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August 1, 2022

Should We Get an Electric Car?

Family getting into car

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Electric cars?! Are they worth it?

This question has been on my mind a lot lately because our 13-year-old Audi is on its last legs.

This once cherished luxury car now has over 125,000 miles on it and racked up around $3,000 worth of repairs this year alone.

In theory, the Audi should last us many more years. But with the unexpected and pricey repairs, my wife and I are now asking ourselves, should we cut our losses and sell it?

Kelly Blue Book says we can sell the car for between $4,400 (trade-in) and $6,800 (private party sale). 

And if we sell it, should we get an electric car?

With the federal tax credits for New All-Electric and Plug-in Hybrid Vehicles, we could get up to $7,500 back depending on which model we go with. 

If we wanted to go with a new Tesla and GM vehicle, we would unfortunately not receive any credits. New buyers can no longer receive the federal tax credit since those manufacturers have sold over 200,000 units. 

Recently, Toyota joined that list as well. 

To add to the monetary dilemma, gas prices have increased significantly this year. If we could eliminate our need to go to the gas station (for at least one of our cars), that would mean huge savings for our family (even with the costs it would take to electrically charge our vehicle). 

So we are left with three options we’re pondering:

  • Option #1:  Keep Driving our Older Car Until it Dies
  • Option #2:  Sell the Older Car and Buy Another Slightly Used Vehicle
  • Option #3:  Sell the Audi and Buy a New All-Electric or Plug-in Hybrid

I’m going to review each of these three options in detail and share our thoughts.

Option #1:  Keep Driving our Older Car Until it Dies

While keeping our old car sounds like the most unappealing option with all the new cars, new technology and electric alternatives out there right now … it’s probably the most economical option. 

Although we spent $3,000 this year to fix our clunker, the three years prior we spent less than $600 total to fix it.

Average that out over 4 years, and we’re looking at around $900 per year for repairs and fixes. That’s evidently par for the course with Audi vehicles. They have more maintenance needs than other more economical vehicles. 

In short, I believe our fatigue with this car may have a little recency bias attached to it. We’re saying that this car is crappy but really it’s just recently crappy. 

And now that we’ve dropped some money into it, it’s not so crappy anymore. In fact, our most recent fix helped reduce some unappealing engine noise and oil leaking. So we’ve got that going for us!

Another reason to keep it is we really don’t have a ton of unallocated money sitting around right now for a new car. Or at least for a car that we’d both want. 

As of today, we’ve saved $10,000 in a “new-to-us car fund”.

If, and when, we upgrade, we want our next car to be something that is more environmentally and more economically friendly. And $10,000 isn’t going to get us that right now. 

Option #2:  Sell the Older Car and Buy Another Slightly Used Vehicle

We could sell our Audi and get around $5,000. That would take our total car budget to around $15,000. That’s not bad.

But in looking at what we could get for around $15,000, options are limited. We could get a 2014 Ford Escape with 100,000 miles! Not bad, but that’s not too far away from the mileage we have right now. And with that many miles on it, we’d be afraid we’d come into more engine or transmission trouble. 

Since we like to buy cars that are about 3-4 years old with around 30,000 – 40,000 miles on them, given the sharp drop in price, this is not an ideal option for us. 

Option #3:  Sell the Audi and Buy a New All-Electric or Plug-in Hybrid

After going through these first two options, I know the frugal dude in me is not going to lease or finance a car I cannot afford. 

The vehicles we’d both like range from $35,000 – $50,000! Since we have $10,000 plus another $5,000 if we sell our car successfully, we’re about $20,000- $35,000 short!

Based on this, what we really need is to save more money for a car we both really want

So with that thinking, we need to increase our income over the next year or so before our clunker dies OR we need to use some money from other accounts we have. 

I’m not talking about our retirement accounts, emergency funds or other important allocated savings accounts. But I could be talking about taxable brokerage accounts we’ve set aside as early retirement bridge accounts.  

Those accounts are nebulously being set aside for early retirement in our 50s, but now that I've left my corporate career and started a small business I really like, I’m not so concerned with early retirement. 

So do we pull the trigger now on a car that we both want and tap most of our brokerage account money? OR do we buckle down and save up some cash until we’re ready to buy a car we can afford?

Final Thoughts on Should We Get an Electric Car

When you’re worried about buying a newer electric car versus keeping your older luxury car, these are good problems to have. So I’m trying to keep that reality in perspective. 

That being said, it’s still something we’re working through. 

Given that we’re not in a desperate situation and our older car is working fine for the moment, I’d like to take this as an opportunity to start piling up money toward getting our next car with cash. 

Like our previous goals of paying off $50k of debt in one year, eliminating our $200,000 mortgage in less than 5 years and becoming millionaires in 10 years, I’m excited about the challenge. 

With my income at ⅓ of what it used to be before I left the corporate world, I also need to be realistic about what’s possible. When you’re making $180,000 per year in a corporate job versus $60,000 per year as a small business owner, hitting huge milestone goals is A LOT easier. The bigger the shovel, the easier the work. 

So the question I really need to ask myself is … Do I want to work harder and more hours to get a nicer car?

Or do I want to keep my 20-hour workweek lifestyle and drive a slightly older car that’s not electric?

Maybe I’ll go with a hybrid option. 

What do you think? Should we get an electric car?

Please let us know in the comments below.

Andy Hill

Andy Hill, AFC® is the award-winning family finance coach behind Marriage Kids and Money - a platform dedicated to helping families build wealth and happiness. With millions of podcast downloads and video views, Andy’s message of family financial empowerment has resonated with listeners, readers and viewers across the world. When he's not "talking money", Andy enjoys being a Soccer Dad, singing karaoke with his wife and relaxing on his hammock.

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