles, bring it in for a $500 maintenance service." Repairs are unexpected, but do follow patterns, though usually only after the warranty is over or extraordinary events (like uninsured events.) For example, my Tesla needed a new window due to a break in after just 1,000 miles. New windows are usually below deductibles. But Tesla windows are more expensive than most, to repairs to my car cost me more than another car, even during warranty.
The battery in a Tesla gets maintenance -- in fact I think that's one of the larger costs in the maintenance schedule for it. It also wears down. Expected wear goes into depreciation. Special wear should go into depreciation but we don't yet know it well enough to figure out how.
Thus, a BEV with 50,000 miles and a battery at 95% is going to sell for more than a BEV with 50,000 miles and a battery at 80%. Probably a lot more. So battery degradation is a whole new type of wear for electric cars related to but not tied to mileage like before.
Battery replacement is a repair, but of course is pretty rare because it's expensive. I don't know if there have been studies of what amount of degradation causes people to pay for replacements. Tesla has promises in their warranty for really bad degradation.
In the future, I expect battery replacement to be easier because the degraded battery is perfectly suitable for grid storage, and thus could get a tolerable resale value during a replacement.
Note that I don't think that Edmunds, KBB and the rest yet understand just how electric cars depreciate with only a few years' experience. Not the way they understand ICE cars.
FKA Anonymous
Mon, 2019-01-28 20:48
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Article
Just came across this: https://cleantechnica.com/2019/01/28/350000-miles-in-a-tesla-model-x-just-18000-in-maintenance/ (Google is paying attention to my searches). Some interesting numbers, though it's not clear how apropos they are of more normal conditions.
"After putting over 350,000 miles on Deuxy, Tesloop recorded a 13% degradation in the capacity of the battery." And that's using supercharging, according to the article. Any idea on how realistic those numbers are? Fake news? Not realistic enough? A different type of battery? Or is it really as good as these numbers suggest?
"Expected wear goes into depreciation." It seems you've just admitted that counting depreciation and expected battery degregation is double counting.
brad
Mon, 2019-01-28 21:06
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Not double counting
That figure is 5.1 cents/mile which is very close to the "fleet average" I have read for ICE cars of 6 cents/mile. I would actually have thought an electric car would do better than that, I am somewhat disappointed. However, I don't know if the ICE figures include cars going to 350K miles because most of them don't. But maintenance is just the scheduled stuff so it should.
I must not be explaining this right. A car depreciates for many reasons, and services like KBB, Edmunds and others monitor markets to figure out the rate of depreciation. However, electric cars have a special factor in their depreciation, a factor they are not getting from used car sale logs they work from. Namely the battery state. The closest they come is they have a "condition" for the car -- poor, fair, good, excellent etc. but it's pretty chunky.
What they are not getting -- yet -- is the battery's state, how much capacity has it lost. The 13% for these model X batteries is better than almost everybody expected in the earlier days, and is a very good sign. However, I can tell you for sure that a car with 10% battery degradation is going to sell for a fair bit more than one with 20%. Which will sell for a lot more than one with 40%. Same miles, same "condition." But these services are not tracking that yet. I know this because if you want a bigger battery you pay a lot for it, though right now Tesla does not have two cars whose only difference is battery size on their site. But people pay a lot for that range, all else being equal.
Extra degradation (for the same miles) will come from driving style, and amount of supercharging, and other things that heat up the battery too much.
If that 13% number from Tesloop holds up, the range of degradation will not be large, and so this factor will be small. But it's not zero, which is what double counting would mean.
brad
Mon, 2019-01-28 20:55
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Bolt on KBB
I put in a 2017 Bolt with 30000 and 20000 miles and got a difference of $1071, or around 11 cents/mile of incremental depreciation. KBB calculates around 34 cents/mile straightline depreciation over the first 5 years of this car's life, so around 1/3 of the depreciation happening from driving and 2/3 from sitting there a year. I think that's "wrong" in the sense that I'm pretty sure the heavily driven car is wearing out much more than a garaged one, but it's not wrong in that this comes from actual sales, so people obviously don't price that way as much as they probably should.
