Does it make sense to buy a new gasoline car now?

[clutch]

I'm currently in the market for a new family car. With all the talks of electric / driverless / ownerless cars, does it make sense to buy a gasoline car right now? Will gasoline cars lose much of its resale value in the future? I'm worried that a used gasoline car (non-exotic) 5-10 years form now could be pretty much worthless... Would it make sense to just lease a car given how the technologies are changing fast? (Electric cars with the current range / charging infrastructure do not make sense for us.)

 

Thanks.

[gfp]

If you are concerned about resale / residual value, don't buy a new car from a dealer - IC or otherwise.  Gas powered cars won't become worthless, just worth less, which is always the case when new cars depart the dealer lot.  It makes sense to buy a vehicle when you need one, but it rarely makes financial sense to buy a new vehicle if you are in a financial position to worry about residual value of the vehicle.

[oddballstocks]

We are at the top of the hype cycle...

 

Yes, you shouldn't buy anything.  It might only be a month or two until we have electric cars everywhere. 

[Liberty]

My next vehicle will be electric. I probably won't need to buy for 3-4 years, though, so I'm not on the market right now.

[rkbabang]

If you are concerned about resale / residual value, don't buy a new car from a dealer - IC or otherwise.  Gas powered cars won't become worthless, just worth less, which is always the case when new cars depart the dealer lot.  It makes sense to buy a vehicle when you need one, but it rarely makes financial sense to buy a new vehicle if you are in a financial position to worry about residual value of the vehicle.

 

Exactly.  Buy a used car a year or 2 old with 20-30K miles on it and you will save so much money that it won't matter what the resale value is in 5 years.

If you need another car now then you need to buy something, you can't spend the next 3-5 years walking everywhere.

 

[rkbabang]

My next vehicle will be electric. I probably won't need to buy for 3-4 years, though, so I'm not on the market right now.

 

Exactly the situation I'm in.  I am going to try to get as much out of my current vehicles as possible then buy an electric in 3-5 years (hopefully closer to 5).

 

[Travis Wiedower]

It's a valid question clutch. At some point in the future, gas cars will probably depreciate faster than they already do because of electric taking over. If so, there would be a tipping point where leasing a gas car in the short-term would be better than buying a gas car (as opposed to the historical model where leasing is a worse financial decision longer term). My wild ass guess is we're not at that point yet, but I have no idea.

 

You could make a simple Excel model to try and estimate where that "curves crossing" point is on whatever car you're looking at. If the assumptions required to make leasing better than buying are too absurd, you should buy. If the assumptions look realistic (or even likely) then you should lease. This is exactly what I did when I was deciding on whether to keep my car or switch 100% to Uber/Zipcar. It was pretty overwhelming in favor of selling my car so that's what I did.

 

I don't think anyone can give you a real evidence-based answer to your question though.

[oddballstocks]

I guess I'm not seeing it here in "TrumpCountry". 

 

There are no Tesla's, there is one Volt.  It's owned by a guy who works at Google who said it made zero financial sense but he thinks it's cool.

 

The average age of cars on the road is ~11 years.  I'd say there's at least one if not two cycles before electric makes a substantial impact.  So you're looking at 11-22 years before some significant proportion of cars are electric.

 

Even then they haven't produced an electric SUV, or electric truck.  In W PA probably 65% of vehicles are SUV's or trucks.  This probably stems from the fact that we get snow, it's hilly, and plowing isn't that great.  If you want to get around in the winter on the day of a storm (not the second or third day) then you need 4wd or AWD and clearance.

 

The people who know about electric cars are all mid-30s and under.  The only electric posts I see are at WholeFoods and I've only ever seen an electric car parked there once, they're empty otherwise.

 

The range problem needs to be solved too.  If you live in an urban area and never leave then range is fine.  But what if you're in the country or a rural area?

