Electric Vehicles to be Cost Competitive With ICE by 2017? Aren’t EVs Cost Competitive Right Now?

4 years ago by Eric Loveday 27

Im Cost Competitive Already

I’m Cost Competitive Already

According to study published by the Electrification Coalition, electric vehicles won’t become fully cost competitive with ICE until 2017.

Chevy Spark EV is Cheap Too

Chevy Spark EV is Cheap Too

For some, that may seem a short time to wait for cost-competitiveness, but we’re thinking some electrics are cost competitive right now.

The Electrification Coalition says that “short-range plug-in hybrid electric vehicles are already cost competitive with cars powered by internal combustion engines,” according to the LA Times, citing a conference cal with the Coalition.

The Coalition basis cost competitiveness on purchase price, as well as the cost of ownership over 5 years, with 14,000 miles driven per year.  Additional evaluation criteria is outlined by the LA Times as follows:

“The coalition teamed with professional services firm PricewaterhouseCoopers to calculate expected costs of several types of compact cars, pitting battery-electric against internal combustion engines, plug-in hybrids and hybrid vehicles. Including cost of purchase, fuel, maintenance, federal tax credits and residuals, the data show the cost of owning gas-powered vehicles continuing to rise through 2024 as costs for hybrids, plug-in hybrids and pure electric cars decline dramatically.”

While the Coalition says that some plug-in hybrids are already cost competitive, it sees pure electric vehicles as having a ways to go still.

On the conference call, Jonna Hamilton, the coalition’s vice president of policy, stated:

“In this analysis, we also saw that battery electric vehicles should have a total cost of ownership that is competitive with internal combustion engines in 2017.”

Hamilton says that electric vehicles are still burdened with high battery prices and that’s the main reason they aren’t yet cost competitive.  However, we’ve seen studies that disagree, including this recent one released by the Electric Power Research Institute.

And the general consensus out there seems to be that, in terms of ownership costs, several of today’s electric vehicles are actually cheaper than their ICE counterparts.

Now, we arrive at a point where there’s those out there who say EVs aren’t competitive with ICE and those saying ICE aren’t competitive with EVs.  It seems we’re at a point in time where the cost of ownership is so close that studies come up with conflicting conclusions.  Soon, the scales will undoubtedly tip fully in favor of electric vehicles.

Source: LA Times

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27 responses to "Electric Vehicles to be Cost Competitive With ICE by 2017? Aren’t EVs Cost Competitive Right Now?"

  1. David Murray says:

    I suppose if you remove the tax credit you could claim that they aren’t cost competitive.

    1. ItsNotAboutTheMoney says:

      Precisely. The idea of the tax credit is to lower prices, to help raise volume, to help lower prices to the price with the tax credit without the tax credit.

      1. Aaron says:

        I wonder if they take oil subsidies into consideration. The amount of money we give the oil companies (approximately $4B/year) causes the EV subsidy to pale in comparison.

        1. ItsNotAboutTheMoney says:

          Uh, US 2012 total petroleum demand was about 309 billion gallons. Even if you assumed the subsidy was only related to transportation it’d still be 230 billion gallons. If there’s a really large subsidy, it’s in costs of protecting the strategic resource and the health impact.

        2. scott moore says:

          Hard to take imaginary subsidies into consideration. If you are talking about “special tax breaks”, then I assume you are talking about depreciation, which every other business in America takes.

          1. Spec says:

            The military costs of protecting the mid-east shipping lanes, the public cost of respiratory diseases, the cost of oil wars . . . these are all real subsidies whether you admit it or not.

  2. Alaa says:

    By the way guys, Tesla just made its 20,001 car this year. Look it up
    http://www.teslamotors.com/forum/forums/post-your-newly-assigned-vins-here?page=4

    1. ItsNotAboutTheMoney says:

      They no longer put VINs in sequence in order to prevent production tracking by VIN. GM’s doing the same thing with the Volt.

      1. Josh says:

        Well, they are still producing in sequence, but it looks like they have taken slots of VINs out for EU production. Either way you can’t trust that every VIN below the number has been produced yet.

        I am also pretty sure that VINs have been accumulating since production started, so it would mean 20k since June ’12. This also includes all demo cars and loaners.

    2. Alaa says:

      The sit uses the German Tank Problem.

  3. kdawg says:

    Well, there are only a couple cars out there that come in both flavors, ICE & EV, and we can use one of those to do a quick compare.

    Spark ICE = $17K
    Spark EV = $27k
    ———————–
    Difference = $10K

    Fuel savings = $150/mo
    Time to recoup cost = 67 months = 5.5 years

    This to me is much less than the life of the car.
    Also I didn’t account for savings of oil changes and brake pads/rotors.

    1. ItsNotAboutTheMoney says:

      That’s an awful lot of miles to put on a BEV.

      1. Alaa says:

        I agree with you. Maybe $75 a month since it is a small motor. But still I think the electric is cheap and could be cheaper!

      2. Vin says:

        14K a year is a lot of miles? You must think I’m abusing mine, on target for 16k miles/year. Many others that have BEVs are also putting a lot of miles on theirs. What specifically in your mind causes you to say that? One of the reasons I bought an EV is I expect the powertrain to outlast that of a similar ICE vehicle, due to its mechanical simplicity.

