It seems a no-brainer that someone buying a first vehicle should look at electric or hybrid models.
Hybrids and electrics cost more than gas-powered vehicles, and strong demand for them means you’ll have trouble getting a deal on both the cost and the interesting rate on financing. But if you’re buying a vehicle you plan to hold onto and you do a lot of driving, you have to at least check out the cost of a hybrid or electric vehicle.
A quick example of the price premium for a hybrid: the price of a gas-powered Toyota Corolla LE with an automatic transmission starts at $22,250, while a hybrid Corolla with more features starts at $27,320.
A thought for young adults who find the cost of hybrids and electrics too expensive: buy the cheapest fuel-efficient gas-powered vehicle you can find and bide your time. There are two potential advantages to doing this, the first being that you remove yourself from a hot market for hybrids and electrics.
A recent Globe and Mail story on the electric Hyundai Ioniq 5 set the scene on demand for this vehicle: “The only real problem might be finding one, and then getting a dealer to sell it without a ridiculous markup. Hyundai Canada received more than 4,000 preorders last year, and has so far delivered only 1,500 of them. If you place an order now, expect to take delivery in late 2022, a spokesperson for the company said.”
Waiting to buy an electric or hybrid might allow for automakers to catch up with demand. You may also benefit from the introduction of newer, more affordable models as demand for alternative fuel vehicles increases.
Minimize your investment in a car today and you put yourself in a position to buy a more affordable hybrid or electric in the next couple of years. If the resale value of gasoline-powered vehicles happens to be declining at that point, you can take comfort from the fact that you didn’t spend a lot on your current ride.
In Season Five of our Stress Test personal finance podcast for millennials and Gen Z, we will look at the economics of buying a hybrid or electric vehicle. We totally get the fact the electrics and hybrids cost more and are thus a stretch for young buyers. But if you need a car or SUV, there are many good reasons to consider a hybrid or electric. If you’re a young adult who has eyed – or bought – one of these vehicles, please take this quick survey:
Are you under 42? Did you recently buy an electric or hybrid car? We’re looking for Canadians who want to share their car stories for our Globe and Mail Stress Test podcast. To participate, please e-mail Globe personal finance editor and Stress Test co-host Roma Luciw at rluciw@globeandmail.com
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Rob’s personal finance reading list
Electrics are luxury vehicles
High gas prices definitely make a case for electric vehicles, but there’s a problem: affordability. Here’s a look at the affordability issue at it relates to Tesla’s lineup of vehicles.
Plunder your RRSP to buy a house?
That’s basically what the federal Home Buyers’ Plan is all about. Here’s a look at the pros and cons of using the HBP.
Tipping for coffee?
Someone complaining about tipping at a local coffee shop gets a reality check in the Social Q’s feature in the New York Times.
Battle of the 5x credit cards
A comparison of two travel reward credit cards that offer rewards of five points per dollar spent on specified goods and services, compared to the usual one to two points. The cards are American Express Cobalt and Scotiabank Gold American Express.
Q&A
Q: Is it possible to put my crypto account in a TFSA?
A: This briefing note on cryptocurrencies and tax-free savings accounts says crypto is not a qualified investment for TFSAs, but you can use exchange-traded funds holding crypto assets.
Do you have a question for me? Send it my way. Sorry I can't answer every one personally. Questions and answers are edited for length and clarity.
Today’s financial tool
A fun, lively take on basic financial literacy – FinLit 101. Brought to you by the non-profit Canadian Foundation for Economic Education.
The Money-Free Zone
A Latin-funk band called Brownout released an album of Black Sabbath covers called Brown Sabbath several years back. The version of Planet Caravan is a highlight – howling guitars and more.
What I’ve been writing about
- An investor’s guide to the regulatory crackdown on online brokers selling mutual funds
- With bonds sinking, conservative investors are waking up to risks they never saw coming
- Why are Canadians stockpiling thousands of dollars at home? Fear of war, unrest, cyberattack and even the federal government
More Rob Carrick and money coverage
Subscribe to Stress Test on Apple podcasts or Spotify. For more money stories, follow me on Instagram and Twitter, and join the discussion on my Facebook page. Millennial readers, join our Gen Y Money Facebook group.
Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: Are your parents giving you money? • Why it’s time to stop shaming the renting lifestyle • Is now the right time to buy a house? • Why are young Canadians leaving the cities they love? • Eating in: How COVID has shifted our food spending • Crisis-proof your finances? • Can you afford to live downtown? • The cost of kids
- ✔️ The housing file: The housing boom is ripping apart the financial fabric of Canada • Shut out: A well-qualified millennial home seeker throws up his hands after losing multiple bidding wars • Big city housing affordability is over – now what? • She sold her Toronto house to retire somewhere cheaper, but it didn’t work • How young adults and the whole country win with a tougher mortgage stress test for home buyers • Can’t afford your house? It’s likely not your fault
- 📈 Investing: Robo-advisers have grown out of the novelty stage. Here’s help in finding one right for you • The 2021 ETF Buyer’s Guide: Best Canadian equity funds • The 2021 Globe and Mail online brokerage ranking: Who’s best for investing … and answering the phone • Are these the stock market returns of a lifetime? • On the cusp of retirement and wondering about an ETF that pushes the limits on aggressiveness
- 💰 Your money: The five most important numbers for checking the health of your personal finances • Today’s freakishly low mortgage rates can’t last. What will pandemic home buyers do when they rise? • There’s a cost in money, isolation and family stress when seniors choose to remain in their own private homes • Taking CPP early can cost you $100,000 and limit your long term options • Fleeing the city for the suburbs? Watch out for higher property taxes, more cars and other costs
Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.
Rob Carrick