New 5-Year TCO Study Says EV Still Face Challenges

JUL 10 2018 BY VANJA KLJAIC 87

Study reveals that both federal and state incentives were necessary for BEVs to be cost-competitive

In a recent study done by a team at the Arizona State University, covering a five-year Total Cost of Ownership (TCO) for representative electric, hybrid, and conventional vehicles—the Nissan Leaf (BEV), Toyota Prius (HEV), and Toyota Corolla (ICEV) – done in 14 US cities from 2011 to 2015 – reveals that electric vehicle ownership savings are not cut that straight-forward. The results showcase varying results, impacted by the different state and city policies, the price of ICE (Internal Combustion Engine) fuel, maintenance costs, charging costs and availability of charging locations, insurance and other, misc. costs, but also, the miles traveled by each vehicle.

But, even with all the differences, in nearly all areas that the study took into account, the higher prices of such vehicles, joined by the rapid deprecation clearly outweigh any of the fuel savings. Furthermore, the major factor played out in the purchase of said vehicles – the federal and state incentives – are necessary for BEVs to even be as cost-effective as their ICE (Internal Combustion Engine) counterparts.

Future BEV cost competitiveness may improve if innovation and scaling lead to significantly reduced BEV purchase prices, but our analysis suggests that it will be challenging for BEVs to achieve unsubsidized cost competitiveness except in the most optimistic scenarios. —Breetz and Salon

The five-year ownership period used to estimate ownership costs as realistically as possible

In order to estimate the ownership cost of BEVs, Breetz and Salon from the Arizona State University, used a five-year ownership period (Fiscal Years 2011–2015) and city-specific data that includes fuel prices, insurance costs, vehicle miles covered, maintenance and repair costs, alongside its resale value, taxes, fees and subsidies. The team also conducted sensitivity analyses that took into account all the different impacting factors – such as fuel prices, depreciation rates, length of ownership and driving distances – in order to gauge what it would take for a vehicle such as a Nissan Leaf, to be cost-effective, all without federal and state subsidies.

We find that although ownership costs varied considerably across cities, the Leaf cost substantially more than the Corolla in all cities and more than the Prius in all but one city. A principal reason is that the Leaf depreciated faster than the gasoline vehicles, losing more in resale value than it gained in fuel savings in the first five years. In addition, the Leaf’s higher purchase price resulted in higher sales tax, ad valorem taxes, and insurance costs. Sensitivity analyses demonstrate that an owner may save money with the Leaf compared with the Corolla or Prius, especially if they have access to free or reduced-rate charging. Government incentive programs were still necessary, however, for the Leaf to achieve cost competitiveness. —Breetz and Salon

Five-year TCO by city and car - Breetz and Salon

Five-year TCO by city and car – Breetz and Salon

While anyone with at least some knowledge of economics will understand that subsidies are the bread & butter of the BEV industry (for now), the future, even without subsidies will be bright for these vehicles. With advancements in technology (vehicle & production), new and better batteries, powertrain and drive systems, all coupled with the economy of scale, the prices will drop down significantly. Probably way beyond the current, subsidized prices for most vehicles in most countries. However, it’s interesting to see how can a well thought-off government incentive program impact the early adoption of (ecologically) revolutionary technology. There might be hope for the planet Earth after all.

Source: Green Car Congress

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87 Comments on "New 5-Year TCO Study Says EV Still Face Challenges"

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So to determine if EVs had comparable total cost of ownership to traditional vehicles, they chose to compare the LEAF, i.e. the EV with the most depreciation due to having no thermal management of the battery, causing significantly more degradation (and depreciation) than any other EV. Sigh.

What other EVs were available in 2012?

Mitsubishi i-MiEV 🙂

Probably too small to be compared with other ICE or HEV.

Also the Chevy Volt, and 2012 was the year the Tesla Model S debuted, altho of course only a fairly small number of people were able to get one that year.

