True Cost to Own 2

I just heard a cringe podcast where they were discussing lack of street parking near our city's high school. One speaker said that, our region is hilly, and eBikes help with that. But not everyone's family can afford an eBike so many kids have no choice but to drive. 

This is a classic case of car brain where people no longer notice the high cost of car culture and car ownership. 

When our teen daughter was added to our car insurance policy, our premiums when up ~$2,000/yr even without adding another car. If your teen can delay becoming a driver by just one year, you can buy a decent eBike, lock, lights, and panniers. You will also save hundreds of hours chauffeuring your teen. 

Another year, another AAA "Your Driving Costs" report has dropped. It's time to update True Cost to Own. The cost of owning and operating a new vehicle in the US has increased to $12,182 in 2023.  New cars cost 4.7% higher than in 2022, but used cars went down in price. 

Remember, this is an average over the entire US, and Los Angeles tends to have higher insurance and fuel costs (both gasoline and electricity). This is also for the average new car sold which, at $34,876, is significantly cheaper than the typical new car I see in our school district (Tesla Y, ~$45,000-$52,500). 

The typical behavior in our area is for the parent to buy a new car and give their old car to the teen. Then they park the old car out on the street, making street parking even scarcer. It's not more people making street parking scarcer. It's more cars. 

I'm doing the calculation a bit differently this year, inspired by a LA Times article about a Culver City High School teacher that had their students run the numbers on car ownership over a lifetime. I don't get into the messiness of predicting inflation rates or marginal tax rates. 

Suppose you don't buy that new car and save that money instead in a balanced mutual fund. Using the Vanguard Benchmark Returns on Target Retirement Funds, you can expect to get ~8.25% long-term returns 

Using an online Savings Calculator, assuming 

Annual Savings: $12,182

Annual Increase in Savings: 3% (car costs have been going up faster than that)

Returns: 8.25% from balanced funds above

Taxes: 0% (if in tax-advantaged retirement account)

Then you have $1,0983,667.47 in year 24. 

Start when you turn 16, and save a million dollars by 40. 

In 50 years, age 66, the car-free saver will have $11,199,484.63. 

But, wait, you can save $18,264 pre-tax (33.3% combined CA+Fed tax rate) while $12,182 car costs are post-tax. But then you pay taxes on withdrawal from retirement accounts. So the amount will vary, but the message is the same. Living car-free or car-light (my family) is a huge money saver. 

Now I want to talk about the really pernicious part about car ownership, the externalized costs borne by others. 

This is painfully obvious to me every time I go to city council to beg for a bike lane and am turned down because "poor people need a free place to park their vehicles" on the public streets. 

I am charged the same price for my groceries whether I use the supermarket's huge and hugely expensive parking lot. I walk or bike to post of my groceries. I even bike to Costco for some of my trips. Yet, I pay for that parking lot. 

Even though road wear is proportional to axle weight to the 4th power, I am paying property taxes to maintain my city streets even though I get around on a 50# eBike instead of a 4,500# electric SUV. 

A 2020 Harvard Kennedy School study found that Driving is more expensive than you think. "Massachusetts' car economy is roughly $64.1 Billion, with more than half of that coming from public funds."

"Using publicly available data, the authors put the annual public tab at $35.7 billion, which amounts to about $14,000 for every household in the state. Those that do own vehicles pony up an additional $12,000 on average in direct costs."

You might nitpick that Massachusetts is snowy and snow plows are expensive. But, a 2021 Ulupono Initiative study in Hawaii found that "Public costs amount to roughly $15,000 per taxpayer ($24,400 per household), annually, even if they don’t own a car."

Furthermore, "Personal vehicles cost an additional $16,200 per household per year. With the public costs above, each household’s costs total $40,600 per year (or 51 percent of pre-tax income)."

Then there is the opportunity costs of the land. "Land value of public lands dedicated to road, highways, and parking is $3.9 billion, covering about 14 percent of the available urban land in our state."

Next time you see me bicycling for groceries, thank me for subsidizing your roads and parking. And drive carefully and slowly around cyclists. Dangerous road conditions are what's holding back the 60% of the public that is "interested but concerned" about riding bicycles. The more of us that are bicycling; the fewer cars in front of you, competing with you for parking, polluting your air, costing your city big bucks in road repair and climate change adaptation...

California AB 1909 states: 

“Existing law requires the driver of a motor vehicle that is passing or overtaking a bicycle to do so in a safe manner, as specified, and in no case at a distance of less than 3 feet.

This bill would additionally require a vehicle that is passing or overtaking a vehicle to move over to an adjacent lane of traffic, as specified, if one is available, before passing or overtaking the bicycle.”

Drivers are required to pass cyclists with at least 3 feet of clearance (and that is from the furthest point of my bike, including handlebars and cargo).  If there is more than one lane, drivers are required to change lanes before passing cyclists, just as they would do when passing another vehicle. This is why it makes sense for cyclists to ride 2-3 abreast in a pack instead of strung out in a single file line. Drivers can pass them in a shorter distance, making it safer and more convenient for everyone.