Study Finds Electric Vehicles Cost Less Than Half As Much As ICE To Own

1 week ago by EVANNEX 43

Electric Cars

Two very popular, yet very different electric cars: Toyota Prius Prime and Tesla Model S (Image: CleanTechnica)

NEW STUDY FINDS ELECTRIC CARS OFFER THE LOWEST TOTAL COST OF OWNERSHIP

It’s no secret that electric vehicles carry higher sticker prices than comparable legacy vehicles (although it’s debatable whether any gas-burner is truly “comparable” to an EV, especially a Tesla). Of course, as any EV booster will tell you, the difference in purchase price is offset by savings on fuel and maintenance, as well as the various tax breaks and incentives that are available.

But how do the numbers really stack up? A new study, published in the journal Applied Energy (via Ars Technica), assesses the total cost of ownership (TCO) of conventional, hybrid, plug-in hybrid and battery-electric vehicles in the UK, California, Texas and Japan for the time period 1997-2015. The study compared the TCO of the Toyota Prius, Prius Plug-in, and Nissan LEAF to the Toyota Corolla in Japan, California, and Texas, and to the Ford Focus in the UK.

*This article comes to us courtesy of EVANNEX (which also makes aftermarket Tesla accessories). Authored by Charles Morris.

The study calculated TCO using an average annual mileage for each region, and an average annual maintenance cost. “Costs were found to be cheaper for electric vehicles due to less wear on the brakes and fewer moving parts,” write the study’s authors.

The good news: in 2015, battery-electric vehicles in all four regions were slightly cheaper than legacy gas or diesel vehicles on a TCO basis. Of the three types of electrified vehicle, the pure EV wins out. The TCO for hybrids was higher than that of traditional vehicles in all regions, because they still use fuel, and receive less in the way of incentives. Plug-in hybrids were the most expensive type of vehicle in every region except Japan, where they are eligible for generous subsidies.

Electric Cars

Battery Electric Cars/Vehicles (BEVs) had the lowest Total Cost of Ownership across all vehicle types and test regions (Source:Applied Energy via Ars Technica)

The bad news: those government subsidies are a big part of the reason that EVs end up cheaper, and they won’t (and shouldn’t) last forever. For example, in the US, the federal tax credit will begin to phase out once a particular automaker reaches 200,000 in EV sales. Tesla will almost certainly be the first automaker to reach that milestone, probably sometime this year.

Another caveat: the results of this study may not apply to other regions, because prices and local subsidies vary greatly. TCO for an individual also varies depending on annual mileage – the more you drive, the greater the cost advantage of an EV.

The really good news is that these results are from two years ago, and EV prices are falling steadily. In all four regions, the study found that the TCO for electrified vehicles fell between the year the cars were introduced and 2015. The most expensive difference between an EV and a legacy vehicle is the cost of the battery, and that cost is dropping rapidly. Bloomberg New Energy Finance estimates that EV batteries had an average cost of $273/kWh in 2016, compared to $1,000/kWh in 2010. Many observers have predicted that $100/kWh is the price at which EVs will reach true cost parity with ICEs, without the need for government incentives. That price point is likely to be reached within the next couple of years.

Electric Cars

Pure electric cars: Nissan Leaf and Tesla Model S (Image: Wikipedia Commons)

Of course, cost is far from the only factor that influences car buyers. Brand loyalty, design features and raw emotional response to a car all play a part in closing a sale. When it comes to EVs, there are two more major factors that have nothing to do with cost: for some buyers, the environmental advantages are a big plus, while for others, the unfamiliarity of a new technology is a big minus. Ars Technica notes that an earlier survey from McKinsey & Company found that 30 percent of US car buyers had considered buying electric cars, but only three percent actually bought one. Half the respondents said they were unsure of how EV technology worked.

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Written by: Charles Morris; Source: Applied Energy via Ars Technica

*Editor’s Note: EVANNEX, which also sells aftermarket gear for Teslas, has kindly allowed us to share some of its content with our readers. Our thanks go out to EVANNEX, Check out the site here.

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43 responses to "Study Finds Electric Vehicles Cost Less Than Half As Much As ICE To Own"

  1. Gazz says:

    Ownership in the UK is expensive. Thanks for reminding us.

  2. Brian says:

    “Study Finds Electric Vehicles Cost Less Than Half As Much As ICE To Own”

    What evidence is provided to support this claim? Less than half as much? None of the data provided plays this out. At best it shows a minor improvement.

    1. terminaltrip421 says:

      it appears as though they’re basing this assertion on a Texas BEV vs a UK PHEV

      at last I think that’s what the graph might indicate.