 

They also need to solve the "out of gas" problem.  If I take my electric truck to a hunting camp and it gets cold and the battery dies how do I charge it?  I've looked at charging these from a generator, it's difficult at best.  If you run out of gas you fill up.  If you run out of battery you need someone with a giant genset to plug in and run it for a night?

 

My guess is electric vehicles loosely follow electrification.  It took 40 years to finally get electric to rural areas outside the city.  And that's because the government created programs that encouraged it.  It's still not 100%!! I was looking at a property recently where I'd need to pay to get electric wired in, it's expensive.

 

We have electric cars for early adopters right now.  In the next 3-5 years we might get a competitive vehicle at a mass market price and more people will start to jump onboard.  I'd say within 10 years in cities they're common, and within 20-30 years they make their way to rural areas.

 

I think there's a real market for an invertor type of vehicle.  Small IC that creates electricity for the drive train.  This utilizes existing infrastructure, eliminates a lot of maintenance and solves most of the problems with 100% electric cars.

[sculpin]

People buying EV's & governments subsidizing EV's should examine some of the materials & mining practices behind some of the key components in these vehicles. Are there much better options with NG or just continuing to increase efficiencies in ICE's? Just skeptical of a lot of the hype these days in this field...

 

"That IF you ignore mining and energy security. 2/3rds of Cobalt comes from DRC which uses 7yr old child labour in extraction, China is the largest producer of refined the Cobalt and controls the market for Rare earth metals(approx 90%). Why do we want to transfer the Wests energy security to China that can manipulate or cut off supply as they did in 2011 when prices when up 2000-3000% for some rare earth metals. Greens just want to exchange one source of energy for another without examining the inherent problems with this new source. Environmentally its a disaster with Chinese rare earth mining villages a toxic wasteland where cattle die and their water is to toxic to drink. Of course EVs and Greenies don't want to respond or acknowledge the environmental damage of mining and extraction of REEs, Cobalt & Copper.(especially in China where environmental protection is scant)

 

Then there is the problem of rising prices for these materials if demand for EVs is anything near projections. Plus subsidies will have to be eliminated as they not fiscally sustainable if EV develop beyond their niche status. Fuel taxes lost will be in the 10s of billions in many countries. (38 billion pounds in the UK alone per yr)

 

Cost of EV's are compared to oil which is taxed to death - without those taxes EVs make no sense. By comparison if we converted our vehicles to NG and charged the vehicles overnight using NG compressors an equivalent litre of NG fuel would be about 30c. (NG is priced wholesale through Enbridge) Emissions comparison would be far different with NG Cars vs EVs vs Gasoline as well as much lower cost to run with NG. When subsidies are eliminated for EVs they make even less economic sense."

 

Then there is this opinion. Should make those looking to invest in EV's pause to examine the veracity of the claims....

 

The Inconvenient Truth About Electric Vehicles

 

Submitted by Gary Novak via Science Errors blog,

 

An electric auto will convert 5-10% of the energy in natural gas into motion. A normal vehicle will convert 20-30% of the energy in gasoline into motion. That's 3 or 4 times more energy recovered with an internal combustion vehicle than an electric vehicle.

 

Electricity is a specialty product. It's not appropriate for transportation. It looks cheap at this time, but that's because it was designed for toasters, not transportation. Increase the amount of wiring and infrastructure by a factor of a thousand, and it's not cheap.

 

Electricity does not scale up properly to the transportation level due to its miniscule nature. Sure, a whole lot can be used for something, but at extraordinary expense and materials.

 

Using electricity as an energy source requires two energy transformation steps, while using petroleum requires only one. With electricity, the original energy, usually chemical energy, must be transformed into electrical energy; and then the electrical energy is transformed into the kinetic energy of motion. With an internal combustion engine, the only transformation step is the conversion of chemical energy to kinetic energy in the combustion chamber.

 

The difference matters, because there is a lot of energy lost every time it is transformed or used. Electrical energy is harder to handle and loses more in handling.