I do think a lot of electric car "depreciation" is going to come because these are high-tech devices, and the new ones are much better than the old ones. If you compare a 2019 Leaf to a 2014 Leaf, there's a lot more difference than over 5 years in many models of gasoline cars. Like a cell phone, it's depreciating even though it's not wearing out. Your battery, for example, is plummeting in price just because the battery industry keeps reducing the cost of the battery packs. They cost half today what they did a few years ago, nothing else in cars is like that.
So I will update my impression of incremental cost per mile -- though this may change as we get more numbers on electrics. And change back as they get new hardware features.
However, the 35 cent number for the model S may still well be right. If the Bolt is going down at 11 cents, I think the Tesla S is easily going down at twice that, and then add the energy, insurance, repairs and maintenance and it's not hard to get to 35.
FKA Anonymous
Tue, 2019-01-29 05:23
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26 cents
The Tesla S isn't "going down at twice that." Tesla S 75, from 20000 to 30000 miles, price goes down by less than $10,000.
What does the scheduled maintenance say has to be done on a Tesla between 20000 and 30000 miles? https://www.tesla.com/support/car-maintenance says you have to do Year 2 Maintenance in this interval, which currently costs $700. So 7 cents a mile. For the first 50,000 miles, most repairs should be covered by the warranty that is included with the model S for no additional cost. But you say 3 cents a mile.
So 10 cents (lower resale value) plus 6 cents (insurance at sky-high per-mile rates) plus 7 cents (maintenance at factory rates and without getting the maintenance plan, which would lower that cost) plus 3 cents (repairs, even though you're covered under warranty) equals 26 cents. Not 35, and not even close to 50.
Note that any value change due to normal degradation of the battery is already included in the change in the resale value. Under this scenario you are selling the car after owning it for a couple years. Maybe people *should* pay a lot less for the difference in mileage between 20000 and 30000 miles (though you haven't convinced me that they should). But they don't. Extra degradation of the battery due to supercharging isn't included, but from the Tesloop numbers it seems like that isn't too bad. It should be especially minimal if you only supercharge to 90-95% capacity. And considering that you're selling the car after owning it for a couple years and driving only 30000 miles, the buyer probably isn't going to know how much supercharging you did anyway.
brad
Tue, 2019-01-29 11:00
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Model S
What's the source of the Tesla S 75 number above? If KBB tellsme 11 cents/mile for a Chevy Bolt, a car costing less than half a Tesla S, one of these numbers is very wrong.
When they calculate cost of ownership repair figures, they only count repairs you have to pay for, ie. not warranty repairs. Definitely your repair bill goes up after the warranty ends but there are still repairs during the warranty, as I outlined I had to pay for one myself this month on my new Tesla.
Note that if you are driving a lot, you will run out your warranty on miles rather than years. In that case, every mile you drive brings the car closer to that cliff date. This should be factored in the overall depreciation score but is not visible in smaller increment of miles.
You call that insurance rate "sky high" but actually it's a low rate! All liability and collision insurance should be based on the amount of risk you take and that's completely based on how much driving you do. Yes, it includes what sorts of roads you drive on and few companies are able to price at that detail, but they are all hoping to. Because most don't, they just charge you a big bulk rate -- overcharging you. But the real cost is based on use. It should cost nothing for liability insurance for a day in the garage.
On maintenance don't forget tires. I know that performance Teslas come with very expensive tires, 2-3 cents/mile (and tires are definitely per mile.) For my model 3 with be 18" wheels it's closer to the norm of just over 1 cent/mile. This is usually put under maintenance by the web sites. And don't forget electricity, which varies based on where you live, when you charge and of course, how much use you make of free supercharger.
FKA Anonymous
Tue, 2019-01-29 15:58
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S
I got the model S numbers by finding out the trade-in value of a model S with 20,000 vs. 30,000 miles. The difference was less than $1,000 (I said $10,000 above but that was a typo).
As far as the rest, I give up. I think you're double counting. You don't. I think you're wrong about insurance. You don't. Oh well. Repeating what I've already said isn't going to change your mind.
brad
Tue, 2019-01-29 17:48
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Actually
I hope we have both learned things in this discussion. Again, which source did you use for those model S figures? That would help to know. In most of my research, I have looked at the same numbers published by the major agencies like KBB, Edmunds, AAA etc. which talk about full depreciation divided by full miles. There is a lot less talk breaking down depreciation into "Cost per month plus cost per mile" which would actually be a more accurate way to do it, and I hoped you were trying to get at the same values.