    2. terminaltrip421 says:

      whatever the case hardly a conclusive hard-line win and I’d also not readily call an PHEV an ICE so generally.

      but we’re talking about and article that starts with a proclamation that Tesla is effectively the greatest car in production. “although it’s debatable whether any gas-burner is truly “comparable” to an EV, especially a Tesla”

    3. Bill Howland says:

      Totally agree Brian…..

      Depends on what brand the car is also, and where it is driven, and the country’s average refueling cost.

      For instance, supposedly Nissan manufactures ICE junk more often than not. Yet, the Leaf most people find is totally reliable (excepting lost battery bars of course).

  3. Bruce Sanders says:

    I’m surprised at these numbers. My 2014 Chevy Volt buyback was $23,136 after 3 years and 45,000 miles. It went for $12,442.00 at auction, and was then transported from New York to the buyer in Ohio. Also – enough of comparing nine to tweleve cent electric rates…I pay .364/kwh here in NYC (ConEd) and .242/kwh at my LI summer home (PSEG). I LOVED my Volt and would strongly consider another one (or Bolt, NG Leaf etc), but the economics make no sense here in the northeast for electric cars…at least not yet.

    1. NFL Champions says:

      NY and LI are not representative of prices in the Northeast. I pay $0.11/kwh and I’m less than 100 miles to Manhattan.

      1. Bruce Sanders says:

        Would you mind if I string an extension cord…

      2. Spoonman. says:

        Yeah I pay extra for renewable electricity and my cost is somewhere around 12 cents/kWh.

      3. Bill Howland says:

        NFL well, yes and no. It depends where you are. Where I am (National Grid), I pay about $0.11/kwh as you do. However Just across the border in western Massachusettes you’d pay around $0.20/kwh.

        Less than 11 cents is representative of those with a large percentage of Hydropower, or a large percentage of COAL fired generation.

        There is hope for the future, however… Wind Power (on shore at least) is continuing to decrease in cost, as well as Solar Power has lately decreased in cost.

        Why people in California and in downstate NY pay extortionary electricity rates (where a VOLT is cheaper to run in the summertime on gasoline than electricity) is beyond me.

        Especially if you are foolish enough to take time of day rates, and accidentally charge your car during SUPER-PEAK summer rates of over $1 /kwh.

        This would mean recharging a large “S” or “X” would be (at around 82% roundtrip efficiency as proven by an “S” owner) during this time would $116. Ouch!

      4. Steven says:

        Absolute agreement. When I make my monthly trip to The Island, my rule of that is that I fill up at a rest stop on the New Jersey Turnpike.

        (And guessing by your name, we’re probably neighbors.)

        1. Steven says:

          Thumb, not that.

    2. John says:

      You just answered your own question- buy a gently USED electric. Their re-sale is so much less than equivalent ICE vehicles that the highest saved money is in the used market.

      1. Bruce Sanders says:

        John,

        You make a great point. I was ready to purchase my Volt from GMAC, but they would not budge on the price. Note to all those with GM Cards – GM has a $500 to $1000 bonus on points used for a new Volt or Bolt until 02-28-18.

        1. John says:

          Which is really dumb, because the dealer/leasor doesn’t budge on the price with the leasee (you) at the end of the lease period, but has no problem negotiating with the guy who walks in off the street.

          Doesn’t make a lot of sense.

          1. Ziv says:

            When my lease is a 2013 was about to end in 2016, I mentioned to the US Bank (?) person that I would like to buy out the car but the official price was absurd. She asked what i would be willing to pay and i told her a number much lower than what was on the doc. They countered me $1000 above my offer a couple weeks later and I took it. I think my check was about $5000 below the buyback number on the lease doc. You don’t ask, you don’t get.

      2. Mike says:

        Yup, after leasing a 2014 LEAF SL for 3 years for a total cost of roughly $ 8000 with the CO tax credit, I purchased a used 2013 LEAF SV lease return for $6500 after CO used tax credit (now expired) and am happily and cheaply racking up the miles on this gently used EV, and getting closer and closer to payback on my 10kW PV system. Used EV’s are a very cost effective way to go.

  4. Get Real says:

    Well, because of the much lower operating costs PEVs (including PHEVs) run on electricity will certainly be cheaper over the longer term then ICE.

    Also should be noted that when combined with a Solar PV system it starts to get ridiculously cheap to own and operate a PEV and in a virtuous cycle the payback periods for both the PEV and PV systems get much shorter.

    Basically a win, win despite the shills, shorters and haters out there and sometimes in here.