 

The use of electrical energy requires it to move into and out of the space medium (aether) through induction. Induction through the aether medium should be referred to as another form of energy, but physicists sandwich it into the category of electrical energy. Going into and out of the aether through induction loses a lot of energy.

 

Another problem with electricity is that it loses energy to heat production due to resistance in the wires. A short transmission line will have 20% loss built in, and a long line will have 50% loss built in. These losses are designed in, because reducing the loss by half would require twice as much metal in the wires. Wires have to be optimized for diameter and strength, which means doubling the metal would be doubling the number of transmission lines.

 

High voltage transformers can get 90% efficiency with expensive designs, but household level voltages get 50% efficiency. Electric motors can get up to 60% efficiency, but only at optimum rpms and load. For autos, they average 25% efficiency. Gasoline engines get 25% efficiency with old-style carburetors and 30% with fuel injection, though additional loses can occur.

 

Applying this brilliant engineering to the problem yields this result: A natural gas electric generating turbine gets 40% efficiency. A high voltage transformer gets 90% efficiency. A household level transformer gets 50% efficiency. A short transmission line gets 20% loss, which is 80% efficiency. The total is 40% x 90% x 50% x 80% = 14.4% of the energy recovered before the electrical system does something similar to the gasoline engine in the vehicle. Some say the electricity performs a little better in the vehicle, but it's not much.

 

Electricity appears to be easy to handle sending it through wires. But it is the small scale that makes it look cheap. Scaling it up takes a pound of metal for so many electron-miles. Twice as much distance means twice as much metal. Twice as many amps means twice as much metal. Converting the transportation system into an electrical based system would require scaling up the amount of metal and electrical infrastructure by factors of hundreds or thousands. Where are all those lines going to go? They destroy environments. Where is that much natural gas going to come from for the electrical generators? There is very little natural gas in existence when using it for a large scale purpose. Natural gas has to be used with solar and wind energy, because only it can be turned on and off easily for backup.

 

One of the overwhelming facts about electric transportation is the chicken and egg phenomenon. Supposedly, a lot of electric vehicles will create an incentive to create a lot of expensive infrastructure. There are a lot of reasons why none of the goals can be met for such an infrastructure. The basic problem is that electricity will never be appropriate for such demanding use as general transportation, which means there will never be enough chickens or eggs to balance the demand. It's like trying to improve a backpack to such an extent that it will replace a pickup truck. The limitations of muscle metabolism are like the limitations of electrical energy.

 

Electrons are not a space-saving form of energy. Electrons have to be surrounded by large amounts of metal. It means electric motors get heavy and large. When cruising around town, the problems are not so noticeable. But the challenges of ruggedness are met far easier with internal combustion engines. Engineers say it is nice to get rid of the drive train with electric vehicles. But in doing so, they add clutter elsewhere, which adds weight, takes up space and messes up the suspension system. Out on the highway, the suspension system is the most critical factor.

 

These problems will prevent electric vehicles from replacing petroleum vehicles for all but specialty purposes. The infrastructure needed for electric vehicles will never exist when limited to specialty purposes. This would be true even with the perfect battery which takes up no space and holds infinite charge.

 

 

[Jurgis]

Even then they haven't produced an electric SUV

 

oddball, meet Model X ...  8)

 

 

On the original topic, as I have said to friend, I'd rather buy gas car with autopilot than ecar without one. So ./shrug

I'll +1 everyone who said "buy used and don't worry".

[petec]

From what I've read, sculpin, electricity is more efficient than gasoline when you take the whole chain into account, and the demand on the grid is 20% higher if vehicles go electric, not thousands of times higher.  The idea that the current grid is designed for toasters is absurd!

[petec]

Even then they haven't produced an electric SUV

 

oddball, meet Model X ...  8)

 

 

On the original topic, as I have said to friend, I'd rather buy gas car with autopilot than ecar without one. So ./shrug

I'll +1 everyone who said "buy used and don't worry".

