Published July 19, 2024 • 9 Min Read
In the market for a new car? You may be considering an EV (electric vehicle). As you do your car shopping, you’ll no doubt be comparing a range of vehicles across several factors – including efficiency, safety and cost. See how an EV stacks up when pricing out your new set of wheels.
Why consider buying an electric car?
Electric vehicles are attractive to new car buyers for several reasons – most notably for their environmental benefits. Due to their reliance on fossil fuels, passenger vehicles are a major contributor to air pollution in Canada, and EVs have the potential to emit fewer or zero tailpipe emissions. Data from the RBC Electric Car Cost Calculator estimates that, on average, the annual emissions savings of fully electric vehicle could be 2,725kg carbon dioxide equivalent — about the same as planting around 123 trees.
Despite these benefits, not everyone is sold on an EV. One of the barriers to purchasing an EV is cost, as the sticker price will typically be higher than its gas-powered counterpart. But while the upfront Manufacturer’s Suggested Retail Price (MSRP) is generally more, other factors can affect the total ownership cost of an EV over time.
How much does it cost to charge an electric car?
The opportunity to save money on gas is another appealing benefit of an EV for car buyers. But electricity isn’t free – so how does powering an Internal Combustion Engine (ICE) vehicle compare to an EV?
Canadians have long grumbled about the price of gas, and according to the Canadian Energy Centre, the increase in the federal carbon tax will significantly impact what Canadians pay at the pump in the coming years. The increase in gas prices between 2021 and 2030 is expected to be 30.8 cents per litre.
The Canadian Climate Institute explored the cost of powering an EV versus an ICE and found that an average Canadian driving approximately 15,000 km will pay about $2,000 a year for gas but could power an EV for $350/year for the same mileage. Estimates from the RBC Electric Car Cost Calculator indicate considerable annual savings on fuel costs: On average, fully electric car could save $2,133 a year.
How efficient are EVs?
Just like the fuel efficiency of gas-powered cars, EVs also have different levels of battery efficiency, which will affect the driving range of each charge. Drivers can expect an EV’s efficiency to fall somewhere between 15 and 40 KwH used per 100kms, with vehicles such as the Lucid Air Pure, Tesla Model 3, and Kia Soul EV being some of the most efficient EVs on the market. To charge an EV at a public station using a Level 2 charger, it usually costs $1.00/hour or $2.50/charge, while Level 3 chargers usually cost between $15-20/hour and take under an hour to charge.
Read more: Learn about the different types of EV chargers and at-home charging
Does the type of electric vehicle affect the cost?
Like with an ICE vehicle, the cost of your EV will depend on the make and model you’re looking to buy. SUVs from luxury brands will naturally cost more than compact cars, and the level of finishings and extras will drive the cost of your vehicle up or down. The most expensive part of an EV is the battery – larger batteries will increase the car’s upfront cost but will produce a longer driving range. For budget-conscious EV drivers, smaller vehicles like the Nissan Leaf and Hyundai Kona typically rank at the top of affordability lists.
The type of EV you get will also influence the cost of your vehicle. There are four categories of EVs you can consider:
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Battery Electric Vehicle (BEV): BEVs are fully electric vehicles and run exclusively on a plug-in powered electric motor, therefore producing zero tailpipe emissions. The purchase price of a BEV is usually higher compared to PHEVs or HEVs.
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Fuel Cell Electric Vehicle (FCEV): FCEVs are powered by hydrogen versus a battery. Like a BEV, they produce no harmful tailpipe emissions and are more efficient than ICEs. FCEV awareness, availability and infrastructure is more limited in Canada compared to BEVs for now.
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Plug-In Hybrid Electric Vehicle (PHEV): PHEVs run on a plug-in battery powered electric motor and switch to a gasoline or diesel engine once the battery is depleted. These vehicles produce some emissions while the gasoline/diesel engine is operating. The purchase price is usually lower compared to BEVs, but higher than hybrid vehicles (HEVs).
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Hybrid Electric Vehicles (HEV): HEVs run on a battery powered electric motor and a gasoline or diesel engine – the operating system determines which power to use. Batteries are recharged through regenerative braking and the ICE – it cannot be recharged by plugging it into a power source. These vehicles produce some emissions while the gasoline/diesel engine is operating – usually more than PHEVs. Price-wise, these tend to be the lowest compared to BEVs or HEVs.