        1. ItsNotAboutTheMoney says:

          Longevity isn’t the issue. The issue is that range limitations (well, charging speed limitation) on such BEVs mean that you need to be in a very limited subset of driving profiles to get that number of miles per year.

          Making an unqualified statement with unspecified parameters comparing a compliance BEV to a higher spec of a relatively inefficient ICEV is a very weak argument.

          1. Jpwhite says:

            What limited subset are talking about? I’m on track for 18,000+ miles per year and have only charge at home for my daily commute. No charging facilities at work. I’m doing that with a 15% degraded battery as well.

    2. ItsNotAboutTheMoney says:

      (Besides your calculation being completely vague as to its parameters).

    3. Mark H says:

      The article states 14,000 which is about 1500 miles above the national driving average. The first EVs have always been aimed at the 12,000-15,000 miles-per-year driver.

      Good headline to get the point out there Eric, and good short analogy Kdawg.
      http://www.afdc.energy.gov/calc/ for more comparison
      http://insideevs.com/what-does-an-ev-really-cost/ (the numbers are better than this now)

      1. Aaron says:

        After 6 months in my EV, I have driven 4000 miles. I’m WAY below the national average. That’s my daily driver, too.

    4. Spec says:

      And such a calculation assumes that the price of gasoline will not rise . . . an obviously bad assumption.

  4. Lindsay Patten says:

    I notice that this study is over five years while the EPRI looked at lifetime cost of ownership where the ongoing fueling costs would increasingly favor the EV. This probably is enough to explain the difference in their conclusions. The definition of lifetime isn’t given in the insideevs summary of the EPRI report.

  5. Jay Cole says:

    Not to be a wet blanket but thanks to the way the federal credit works, and many people’s inability to qualify for the whole amount (or simply choosing a lease for other reasons – personal, battery life, new tech, etc), a extremely high percentage of EVs are leased with a mileage cap…so doing “cost of ownership” past 36 months or 36K-45k total miles is not a practical exercise, at least when applying it to the norm.

    …maybe what we should be searching for is competitiveness on total expenditures during the term of a lease

    ie) Chevy Spark ICE vs Spark EV — cap costs + fuel costs + maintenance costs over 36 months = XXX vs XXX

    1. Bloggin says:

      With over 80% EV drivers leasing, the total expenditures relating to a lease should be the comparison.

      Using the Focus Titanium Hatch and Focus Electric Hatch, a true apples to apples comparison can be made.

      Focus Titanium Hatch Lease: $257/mo x 39 = 10,025 + 3,393 down = 13,416 + 5,249 Fuel(39 months based on fueleconemy.gov) = $18,665 + $180($30 oil change 2x annually) = $18,845 or $523/mo

      Focus Electric Hatch Lease: 229/mo x 36 = 8,244 + 2,028 down = 10,272 + 390 Fuel(36 months based on fuel economy.gov) = $10,662 or $296/mo

      Which puts the Focus Electric costs $227/mo or $2,724 annually less than leasing the same ICE vehicle. Savings over 36 months is $8,172, or almost enough to lease a second Focus Electric.

      Lease mileage at 10,500 annually is the same for both vehicles.

      1. Spec says:

        Damn, that is a compelling comparison.

        1. Just_chris says:

          and also a sensible one, so many comparisons start with “if I bought a Kia Rio” and end with “compared to the top end Leaf the Rio is much cheaper and comes in a wider range of colors.”

          The “wider range of colors” comment can be replaced with any amount of irrelevant nonsense generally relating to the range, size of the vehicle or number of seats and can also take the form of a “but if I chose to drive from my house to the middle of the united states it would take me x number of days including charging time where as if I drove my Rio over the same journey it would only take me 72 hours”.

  6. Just_chris says:

    I always find these type of articles interesting. If a car cost $30 000 dollars it is cost competitive with all other cars that cost around $30 000 or more. There is a little bit of a twist if you want to calculate total cost of ownership but really those sorts of calculations are always a bit debatable as the cost of everything can change over the 10 year period of a cars life and everyone uses a car in a different way. There are also huge variations in ICE cars with respect to cost of ownership both in terms of fuel consumption and maintenance.

    Is a BMW 1 series cost competitive with a similarly sized Kia Rio? Is a Ford focus electric competitive with an ICE focus? depends which one, the base model or the RS? BUT! I hear you shout, the cars you are talking about are in different classes you have to compare apples with apples, if that’s the case how can you compare an EV with and ICE? Totally different apples to my mind.

    The only thing of real importance is the absolute cost (either sticker price or cost of ownership) as this goes down the cars can be bought by a larger number of people. How much a car is worth and when it becomes cost competitive is totally related buyer and is probably more related to the sales person and the marketing team than the nuts and blots sitting on the forecourt.

  7. Ruffhouse says:

    What it comes down to is that while an EV may be cost competitive right now for localized usage, if I’m paying $25,000+ for a vehicle, under what circumstances would I accept a vehicle that I can’t take long distance if the need arises. To most Americans, I’m guessing that at current fuel prices, this situation still vastly favors the conventional ICE vehicles, even in two-car households. As the Technology improves (particularly in the area f capacity, and fast-charging) this can change, but for the moment, the only EV on the road offering gas-vehicle-like long-haul utility is the Model S, which is well beyond the price point for most buyers.

    I think the Volt and other PHEV’s are more likely to see wider adoption in the near term, as EV technology matures.