Should You Buy An EV? (And Why I Did)

I recently became the owner of a brand new Tesla Model 3.

Not gonna lie, it feels very strange.

After not buying all that much (besides investments) for the last 15 years, I decided to indulge in some luxury.

While this might seem like a wildly out of character purchase (and let’s be honest, it is), when put into the correct context it might not be as crazy as it seems.

In this post I’ll explain…

— Why I bought it (and how)
— The experience so far  (what I do/don’t like)
— How much it cost, and ongoing savings/expenses
— Charging options + EV basics
— Tax rebates + subsidies
— Whether you should get an EV

Alright, let’s get into it.

What I bought

A relatively standard Model 3.

The only modification I made was blue paint.  I was considering the larger, nicer wheels, but I’d read those can reduce the range a bit.

Why not the long range?  It’s ten grand extra and only offers an extra 100km or so of range.  That didn’t feel worth it to me.

Especially when most of our driving will be relatively short, plus where we road-trip (South West WA), there’s plenty of chargers along the way.

I had to draw the line somewhere! 😄  And since that’s not a real picture, here’s one after bringing it home:

After flirting with the idea for quite a while, I took a test drive back in November.  The new model 3 hadn’t been released yet, so it was a 2023 version.

It was a strange test drive.  No keys.  No noise.  No dials.  No gearstick.  But it was fun to drive, nice to be in, and felt futuristic.  The novelty effect was in full swing.

After another few days of thinking about it, I ordered one!

The 2023 model had sold out for the year, so I had to wait for the 2024 version.

Anyway, you’re probably more interested in why we bought the damn thing rather than the actual details of the car!

Let me explain…

Why did I buy it?

Here’s the story:

Before this, I’d been continuously exposed to the Model 3 for the previous 12 months.

My friend bought one to use for work as an Uber driver, replacing his trusty Corolla.   Side note: his operating costs are now much lower (fuel and  maintenance) making his driving more profitable per hour.  He also qualifies for ‘luxury’ rides as a bonus.

Sitting inside, I found it pleasantly different from anything else I’d seen before.  Granted, I don’t have a lot of car exposure, but I found it attractive yet minimalist, with thoughtful features, and cool technology.

But that’s why I liked it.  Why did I actually buy one?

Well, because we can afford to without it having much of an impact on our finances.  Importantly, the purchase has absolutely no impact on our freedom or lifestyle.

If that wasn’t the case, I simply wouldn’t do it.  My personal motto is “freedom before fancy shit”, and that hasn’t changed.

The numbers

Many of you are waiting to sink your teeth into this part!

How much did the car cost? 

$63,400.  Or $59,900 after the (incoming) WA rebate of $3,500.

Then of course there’s other fees and government charges (like stamp duty) which added another $6,000 or so.   We also bought a wall charger and have that installed at home for another $1,800 (more on charging soon).  Like having your very own 7/11 servo at home haha.

So yeah, it’s been an expensive exercise 😄

How did you pay for the car?

Cash.  We held back from investing and let our money pile up a bit.   The book has also continued doing much better than I could’ve ever imagined, so the car is kind of a reward for that I guess.

We did look at a novated lease (more on that later), but it didn’t make sense for our situation.  The cost was going to be roughly the same overall to own the car outright, so we didn’t bother.

Will we actually save any money?

Absolutely not.  The smart financial option is keeping our Hyundai i30 as long as possible, not sinking tens of thousands extra into a lump of metal on the driveway.  This is a lifestyle purchase, not a financial one.

In terms of ongoing expenses though, our ‘fuel’ bill will definitely be lower, despite the expected increase in driving.  Maintenance will be lower too.

Tesla vs our current car

Here’s a summary of the main cost differences compared to our Hyundai i30 hatch.

We’ll be spending about $15 to ‘fill up’ the Tesla.  That’ll probably get us about 450km of range on average.

For the same km, the i30 would cost about $60 in petrol.  So the EV is much cheaper in that regard.  Once our solar is installed in the next few months, our ‘fuel’ bill will be near-zero.

Insurance is pricier due to being a more expensive car and choosing comprehensive cover (see below).   So that would be the case with any new car purchase vs keeping an older vehicle.

Servicing will be lower since there’s very little maintenance needed.  The biggest cost likely will be the fancy tyres.  My Uber-driving mate still had 2 original tyres after 80,000 kms!  So, with our rate of driving – about 15,000 km/year – that won’t amount to much, maybe one full set every 5-7 years.

In short, the annual savings aren’t as good as some EV fanatics claim (it costs basically nothing!), but better than the naysayers claim (you save basically nothing!).

Overall, I expect the Tesla to be about $1,000 ‘cheaper’ to run in our particular scenario.  But depreciation and the opportunity cost of having a more expensive car is multiples of that 😅

Insurance

What’s the insurance like?

