The burgeoning realm of Canada’s electric vehicle industry has attracted an increasing number of Canadians making the transition from traditional fuel-based automobiles to electric vehicles, primarily motivated by the prospect of trimming down fuel and insurance costs. However, the total expenditure is contingent on diverse factors: the distance driven, the specific vehicle procured, and the charging location.
Savvy consumers considering this transition should be aware of several key financial aspects. The cost of insurance for electric vehicles, much like their fossil fuel counterparts, fluctuates with user’s driving record, geographical location, age, and the categorization of the vehicle as a luxury or a standard model. Depending on these variables, electric vehicle (EV) insurance could potentially reel in some savings.
Recent data from a 2022 report by auto insurance enterprise, Ratesdotca, demonstrates that a Tesla Model S from 2017 – the most costly electric vehicle – would require a monthly insurance payment of $200.42 for a 35-year-old resident of Toronto with a clean driving record. In contrast, insuring the least expensive EV, a 2019 Kia Niro, averages about $165.92 monthly. Compared to the highest-priced conventional car to insure – a 2022 BMW M340i, the insurance rates of which averaging around $231.75 monthly – cost efficiency can be seen.
Qui Trieu, AVP National Underwriting for Aviva Canada, states that while savings on insurance may be possible, other considerations such as part replacements may impact premiums and the overall expenditure for EVs. For example, major damage to an EV’s battery in an accident could cost thousands of dollars if not covered by insurance. However, Trieu also optimistically suggests that as the industry evolves, so will the availability of essential components.
There are regions where owning an EV could lead to cost savings, particularly relating to overall fuel costs and insurance premiums. However, the upfront expenses tied to acquiring an EV remain higher compared to traditional gasoline vehicles. Electric vehicle models in 2022 and 2024 can range in price from $38,198 to $212,500, according to the Canadian Automobile Association.
Some relief can also be found in government incentives, offering a $5,000 purchase incentive for vehicles with an electric range over 50 kilometers and $2,500 for shorter range vehicles. Furthermore, Trieu encourages potential EV buyers to explore different incentives each province offers, as well as discounts from various insurance companies which can contribute significantly to the savings.
Electric vehicle owners can potentially save on fuel costs, particularly salient with the surge in gas prices over recent years. The annual cost of charging a Tesla Model S, for instance, stands at $525, compared to the $1,775 annual fuel cost of a Honda Civic.
Deciding who might make a good candidate for an EV, Brian Kingston, the president of the Canadian Vehicle Manufacturers’ Association, states that Canadians considering the move to electric vehicles are commonly well aware of potential savings, however, a major obstacle remains the sparse availability of charging stations.
Before taking the plunge to purchase an EV, Kingston underscores the significance of evaluating factors such as the accessibility of a charging station, be it at home, workplace, or a nearby public location. He further advises Canadians to examine their driving patterns and consider factors like how often and how far they would need to drive to figure out whether an EV is suitable for them, given Canada’s expansive road network and harsh climate.
It is necessary, he says, to ensure that one has access to a charging infrastructure if they tend to make long-distance drives frequently. After all, the unique allure of spontaneous cross-province trips to visit family, or the weekend drives spanning 800 kilometers could be far too charming to resist.