  5. David says:

    The short list of advantages leaves out one my biggies–convenience. Not just saving money on gas and maintenance, but not having to spend the time at the gas station or the dealer for said gas and maintenance. It’s a huge deal for me.

  6. scott franco says:

    I know people here in Silicon valley who bought an EV for the white sticker. I don’t know anyone who bought one because there is a rebate on it. I suspect people who are worried mainly about price are going to buy an ICE.

    The sooner we get past the government support of these cars the better. Its a complete waste of money, and distorts the market.

    1. Zyzzyx says:

      And the sooner we get rid of the government subsidies and support of the fossil fuel industry the better. Complete waste of money and distorts the market.

    2. David Cary says:

      The problem is that government has a huge role in distorting markets. It is what they like to do.

      The right answer is to pay the true price of gasoline – incorporating the costs associated with protecting its supplies and the environmental damage that it does. We, as a society, can’t seem to agree on that so we have already produced an enormous market distortion.

      The construction of free roads is an enormous market distortion.

      The EV tax credit is peanuts in comparison to what government continues to do on a regular basis.

      I think you can appreciate that SV is not an average place. White stickers are a huge market distortion. Elsewhere, the tax credit makes a difference.

      But efficiency should demand large tax increases on gasoline. That would fix a lot.

  7. Phil says:

    The title of this article does not agree with data provided within it.

    Perhaps if depreciation is taken out of the equation, then the operating costs are half of an ICE car. But depreciation should be included in the TCO.

  8. F150 Brian says:

    I am pro EV, and can’t wait for electrified pickups to hit the market. I would love for them to be cheaper than an ICE pickup (although I don’t really believe they will be cheaper but that won’t stop me from buying one anyway).

    But I don’t follow the logic here at all – please explain!

    Take a small ICE hatchback (Toyota Corolla IM) since there are many BEVs that compare closely:

    According to Edmunds, the TCO for 5 years is $34,659.
    Depreciation, tax, financing and insurance totals: $21,478
    Fuel, maintenance and repairs total: $13,181

    The title says “Study Finds Electric Vehicles Cost Less Than Half As Much As ICE To Own”

    So the EV gets a TCO of $17,330 or less?

    How?

    1. Brian says:

      An EV pickup could be amazing. What I would love is something like the old Ford Ranger EVs from last decade. I would need it to tow my boat (~3,000 lbs), but not far. And it needs a bed for hauling stuff I don’t want to put inside my car.

      I don’t see this happening, though. At least not soon. People who buy trucks want to be able to tow heavy loads over long distances, something that is very difficult for an EV.

      1. Bill Howland says:

        You may be right but if people start buying that WORKFORCE pickup (with the 2 cyl BMW motorcycle engine to push the truck past the first 100 miles of battery), then its 100 mile range should certainly be at least 50 miles fully loaded, and towing something.

        Since the engine rarely runs, (only on trips and vacations) – the fact that it is working hard should still be ok for the life of the truck.

    2. Mark.ca says:

      F, your cost analysis is for 5 years only….extend the period see what happens.

  9. ffbj says:

    This is all well known, and another reason the ice is on the way out. Also PHEV are not good either, as one might expect.

  10. John says:

    Imagine the cost savings when they do the same article in relation to the USED market. EV’s depreciate so quickly the massive cost savings are sitting like a diamond in the open when looking at the used market. Once can pick up a gently used Volt right now for $11-13k, drive it for the next 2-3 years, and upgrade for roughly the same cost into an even better equipped EV. Rinse, repeat indefinitely.

    The best part about the used market is its access to the best cost-savings in the 2nd highest family expense category (behind rent or mortgage).

    It’s one of the few/only areas where huge savings are made available to not just the wealthy.

  11. Texas FFE says:

    I calculated the cost per mile for the 2013 Focus Electric I just sold. The cost of ownership equated to about $0.33/mile and the electric cost ran about $0.04/mile so it looks like I paid about $0.37/mile for the 30,000 miles I put on the car. I think I will do at least as well with the 2017 Focus Electric I bought.

    1. Texas FFE says:

      I should mention that paid I about 35% of the original MSRP on the 2013 and I paid about 60% of MSRP on the 2017.

    2. Texas FFE says:

      I might also mention that the main reason I replaced my FFE was because I wanted fast charging. The battery range wasn’t a real problem for me and I always figured I could have replaced the 2013 24 kW battery pack with the 33.5 kW pack if I needed to. I also figured that with enough time, patients and money I could get fast charging installed on my 2013 FFE but I don’t have any of those things in great abundance right now.