People have said insurance costs for EVs are insane.  It’s true, there are certainly some very high premiums being quoted.  But if you shop around, there are still insurers who are providing reasonable cost cover.

We went with RAC, $1,115 for comprehensive cover.  AAMI quoted a similar figure.  I’ve heard of other decent quotes coming from Allianz and NRMA, but it pays to shop around (as always).

Why did you choose comprehensive?

Long-time readers know I’m generally not a big fan of insurance.  I only want to insure against massive out of pocket costs.

Two reasons why we went with comprehensive: to make the experience of owning an expensive car less stressful.  And because I’d rather not fork out $60k for a new car if we get in a ‘write-off’ type accident.

We could technically afford to pay out of pocket for a full write-off or major smash.  But the psychological benefits of not having to think about the ‘risk’ when driving and the convenience of having to pay very little if something happens, is worth it to me in this case.

I’ve always thought the worst part of owning an expensive car would be the stress of someone hitting it, or the frustration of getting it in an accident.  So I see this as a deliberately irrational choice.  Of course, I chose the highest excess available with RAC, which was $2k.

Experience so far

What I like about the car:  

It’s fun, fast, smooth, and extremely comfortable.  Very enjoyable to drive or just be in.

I like the minimalist interior and how heavenly quiet the car is.  Driving is so incredibly peaceful, and they use ‘acoustic’ glass and special tyres to reduce noise even further.  I tend not to drive with music on, so it’s even more noticeable.  For someone who likes peace and quiet to relax and think, it’s bliss.

I like not having to use keys or a remote.  It’s connected to my phone so I can just walk up, open the door, and start driving.  That’s optional, but I like it.  The car also closes the windows and locks the doors once you walk away.  Little things like that.

Something unexpected too: air-con in the seats.  I didn’t care about this at all when buying the car.  But after turning it on one sweltering Perth day… holy shit it’s good!

It’s also pretty, haha.  I’m honestly not a fan of many car designs.  In fact, there’s very few cars I actually like (the older Chrysler 300c is another – like a poor man’s Rolls Royce Phantom).   And while I’m not really a car person, luxury sedans are more my thing than sports cars, spacious SUVs, and obscenely large child-like monster trucks (RAM/F150, etc) 😉

What I don’t like:  

It gets hot inside, thanks to the glass roof.  Ironically, this makes the backseat passengers have the best view in the house.  Also, if you’re taller your head will sit closer to the hot roof.

In cooler climates than Perth this wouldn’t really matter.  Either way, we just got the car tinted to keep more heat out.  This will probably reduce AC use and save battery.  If it annoys me further I may get a cover for the glass roof.  To be fair, it doesn’t take that long to cool down with the AC, and you can always ‘pre-condition’ the car to be cool when you get in.

The only other thing that has annoyed me so far is the automatic emergency lane assist.  It’s come on a few times if I’m touching the outside of the lane (seems to be a safety feature I can’t turn off for now).  The slight movement doesn’t worry me, but the beeping does.  Apparently there’s no current way to permanently turn it off, other than de-selecting it before each drive (which I can’t be bothered doing).

Charging options, speeds and costs

For those unfamiliar, there are essentially three speeds of charging.

1- Wall outlet (slow).  This just requires a ‘mobile connector’ cable (these stupidly don’t come standard anymore).  Charging speed is about 10-15 km/hour.  While that is pretty slow, it would actually be enough for us (and many households).  The average household drives 40 km/day.   Plug it in after work, and by the morning, you’d have replenished well over 100km.

2- Wall charger (medium).  These are far more convenient.  Also known as destination chargers.  Picture below.   Charging speeds are 60-70km/hour with 3-phase power, or 25-50km/hr with single-phase (depending on being 16/32 amp).  Often enough for a full charge in 5-8 hours, easily overnight.  You’ll also see these in public spaces, like shopping centers, council buildings, hotels/restaurants, train stations, etc.

3- Supercharger (fast).  Typically at shopping centers, Ampol service stations (they’re rolling these out), sometimes outside car dealerships or select major shops, and often in touristy towns on the way between major population hubs.  These can charge up to 80% in 15 minutes.

How much does it cost to charge?

At home, a full charge would cost around $15 at current WA power prices., equal to about $60 for the same km in a small petrol car.

As mentioned, with solar the cost will end up being near-zero since we can charge during the day when solar is at its peak.

What about public chargers?

There are some free medium/fast public chargers around the place.

I recently tested one out at a nearby shopping center.  Went in, did some shopping, had a coffee, came back with an extra 150km in the tank 🙂

Some places charge, so be mindful.  I use the PlugShare app to find where they are, and whether they charge (very helpful).  And sometimes you need to bring your own “type 2” cable.

Superchargers (in WA at least) often cost about double the rate of home electricity.  Apparently, they’re very expensive to install so it makes sense they’d want to earn their money back.  These are best used only on longer road trips when you can’t charge at home, or don’t have time for (or access to) a free public one.