 

Autonomous is a key enabler for electric.  Autonomous enables fleets, and fleets should prefer electric because the running and maintenance costs are lower. 

 

My sense is the tipping point will come sooner than most realise.  Some time in the second half of the next decade electric cars will be cheaper to buy, cheaper to run, and better.

 

 

[oddballstocks]

Even then they haven't produced an electric SUV

 

oddball, meet Model X ...  8)

 

 

On the original topic, as I have said to friend, I'd rather buy gas car with autopilot than ecar without one. So ./shrug

I'll +1 everyone who said "buy used and don't worry".

 

The X is as much of a SUV as a Honda CRV.. I'm looking for something that seats more than five, can haul, is utilitarian, can tow.  I have six people in my family.  Need seats plus room for suitcases.

 

Yes, I get it, I'm outside the norm: I have a) kids, b) more than one, c) don't live in some cool trendy city.  I guess I'm just frustrated so many products are created for couples, or a "family" i.e. single kid, or at most two.

 

Even now you need a third row with more than two kids.  The problem is these car seat regulations have made them massive.  Two car seats take up almost an entire bench seat.  The seats supposedly expire, and you need to buy new ones every few years.  The newer ones keep getting bigger and bigger.

 

[gfp]

I realize you are not about to buy a Model X, but you can fit a bunch of people in one -

 

[petec]

Even then they haven't produced an electric SUV

 

oddball, meet Model X ...  8)

 

 

On the original topic, as I have said to friend, I'd rather buy gas car with autopilot than ecar without one. So ./shrug

I'll +1 everyone who said "buy used and don't worry".

 

The X is as much of a SUV as a Honda CRV.. I'm looking for something that seats more than five, can haul, is utilitarian, can tow.  I have six people in my family.  Need seats plus room for suitcases.

 

Yes, I get it, I'm outside the norm: I have a) kids, b) more than one, c) don't live in some cool trendy city.  I guess I'm just frustrated so many products are created for couples, or a "family" i.e. single kid, or at most two.

 

Even now you need a third row with more than two kids.  The problem is these car seat regulations have made them massive.  Two car seats take up almost an entire bench seat.  The seats supposedly expire, and you need to buy new ones every few years.  The newer ones keep getting bigger and bigger.

 

All valid points, but if you'd applied that logic you probably wouldn't have bought a petrol car until the 1950s, because the cars available wouldn't have been good enough for you.  We are seeing, right now, the first commercially competitive EVs in history.  You can't compare them against SUVs which they weren't designed to compete with.  But, if you compare them with the cars they *were* designed to compete with, they do pretty well (Tesla S vs Merc/BMW, Tesla Model 3 preorders).  Give it 3-5 years and you'll have your SUV.  The technology is there.

 

Also, to move the discussion away from the US, for better or for worse EU regulations will make ICE vehicles prohibitively expensive from 2021, and China is hot on EVs due to the air pollution issue.  This, plus Tesla, is scaring the tits off the manufacturers, who are pouring R&D into EVs.  The momentum is heading one way right now.

[oddballstocks]

I realize you are not about to buy a Model X, but you can fit a bunch of people in one -

 

 

Weird, the other day I was on their site looking and I could have sworn the pictures only had a second row.

 

I stand corrected, Tesla has the holy grail vehicle!

 

The thing is cool.  It just needs a better range.  If I could get 500 miles per charge, and re-charge in 15m or less I'd buy one.  I've long wanted the torque of an electric motor, it's the range that kills it.

 

I wonder how you get to the back seat?  Looks like the Infinity 3rd rows, you have to climb through the trunk.  Maybe the seats flip down?

[oddballstocks]

Even then they haven't produced an electric SUV

 

oddball, meet Model X ...  8)

 

 

On the original topic, as I have said to friend, I'd rather buy gas car with autopilot than ecar without one. So ./shrug

I'll +1 everyone who said "buy used and don't worry".