      The 2013 was a great car, one of the best cars I ever had. That car was a tough little car and it should be good transportation for many decades to come. If Ford had the foresight to put fast charging on the 2013 model I probably would still have mine.

  12. notting says:

    No word about people who can’t have their own wall-box at home. Charging at public chargers can be very expensive. E.g. for the Ampera-e they say that you should stop CCS charging at 70% SoC because it get’s to expensive then with their card -> https://newmotion.com/de_DE/produkte/opel-ladekarte (German) -> 0.39EUR/min. In best case (50kW, which are possible) you get with that card in 30min 25kWh for 11.70EUR, which is 0.468EUR/kWh!
    And if you can’t do sensible things you probably want to charge AFAP.

    BTW: At least for Tesla and BMW, the maintenance costs roughly as much as for many ICE cars…

    The ADAC (Germanys most popular motor club) wrote in May 2016 that including subsidies only the Mercedes B 250 e and the Kia Soul EV are cheaper than the corresponding ICE car -> https://www.adac.de/infotestrat/adac-im-einsatz/motorwelt/e_auto_kostenvergleich.aspx?ComponentId=260717&SourcePageId=8749 (you’ll find the date if you look into the metadata of PDF file which is linked behind the table (scroll down)).

    notting

  13. hpver says:

    Seems to me what this really shows is that overall EVs are a little bit less costly than non-EVs. But YMMV. There’s a huge range of variables including incentives, discounts, rebates, etc. Not to mention added cost savings or not depending on one’s electricity costs.

    The lesson as always is to do the math for one’s own situation.

  14. qqppwqerre says:

    What about when you take into account resale value (which, aside from Teslas, is absolutely terrible for EVs) or if you keep the car long enough where you need to worry about replacing the battery? Having to go through a battery replacement in an EV will surely blow any financial gains you made over an ICE and that’s a consideration for people like me who keep their cars for more than 10 years.

    1. Texas FFE says:

      I think you’re very wrong. So few high voltage batteries have failed no one really knows how long they will last. And even if you take your EV to the closest scrape yard at say 120,000 miles you’re still going to come out ahead.

      And then if you decide to replace your battery you are going to get maybe another 120,000 miles out of your old EV at a fraction of the cost of a new EV. There are so many variables it’s hard to predict what life of an old EV will be like but I expect many high voltage battery changes before an EV finally makes it into the scrape heap. The resale values are negatively impacted because the tax credits but we are already seeing resale values start to stabilize and I would expect the value of EVs that hold together well to eventually go up just like classic gas cars.

    2. terminaltrip421 says:

      ICE car repairs will almost undoubtedly add up to the cost of a battery replacement over the same period of time.

    3. David Cary says:

      I suspect used battery’s to be an option also – just like used engines.

      Even the early Leaf’s don’t get scrapped. Or at least I haven’t heard of any. They get repurposed or get new batteries.

      There is a huge use for cheap cars that are safe and reliable with degraded batteries. Teenagers, elderly, people in cities etc.

      I have a 5 yo Leaf that is missing a bar. It isn’t worth much but sure is cheap to own.

    4. SilverNewt says:

      Agreed re: 10 years of ownership. This study only goes out to 3 years of ownership (the average in the UK or Japan) and starts with model year 2015 vehicles (24 kWh Leaf, old Prius plug-in, a Corolla, and 2 Ford Focuses).

      In my experience with a certified pre-owned 3 year old Leaf, that I’ve had for 3 years now:

      * Insurance is on the high side of normal.
      * Depreciation is crazy. I bought for $13,000. Trade in value is about $4,000 and I could maybe get $7,000 private party.
      * Repairs are more expensive because my small local shop won’t touch it, I have to go to the dealership.

      I still like the car, and I got it for cheap, but it still has attributes related to the high MSRP.

      1. SilverNewt says:

        As for battery replacement: my 2012 is down 3 bars at 65,000 miles. Which is on track for the Boston, Massachusetts area and the old battery chemistry.
        http://www.electricvehiclewiki.com/Battery_Capacity_Loss#Battery_Aging_Model

        In a couple years I’m facing battery replacement because I won’t be able to do my commute on a single charge even in the summer. I’m crossing my fingers and hoping replacement batteries come down in price or used batteries become available.

  15. silversod says:

    Yeah no surprises there for the cost of ownership in the UK, My electricity tariff is 17p/Kwh=24cents/Kwh

    Filling up with petrol yesterday was £1.24 ltr/£5.64/$7.91 UK gallon.

  16. JohnD says:

    I think the key to owning in the UK is leasing. My 6+23 10k lease for ~£220 a month for I3 Rex. So much lower TCO.

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