Why owning an average car costs $650 000+

People underestimate how much owning a car costs by 52%. Even a cheap car costs a fortune to its owner, and yet another fortune to society. Let's compare it to some alternatives to show the insane real cost of cars.

The Story Behind - ep. 89

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[TechAltar]

Corrections:
- The 4144 EUR rail ticket apparently includes free city-wide transit as well. I didn't know this, but that would make the calculation at 6:18 even cheaper.

Clarifications:
- The Berlin public transport figures only include BVG, not S-Bahn & Regio (both cost and revenue side). This is done simply because BVG figures are more easily broken out, while the rail figures are harder to separate from the German Rail figures who runs them. Note that this means that there are actually more people taking public transportation because of this than I said, but for the sake of a cost calculation, the BVG figures should be accurate.
- Note that I'm comparing total cost of car ownership (including non-financialized externalities, such as pollution) vs. public transport/bikes costs, which don't fully include externalized costs. This is because such numbers have not been accurately been made for a comparison as far as I know. This means this is not a perfect comparison. That said, keep in mind that public transport companies, unlike private car owners, do have to directly pay for the vast majority of their own infrastructure except bus lanes (rail infrastructure, parking, repair, accidents, etc.), and cause much less pollution (a tram here in Berlin does 1/7th per passenger vs. cars for example) and meanwhile bikes take up about 1/10th as much space for both parking and riding as cars + their roads don't need to be re-paved nearly as often. So keep in mind that these costs are not included, but they would hardly tip the scales.

[NotJustBikes]

Great summary! I'm constantly amazed at how much regular drivers underestimate the cost of driving. They usually don't think past gas and maybe insurance.

At the municipal level, the non-profit organization Strong Towns has done extensive calculations across dozens of cities to show that sprawling car-centric infrastructure is always a net-negative for cities, and it has many knock-on costs to other infrastructure (especially water and sewer costs) that are literally bankrupting cities.

But because cars are expensive - horrendously expensive - people who pay for them think they've paid their way, and there's an entitlement from many drivers. Meanwhile, in the majority of cities, local roads are paid for by property tax or local sales taxes, which means that everyone in the city pays for local roads, regardless of whether they drive or not. If you want cyclists to "pay their way", then you should start calculating their refund cheques.

On a personal note, my next video (coming out on Monday) talks about how our family has saved tens of thousands of dollars since we went car free. That has been so financially liberating for us, but it's only possible because the cities we live in were designed properly. Many people (and especially Americans) don't have that luxury, which is a major problem.

[Tapakapa]

Brilliant stuff! Really enjoyed how you avoided the typical surface level argumentation and instead took us on a deep dive into the actual numbers of car dependency costs. Love it 👌

[alexnefi]

I think you made a massive oversight in this video. No sane person with a low income buys a new car every 4-6 years. Most people in that income class don't buy new cars ever. They buy used cars, which drastically reduces cost of ownership. Also, I'd argue that a VW Golf isn't exactly a bottom-shelf car, it's actually rather expensive. Something like a used Renault Clio or Renault Twingo would be a more likely candidate (New VW Golf starts at 30k€, new Renault Clio starts at 17k€, for reference).
I'm not saying all your arguments are false, they are actually quite valid, I'm just saying the cost of car ownership might be quite overblown compared to the real world.

[fkutwttrtub]

Great video. Great arguments. Very informative yet very easy to get a grip on such a massive topic.

Thanks a lot!

[adisaxena]

I am from Delhi, India. The Delhi Metro has completely revolutionised the travelling habits of the people. Its high speed, clean and air conditioned transportation that charges you a fraction of what you would spend on fuel. It has evidently reduced the number of cars on the roads. Then came Uber and Ola, the ride share apps which has completely subsided the need for owning a car. My father is surprised how I have been earning since 5-6 years and refuse to buy a car. (I just take his if I need. 😂)

[Blackadder]

I agree with everything, except one financial detail, people always take the new car cost in calculation, but most private people don't buy a brand new car, but a car that is a few years old. So I think it would be more fair to take a 4 year old Golf and let somebody use that for 10 years, and then they buy another 4 year old Golf etc... Richer people of course can buy new cars, but I think they are not the majority.

[justynsweeting]

Awesome stuff. This was well documented and well researched, I really enjoyed it and found it informative

[Georgije]

I read an article saying something like this before I bought my first car, so I decided to systematically write down every single expense I have with it into an Excel spreadsheet. So including all insurance, servicing, gasoline, tires, road taxes, depreciation, etc. And I came up with just under 20.000€ over 7 years and 90.000 km. So as I have suspected, owning a car is not terribly expensive at all if you buy a reasonable car.

[alanthefisher]

Fantastic video with the cost breakdowns. It is absolutely insane how much we spend and justify on car infrastructure when there are obviously more efficient ways to spend our time and money on transit.

[squelchedotter]

The Bahncard 100 actually includes local transportation! It is valid on the entire BVG and S-Bahn network too, you don't need to add the numbers.
That is how it makes sense for a lot of people to own. If you are regularly in two cities, it quickly makes sense. I also know people who live a digital nomad lifestyle using it, where they will spend a lot of nights on the train.

[sibolte]

My extended family of 4 living in the suburbs of Florida, USA has 5 vehicles: two SUV's- one of them a junker for carrying the other SUV for moving family/friends and roadtrips, one expensive BMW Sedan purely for one person to drive to work (merely as a status symbol haha), and another sedan and hatchback for two young adults in college. Even though they are constantly repairing them, and literally have no room in the driveway to park them (so much that one has to be reparked on the street when mailman is not there), there is 0 chance they would get rid of them. Their convenience and other perks just outweigh any other benefit in the United States, it is a starkly different world than here in Europe.