What rebates and incentives are available to help save on an electric vehicle?
There are several incentive programs available to help Canadians make the transition to an EV. The most notable is iZEV — the federal government’s Zero-Emission Vehicles Program —which offers rebates of up to $5,000 for Canadians who buy or lease a zero-emission vehicle like a battery electric vehicle, fuel cell or plug-in hybrid. (Hybrid electric vehicles do not qualify for the the iZEV program because they rely on an internal combustion engine, as well as regenerative braking, for power.)
While the iZEV program was originally set to finish by March 31, 2025, it was announced in the most recent federal budget that it will extend beyond this date (although, as of June 2024, no new end date has been released).
The rebate can go a long way toward offsetting the upfront cost of an EV, but there are some eligibility requirements that are important to be aware of to ensure your vehicle qualifies for the program:
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The program only applies to Zero-Emission Vehicles (ZEVs). To find out if the vehicle you’re looking at is eligible, you can consult the list found on the Government of Canada website.
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Only new ZEVs are eligible. Demo vehicles (i.e. vehicles that buyers can test-drive) are considered new and are eligible for the incentive if the odometer reads less than 10,000 km
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The vehicle price must fall within certain Manufacturer’s Suggested Retail Price (MSRP) limits, which are as follows:
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For passenger cars, the base model MSRP must be less than $55,000. With higher-priced trims, the MSRP can be up to $65,000.
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For station wagons, pickup trucks, SUVs, minivans, or vans, the base model MSRP must be less than $60,000, and up to $70,000 for higher-priced trims.
There are also incentives available by province and territory, which can be used in addition to the iZEV program. Visit the RBC Electric Car Rebates page, where you can choose your province or territory and discover what’s available where you live.
Does it cost more to maintain an electric car?
According to a report by the Canada Energy Regulator, the cost of electrical vehicle maintenance is about 70 percent lower than that for a comparable ICE vehicle. This lower cost is largely because EVs have fewer parts and no oil or transmission fluid to replace. Also, thanks to regenerative braking, brakes tend to last longer. (Regenerative braking captures the kinetic energy from braking and converts it into electrical power that charges your vehicle’s battery. In turn, this means less wear and tear on your brakes.)
On the flip side, EVs often cost more to repair than comparable ICE vehicles. This is due to the fact that EVs are more likely than ICE vehicles to use Original Equipment Manufacturer (OEM) parts, which are generally more expensive than used replacement parts. According to a recent report, almost ninety-one percent of EVs use OEM parts, while 66.5 percent of ICE vehicles use OEM parts.
The cost of specialized labour also has an impact on the cost of repairs, but this is likely to change as EVs become more mainstream and more mechanics are trained to work on them.
How long does an EV battery last?
The lifespan of the battery is also a consideration when it comes to maintenance costs – most EV batteries last about 8 years or 160,000 kilometres. If the battery needs to be replaced within that period, it will typically be under warranty and there will be no replacement cost. If it falls outside of this warranty period, however, the cost can vary greatly based on model, size and manufacturer. It is expected that the rapid pace of change in this technology will positively affect battery costs in the coming years.
Read more: How much does EV maintenance cost?
Does leasing versus buying an EV affect the cost?
Like with any vehicle, leasing an EV will typically lead to lower monthly payments compared to buying – but you won’t build equity in the vehicle. The decision to lease or buy a vehicle tends to be a personal preference, with factors such as budget and lifestyle affecting your choice, along with the expected length of time you expect to drive your vehicle.
If you are thinking of buying, the RBC Clean Energy Vehicle Program offers special financing rates when you finance through RBC. The RBC Car Loan Calculator can show you how your interest rate, down payment amount and financing term could affect your loan payment.
Calculate the cost to buy and own an electric vehicle
While there are several factors that influence the cost of vehicle ownership – especially as you compare the cost of an EV versus a gas-powered vehicle – the RBC Electric Car Cost Calculator can offer more clarity.
Simply input your province, expected mileage, electrification choice, budget, and financing preferences, and the calculator will help you determine your breakeven point – in other words when an EV could start to cost less than an ICE. You’ll also have the option to estimate loan payment, annual estimated fuel cost savings and estimated emissions savings for an EV, presented alongside the ownership costs of a comparable ICE vehicle.
While an EV may cost you more upfront, you can realize meaningful savings over time – and reduce your impact on the environment at the same time.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.
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