While global electric vehicle sales recently broke the US$1-trillion mark, the auto industry has an elephant in the room: gas-intensive SUVs and light trucks are still the most popular vehicles in North America. Though full-sized pickup trucks remain the top-selling vehicles in the United States and Canada, more than half of all vehicle sales in both countries are SUVs.
That helps explain why the industry is still on a trajectory that will overshoot the Intergovernmental Panel on Climate Change pathway to limit warming to 1.5°C by a wide margin – at least 75% by the year 2050, according to a study by global management consulting firm Kearney. The bright side is that EV sales are surging across North America. In fact, the Tesla Model Y was the sixth-bestselling vehicle in the U.S. in 2022, breaking the brand into the annual top-10 sales list for the first time. This happened despite ongoing supply shortages that continue to impose low inventory and long wait times of up to 24 months for EVs of all types, but particularly for trendy vehicles like the Ioniq 5. The electric SUV with a funky 1980s-inspired aesthetic has been raking in awards and accolades. But can it lure SUV drivers away from gas-powered models?
While EV manufacturers like Ford and Tesla have been dropping their prices in the U.S. and the Inflation Reduction Act offers new incentives for EV buyers, more than half of American consumers think they’re still too expensive, according to new research from Deloitte. The takeaways? Now is the time to push hard on educating consumers about the benefits of EV ownership, while the iron is hot and climate change targets aren’t yet astronomically out of reach.
The EV cost-of-ownership analysis at left is one such educational tool. For Corporate Knights’ fifth EV faceoff, we’re pitting one of the industry’s most awarded EVs, the Ioniq 5 SUV from Hyundai, against the world’s bestselling gas-guzzling SUV, the Toyota RAV4. Here’s how much each of these vehicles costs to own over a 10-year period and how an EV can save money over the long term in ways drivers may not yet have considered.
Canadian analysis
The Ioniq 5 is the second most popular EV in Canada after the Tesla Model 3, and it was named 2023 Canadian Utility Vehicle of the Year and Best EV in Canada for 2023 by the Automobile Journalists Association of Canada.
For this analysis, we chose the Ioniq 5 Preferred AWD Long Range trim. Although this is the most expensive model, it has the longer-range battery and all-wheel drive, which are important purchase factors for many Canadian buyers. We skipped the $6,000 Ultimate package, which adds on driver assistance and other technologies, since most essential features are already included in the base purchase price of $57,652, including destination charges of $1,925 and other fees.
To find equivalent features and as a nod to the current trend toward SUVs with added outdoor-focused design elements and features, we’ve priced the Ioniq 5 against the Toyota RAV4 Trail AWD, which carries a price of $43,334, including delivery charges of $1,930 plus other fees.
Notably, these figures are based on prices in Ontario, where there are no provincial rebates available and electricity rates are less favourable, at an off-peak time-of-use rate of 7.4 cents per kilowatt-hour. Even with these factors working against it, our calculations show it’s less expensive to own the Ioniq 5 over 10 years than the RAV4 by $6,726.75.
The Ioniq 5 gains an edge via the RAV4’s fuel costs and a more favourable interest rate: Hyundai is quoting a 72-month financing annual percentage rate (APR) of 5.99% as of late February 2023 for the Ioniq 5, while Toyota is quoting 7.09%. Every RAV4 built will sell, so Toyota has little incentive to offer cut-rate financing. The result is a cost that consumers may not expect up-front.
Note that the Ioniq 5’s cost savings would be even higher in Quebec and British Columbia, where provincial purchase incentives of $7,000 and $4,000, respectively, would apply. In any case, the most challenging part of the decision-making process here is whether to settle in for a long wait for delivery.
U.S. analysis
The Ioniq 5 is just as celebrated in the United States, where MotorTrend has named it SUV of the Year. For our U.S. analysis, we’ve based our calculations on prices in Washington, D.C. We’ve selected the Ioniq 5 SE, which is the most affordable trim that comes with a long-range battery, and we’ve chosen rear-wheel drive. With $1,335 in delivery charges included, the price to buy a new Ioniq 5 SE comes to $42,785 (all prices in U.S. dollars).
For the RAV4, we’ve worked with the XLE Premium trim with front-wheel drive, which is relatively affordable at $33,710 (including $1,335 in delivery charges) and roughly equivalent to the Ioniq 5 SE in included equipment.
A significant change was made to the federal tax rebate program through the Inflation Reduction Act that came into effect on January 1, which has made vehicles built outside of North America ineligible for U.S. EV tax credits.
Ioniq 5 units sold in the U.S. are currently built in South Korea, meaning it no longer qualifies. Hyundai is building a production facility in Georgia, but it will be several years before this comes online.
Even with the lack of rebates, the Ioniq 5 comes out ahead of the RAV4 in cost of ownership over 10 years. This is again thanks to a lower financing APR (4.9% for 72 months for the Ioniq 5 versus 5.49% for the RAV4), plus Hyundai offers an extra year of included scheduled maintenance versus Toyota, which allows us to calculate an even lower upkeep cost. Most importantly, the District of Columbia has a program that gives EV owners access to an off-peak electricity rate of 4.9 cents per kilowatt-hour, which goes a long way in reducing charging costs. Charger installation costs also qualify for a district tax credit of 50% to a maximum of $1,000; we have not included the credit in these calculations as the amount would vary significantly based on actual purchase and installation cost, but the tax credit would equate to an additional few hundred dollars in savings for most owners.
Unfortunately, many U.S. dealers are charging significant markups for the Ioniq 5 because of high demand, and if you relent and pay more than the sticker price, you’ll lose these gains. But if you can find a scrupulous dealer with access to inventory, our calculations show you’ll save $2,892.74 on the Ioniq 5 over the RAV4 over 10 years. And since you’ll also spend that decade driving a vehicle that’s not guzzling gas and spewing fumes, in this scenario the Ioniq 5 is a win-win proposition.
Stephanie Wallcraft is an award-winning automotive journalist based in Toronto and is a past president of the Automobile Journalists Association of Canada.
Read more EV Faceoffs to find out how electric vehicles compare to their gas-powered counterparts.