[camiloguzman]

This channel produces amazing material 👏👏👏 Thanks for all your hard work.

[ConanOG]

One thing I think people misjudged: expensive cars doesn't get more subsidy from the public than cheaper cars, heavier cars/trucks/busses do. If we only ran light cars and motorcycles our roads would last several years more than our practical use with heavy vehicles to transport our stuffs and people, the impact on road materials increases a lot with the high weight vehicles.

[ergergzbhzefer]

Techaltar is going full orange pill and I’m here for it!

[aurelien]

I think the cost of a car is greatly overestimated is this video.

The depreciation of more than 3000€ a year is in the case of a brand new car but for a used cheaper car it's actually a lot less. I'm not even considering the fact that 75% of the people in France (that's probably the case in Europe too) don't own their cars but rent it.
So you can probably divide the budget by a third or more.

The insurance cost is above the roof. Nearly 1200€ for tax and insurance a year is probably the most expensive you can get in my country (France). As an exemple, i pay 300€/year for a car bigger than a Golf.

What is other ? 1320€ is a lot so it might be interesting to precise what it is.

To counter my own arguments, it seems that all the cost in this video are wildly overestimated (public transport, train, bike maintenance) or maybe Germany is ten time more expensive than France but i doubt it.


To conclude, yes, owning a car is probably a lot cheaper than what you argue but so is the case for public transportation and bike. Overall your video makes total sense and the work behind it is impressive !

[sheldz]

Your videos are great man keep them coming 💪🏼

[katoda]

A couple of issues in this video:

1. All calculations include 1-person households. A single car can be used by all people in a family, and that increases the alternative cost of public transport/bikes - the latter needs to be multiplied by the number of family members. Keep in mind that most discounts (e.g. for school kids) are subsidized by the government.
2. Car infrastructure in the cities - we need the infrastructure anyway for delivery and logistics. All businesses need to deal with transportation, and removing all public parking spaces (or charging the real-market value) would significantly increase the cost of all goods.
3. Lifetime cost of owning a car assumes that a household buys a brand new car. Value cost is not linear, the majority of the costs can be avoided when buying a used car (cheaper insurance, cheaper parts, smaller value degradation).
4. Alternatives presented are not viable at scale. For example, car sharing is amazing, except when everyone needs a shared car (bank holidays, vacation season). Rental car shortages is a real thing.
5. Alternatives presented are not viable for all people. For example, certain people with disabilities have significant problems with using bike / public transportation. Excluding them from owning a car could further result in isolation.
6. 60-year totals in the spreadsheet include costs of 50-year totals 😅

That being said, I still agree with the conclusion that majority of the people living in the cities does not need to own their car. But it won't be so easy to change - first we need to solve the problem of the end-point logistics being mostly based on cars.

[mattnice]

You messed up the Excel formulae in the 60 year total and the figure made it into the video. You've summed B98:B137 and C98:C137 but these include the 50 year subtotals (and miss out the first 21 years of usage) which massively distorts the figure. If you're going to use subtotals like this I'd recommend you use the subtotal formula. The correct 60 year figures (based on the numbers you've decided to use) are 223, 298 for the bike and 1, 041, 288 for the car. This sets the tone for the rest of my comment because if you were viewing any of this with a critical eye you might have noticed that the 60 year figure is more than double the 50 year figure. Suffice to say I think the approach you've taken is biased and overly simplistic.
I'd also take issue with the approach to some of the figures you've used from studies (in particular the Gössling one) - the 'blame' for arising social problems caused by cars is being placed on car users ('selfish, stupid, ignorant drivers') with no critical analysis of the social factors affecting why people might *have to* use cars, and this whole video comes off as a sales pitch to get people to stop using cars which oversimplifies the complexities of the issues surrounding car use. I don't have the time to separate out which factors that have been added to the 'cost of car ownership' are fair to apportion to drivers themselves (I can think of several other interest groups that could bear responsibility for cars being necessary in the first place); that was supposed to be your job: to view the study with a critical eye rather than using it as a tool to sell bikes.
This line from the Gössling study is interesting: "For example, many businesses provide vehicle parking facilities to employees and customers that are unpriced or priced below their full production costs (including land, construction and operating expenses), while providing no comparable benefit to those who travel by other modes." (And you make many similar arguments in the video.)
I wouldn't consider taking less time to commute to be an employee benefit just because I live closer to work, that's time I'm saving because of where I live which isn't really either my choice (entirely) or my employer's; if an employee *needed* a car to get to work, it is surely appropriate that the employer provides a parking space, otherwise presumably the cost of parking would fall on the employee - why do both you and the study believe workers should be further penalised for driving to work if there is no other practical mode of transport? There are different ways of approaching this issue and this video gives no critical analysis.
I'm disappointed to see the figures presented in the way they have been in this video. For example, you've given no explanation of why it would be appropriate to compare the cost of a car *including social costs* with the cost of public transport *without social costs* (did you think it was fair to assume that there were no social costs to public transport?), and then comparing just BVG subsidies with the full social cost of a car - what useful information is this actually giving us?
I think the problem you have in tackling an issue like this is that making a simplistic comparison like this is never going to work - it's not providing information that can accurately assess the unique factors that motivate each driver to own and drive cars and whether or not it's possible or reasonable to ask them to ditch the car. I agree we need to reduce car usage but this video takes the wrong approach imo. What are the factors holding people back from shifting away from cars? I don't think you've adequately covered them in this video.

[WitchMedusa]

Wait so you counted both car payment & depreciation in your calculations? That's a pretty big mistake that inflates your numbers A LOT.

Especially since depreciation is not a fixed cost.