 

The X is as much of a SUV as a Honda CRV.. I'm looking for something that seats more than five, can haul, is utilitarian, can tow.  I have six people in my family.  Need seats plus room for suitcases.

 

Yes, I get it, I'm outside the norm: I have a) kids, b) more than one, c) don't live in some cool trendy city.  I guess I'm just frustrated so many products are created for couples, or a "family" i.e. single kid, or at most two.

 

Even now you need a third row with more than two kids.  The problem is these car seat regulations have made them massive.  Two car seats take up almost an entire bench seat.  The seats supposedly expire, and you need to buy new ones every few years.  The newer ones keep getting bigger and bigger.

 

All valid points, but if you'd applied that logic you probably wouldn't have bought a petrol car until the 1950s, because the cars available wouldn't have been good enough for you.  We are seeing, right now, the first commercially competitive EVs in history.  You can't compare them against SUVs which they weren't designed to compete with.  But, if you compare them with the cars they *were* designed to compete with, they do pretty well (Tesla S vs Merc/BMW, Tesla Model 3 preorders).  Give it 3-5 years and you'll have your SUV.  The technology is there.

 

Also, to move the discussion away from the US, for better or for worse EU regulations will make ICE vehicles prohibitively expensive from 2021, and China is hot on EVs due to the air pollution issue.  This, plus Tesla, is scaring the tits off the manufacturers, who are pouring R&D into EVs.  The momentum is heading one way right now.

 

In the 1950s?  Station wagon!  They could seat a ton of people, tow, haul, they were the first utilitarian vehicle.

 

They had station wagons in the 50s, 40s, 30s, 10s...

[petec]

 

I wonder how you get to the back seat?  Looks like the Infinity 3rd rows, you have to climb through the trunk.  Maybe the seats flip down?

 

Don't the gull wing doors give access?

 

https://www.bing.com/images/search?view=detailV2&ccid=V4yBQoqR&id=26F993B30047E5D21E1BA6C4B8E949A0D4F03C65&thid=OIP.V4yBQoqRjg5_KlwfMPN-DwEsCm&q=tesla+x+seat+plan&simid=608055254932850687&selectedIndex=14&ajaxhist=0

[Jurgis]

Since Musk has more kids than oddball, he thought about oddball's issues.  8)

[petec]

 

In the 1950s?  Station wagon!  They could seat a ton of people, tow, haul, they were the first utilitarian vehicle.

 

They had station wagons in the 50s, 40s, 30s, 10s...

 

In 1910 station wagons didn't have sides!  You'd have gotten pretty cold ;)  But my point, I think, stands: the vehicle you want might not have been created in this, the first year or two of what might be a new age.  But the technology exists to do so (range aside, but batteries are improving fast).  So why doubt it will happen?

[oddballstocks]

 

In the 1950s?  Station wagon!  They could seat a ton of people, tow, haul, they were the first utilitarian vehicle.

 

They had station wagons in the 50s, 40s, 30s, 10s...

 

In 1910 station wagons didn't have sides!  You'd have gotten pretty cold ;)  But my point, I think, stands: the vehicle you want might not have been created in this, the first year or two of what might be a new age.  But the technology exists to do so (range aside, but batteries are improving fast).  So why doubt it will happen?

 

I feel like the argument keeps shifting here.  You said 50s, I pointed out that this format has pretty much existed since the vehicle was invented.

 

Will these things be created in electric eventually.  If the economics make sense then I have no doubt they eventually will.  I'm just trying to be realistic in when that might happen.

 

Look, I'm an extremely optimistic person.  I tend to think everything will happen quickly and is easy.  My business partner jokes I'm like Tom Hanks in the Money Pit.  At a high level it always seems to me that we can add any feature in two weeks.  But he's realistic, knows the underlying pieces and can give appropriate estimates.  I've learned over the past few years to be more realistic, at a high level everything looks easy, but the details usually lengthen things.