Of course, the months and miles are both proxies for other things. Real depreciation for ICE cars, for example, might be better measured in engine hours, or integrations of total revs, or time at higher temperatures, or quick starts or a number of other factors. Interior degradation is almost surely tied to driving hours and weather, and a bit of age, not miles. Exterior wear depends on miles and weather and stone chips on the road. And many other things. But for now, miles are the main proxy we get because that's recorded for every car sold.
I can't be "double counting" because I haven't actually cited any number for how much additional battery degradation adds to overall vehicle depreciation. If I had put out a number you could argue double counting. Since I have not, the most you can assert is that there is always zero additional battery degradation loss. That's clearly not true. The battery is a whole new thing, whose wear depends not just on how many charge cycles you do (which would be proxied by miles) but what type of cycles -- do you run always from 20% to 70%, or do you often go to 100% or 0%? Do you supercharge frequently? Do you do lots of heavy acceleration? While we don't know all the sources, we can measure the result, in that cars report how much charge they can hold when "full" and how it declines after these activities. This is a new, less understood thing, which is why I put it in its own category. Of course, in time, it gets factored into the price cars sell for based on miles, but that factoring is poor because miles aren't a great proxy for it.
Which statement about insurance is wrong:
Which of those is the thing you think I am wrong about?
FKA Anonymous
Wed, 2019-01-30 00:30
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source
https://www.edmunds.com/appraisal/ was my source for the Model S figures. 2017 Tesla Model S 75, Solid Black, 20000 miles, Clean, $48,270 trade-in value. 2017 Tesla Model S 75, Solid Black, 30000 miles, Clean, $47,324 trade-in value. $48,270 minus $47,324 equals $946. $946 divided by 10,000 miles equals $0.0946/mile.
Adding the cost of any repairs or maintenance that don't take place until after 30,000 miles is double-counting, because those costs would be incurred by the buyer of the trade-in, and should be reflected in a lower trade-in value.
"Cost per month plus cost per mile" is no doubt what Edmunds is using behind the scenes. You can see this reflected in the "Mileage Adjustment - 20,000 miles" (+$241) and "Mileage Adjustment - 30,000 miles" (-$705). Their numbers by and large show that the value of a car goes down drastically over time whether you drive it a lot or a little. This makes sense.
FKA Anonymous
Wed, 2019-01-30 10:20
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Software limited battery
Any ideas on how the new addition of a range-limitedby-software battery changes the equation? Seems like it's almost a no-brainer to accept this limitation if you don't desperately need the extra range, as you'll put less wear on the battery so that limited range will approach the complete range if the battery over time. At least, that's if the software limit is a fixed number of miles and not a percentage.
brad
Wed, 2019-01-30 22:41
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Software limit
I think Tesla has stopped selling that, but it has one big minus -- you carry around extra weight -- but if they are generous with it, it should be set up so that your battery pack lasts much longer because it uses the section of the pack you didn't pay for. Ie. you never truly go full or empty, which is good for the battery and it cycles through all the cells, not just the ones you paid for. One would hope.
FKA Anonymous
Thu, 2019-01-31 10:41
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Yeah
Maybe they had a different program before, but this one I'm talking about seems to be new: https://electrek.co/2019/01/29/tesla-launches-new-cheaper-model-s-x-software-limited-battery-pack/
There definitely are plusses and minuses. Longer battery life vs. extra weight. Also probably better resale value, as the extra range can be software-added by a subsequent purchaser, and decreased production costs from only needing to deal with one battery size across the whole class of vehicles.
brad
Thu, 2019-01-31 14:42
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Those prices are goofy
$8,000 for 8% of the range? Seems silly to pay that, but I am sure some people will -- and Tesla gets to sell a cheaper car to those who are more price rational.
Phillip Helbig
Fri, 2019-02-01 02:23
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Pun intended?
"There definitely are plusses and minuses."
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