In all likelihood, there’s no need to use a supercharger other than that.  Most EV owners simply find a home charging routine that works for them and then never have to think about it.

Currently, we’ve just been charging overnight once a week or so.

EV Rebates

Most state governments are promoting electric vehicles by offering subsidies or rebates for new EVs purchased.

There are certain price limits and caps that apply, so google it for your own state to see what the rules are.  Or see a list of incentives here.

In WA, the current rebate is $3,500 for the first 10,000 vehicles with a value of up to $70,000 or less.

Do I need to tell you that it’s a terrible idea to buy a $60,000 car just to get a few thousand dollars back?  I hope not!

People can be quite irrational when it comes to grants, rebates, bonuses, tax savings, and other forms of seemingly ‘free money’.  But not you though, right?!

Novated leases

The idea of a car ‘lease’ is ridiculous to me for most situations.  But novated leases are different, where you can buy the car outright at the end of your lease based on its depreciated value.

There are tax advantages to getting an EV through a novated lease.  If your employer offers salary packaging, you’re able to make the payments using before-tax money.  Depending on your tax rate, this can be a significant saving.

But there’s a catch.  The novated lease companies charge you an interest rate in the background, which is built into the payments.  This trips up many people who don’t run the numbers and just get excited about the tax savings (see previous point!).

We looked at novated lease, but it didn’t make sense in our situation.  Mrs SMA’s job offers salary packaging.  But her tax bracket is too low for the savings to add up.

If you go this route, be sure to triple check the total payments (including the final payout figure) to find out how much it’s really going to cost.

Beware, the NL companies are very sneaky with their marketing and make it look like an incredible deal.  The reality is far less rosy.  And be sure to get a few quotes, because prices can vary quite a bit between different novated lease providers.

Should you buy an EV?

Probably not.

If you’re still working towards financial independence, it likely only makes sense in a few cases:

— You already have an expensive vehicle, you drive a lot, and are looking at a simple switch.  This way no ‘extra’ cash will be tipped into vehicle ownership.

— Your finances are going so well that you’re looking at upgrading your car, you want an EV, and you don’t care about the extra cost or foregone investment gains.

— You simply can’t resist buying one and it’s going to be your one and only major splurge along the way.  You also accept it may not ‘save’ you money and delays your freedom.

—  You’re on a high tax bracket, can access a decent novated lease, and drive a lot so the fuel and maintenance savings add up a fair bit.

Just to be clear, If I was still on the path to FI, I definitely would not buy an EV (or a new car of any kind).  I’d be ploughing everything into investments or smashing a mortgage.

But that’s me.  Others take a more relaxed approach, and if they’re happy with the tradeoffs, that’s perfectly fine.  This blog has always been about making clear and deliberate choices based on your priorities, as explained in the below posts.

—  If the FIRE Journey Is Making You Miserable, You’re Doing It Wrong
—  How to Beat FOMO and Create Your Own Path to Wealth

Final thoughts

This post wasn’t to brag or encourage you to buy an EV.  It’s simply to share what I’m doing, the thinking behind it, how the numbers work, and answer all the questions I’ve been getting.

This purchase seems to contradict my message of shunning consumerism, investing, and using money wisely.  But those things are all in the context of wealth creation.

After you’ve built some wealth, you can focus a little less on wealth creation, and a little more on wealth enjoyment.

It’s also worth remembering something else…

If you engage in big spending consumer behaviour first, you’ll never have wealth.  But if you build wealth first, you can also spend more later.

Not only do you get the life-changing benefits of having savings and assets, but you can also indulge in what I call CUPs (Completely Unnecessary Purchases).

To be perfectly frank, at a certain point, you can live however the hell you like.   Eat fast food and sit around playing video games, I don’t care.  You’ve earned the right to do whatever you want.

But I have a feeling you won’t want to do that.  Life is far more satisfying spent in other ways.  And after years of sensible spending, you’ll still manage your money wisely while also being sure to enjoy yourself along the way.

Thanks for reading! 

Here are some resources you may find useful on your wealth building journey:

My book: After 5 years and hundreds of articles and podcasts, I’ve now distilled everything down into an easy to follow book.  Designed as a complete roadmap to achieving financial independence and retiring early in Australia.  Available in paperback, ebook, and audio.

Mortgage broker: My personal broker of 10 years is More Than Mortgages.  If you’d like help refinancing or getting the right loan for your needs, get in touch with MTM. They have fantastic reviews for a reason. I’ve worked with them for 10 years and they’ve been excellent.

Sharesight: A great portfolio tracking tool for share investors, and free for up to 10 holdings.  It tracks all dividends, franking credits and capital gains, which is incredibly helpful at tax time.  Saves me a lot of time and headache!

Just so you know, if you choose to use these resources, this blog may receive a financial benefit at no extra cost to you.  Thanks in advance if you do.  And to be clear, I only ever recommend things I use myself and genuinely believe in.