 

I remember in the 1990s we were going to have hydrogen powered cars.  That never came to fruition, but back then it was spoken of as a guarantee.

 

I have a book on my shelf that I consider a must read.  It's called Yesterday's Tomorrow.  It's a history of what people thought the future would look like through time.

[petec]

 

I feel like the argument keeps shifting here.  You said 50s, I pointed out that this format has pretty much existed since the vehicle was invented.

 

 

Which I concede.  But my original argument had two parts, and the second stands.

 

I don't remember hydrogen cars being spoken of as a certainty, but even if they were, you never saw one on the road.  Today I see Teslas every single day.  They are a reality, and people love them.  That's the difference.  Ten years ago electric cars were a pipe dream and solar worked, but was expensive.  Now both are in or entering mass production at prices that are competitive with established technologies, often without subsidy.  Now, you can argue that last point (both ways) when you dig into the various things government does to distort costs.  But a) government does and will continue to distort costs, and b) you can't argue with the cost trends, which are falling faster in EVs and solar than in the established technologies (10% a year for solar, much faster for batteries which are 1/3rd the cost of an EV).  And, on a global basis, regulation is swinging hard in favour of EVs.

 

Now, all that could change.  But if it doesn't then within 10-15 years we may well see EVs being cheaper and better than ICEs.  Yet even the organisations that predict that (BNEF, for example) say EVs will only be 30% of new car sales by then.  How on earth does that make sense? 

 

 

[oddballstocks]

Really interesting article with some reason world Model X experience: https://www.edmunds.com/tesla/model-x/2016/long-term-road-test/2016-tesla-model-x-range-and-charging-while-towing-a-trailer.html

 

The comments are fascinating as well. 

 

petec - You in California?

 

There is a Tesla dealer near me, I can see it from the top of the hill in my back yard, so maybe ~1mi away?  With that I still don't see any driving around.

 

I think the predictions are correct, look at my earlier comment about average vehicle age.  Think about it this way.  Even if a EV is cheaper to buy and run than an IC you have to wait until that cycle of car purchases runs through.

 

For example right now it costs gas and some minor repairs for my vehicles.  Let's say $2k per year total.  There is zero motivation to change unless repair costs are through the roof, or I can get something to replace it at the same price.

 

I buy vehicles cash upfront.  If you lease or finance then it's just a monthly payment question.

 

I think this message board isn't a good sounding board on a lot of these things because:

1) Most people on here are wealthy

2) Most are up to date with tech and are willing to pay up for new things

3) We keep up on advancements

 

This is true for most consumer products.  Look at any thread, the comments don't represent anything close to what most people do.  I think that's why you see EV's at 30% of vehicles in 15 years, even if in wealthy educated circles they're popular.

 

[DTEJD1997]

We are at the top of the hype cycle...

 

Yes, you shouldn't buy anything.  It might only be a month or two until we have electric cars everywhere.

 

 

180!

 

I too am in Trump country and "Fly over land".  I see Volts, Leafs, and Teslas from time to time.  I don't see them every day...and they tend to be in the more "well to do" areas...but slice it ANY way that you wish and electric vehicles are WELL under 1% of the fleet here in Detroit.  I would guess that it is more like 1/10 of 1%, and that might even be optimistic.

 

How are you going to have an electric truck to haul gasoline?  They won't have enough power/range!

 

What happens if AMZN decides to start selling electric vehicles?  What then?

[Jurgis]

Really interesting article with some reason world Model X experience: https://www.edmunds.com/tesla/model-x/2016/long-term-road-test/2016-tesla-model-x-range-and-charging-while-towing-a-trailer.html

 

Yeah, I agree that long road trips and especially towing is not for ecars yet.

 

Some people do long trips, but I'd hate to sit hour or even 40 minutes on a long trip to charge the car.

 

If I get Model 3, I'm still gonna do long trips either with second gas car (if I have it) or a gas rental.

 

For someone like you who does long trips often, it's probably not a match.  8)