Focus Electric

Tesla S, Honda Fit

If I were to do a comparison based on cost, maintenance and fuel, I would compare the Tesla Model 3 to the Audi A4, BMW 330i, and the Mercedes C 300. Based on cost without incentives, maintenance and fuel, the Model 3 has them all beat. Add into the mix performance and equal amenities, the Model 3 still beats these cars without any incentives.

For those who are lucky enough to receive the $7500 fed tax credit or state incentives, the Model 3 becomes a real bargain.

So, when’s your 5-year study of Model 3 coming out?

Well, what was the 4 year total cost of ownership of my Tesla Roadster? Probably less than some people spend on their ‘S’s and ‘X’s. Our friend Brian probably didn’t spend too much overall.

The study was only on cars sold from 2011 to 2015 with the Leaf chosen as the pure EV for the study. The Leaf was by far the undisputed best selling pure EV from 2011 to 2015.

It is a darn shame that the vastly dominant EV for that entire time period has thermal management problems. It was a black eye for the image of EV’s in general, and for the Leaf in specific. Even though plenty of folks report they aren’t having any problems at all with their Leaf batteries, and Nissan upgraded their battery a couple of times.

Nissan didn’t upgrade the battery nearly enough. The VW eGolf also lacks an active TMS, yet we don’t see many, if any, reports of premature battery fading in the eGolf.

Agreed to Clarkson Cote. Also why not compare the Volt?

Volt wasn’t a pure EV, and they specifically wanted to compare to a pure EV as one of their categories. (not to imply “purity” tests, just to be clear about BEV vs. PHEV/EREV/ABCD whatever)

They chose Leaf as one of the most widely available models. There is no point showing an EV that has 12+ months waiting time for delivery. The real issue is gas price. It is still low.

Hey Steven, the caption on the image is always over the legend, even when clicking on the image for full resolution. It makes it hard to discern what all the colors mean, just wanted to let you know!

Yep. We have a no embedded captions rule since the redesign, but sometimes it happens anyhow. Thank you for catching it. I removed it and put it below.

Well, if one compares ass end of EV (Leaf), of course it won’t look favorable. Try the BoltEV using Trucar price and taking subsidy into account compared to others that does 0-60 in 6.5 sec (eg. GTI, Focus ST, etc). EV comes out way better. And if one has home solar, there is no contest.

I hate to be a spoil sport with your comparison, but merely using the 0 to 60 time as a point of comparison to other cars doesn’t make a whole lot of sense. Does that mean the the Tesla Model S should be compared to Porsche 911 or a Ferrari? Otherwise, the Bolt will end up being compared to the 2016 Alfa Romeo Giulia (6.5), Acura RDX (6.1), etc. But my vote, it you’re doing a comparison based on only 0 – 60 times is the 2000 Bentley Azure (6.2).

I think his point is the GTI and Focus ST have the same price point and performance as the Bolt EV.

The GTI has the same performance as what? Oh boy, You really have no idea have you?

Also similar size small hatchbacks.

Did they take into account that much of the increase in depreciation is due to the incentives on purchase price?

They would have simply ignored it because their study is financed by Big Oil.

Net capital costs really disadvantages the EVs as they get hit hard with resale value after 5 yrs – pace of improvement is fast, meaning yesterday’s models are viewed as inferior and hard to sell. I’d like to see the numbers when resale is not considered, or that the hold period is set to 10 yrs instead of 5 yrs.

Well, it sure sucks to own a VW TDI right now. Who wants that? Some third world nation? Mark my words, a lot of TDIs will be sold at scrap value.

Any tdi made from 2008 on had the option for a buyback. I took it due to it being a good deal. I got about $24 k for a vehicle that I paid $22k and drove for 50k miles. Vw paid me to drive the car, they also paid for the first two oil changes, so I was only out 2 oil changes. That car will be lowest tco of any vehicle I have ever driven.

The older ones, i.e. Pre 2006 will probably hold good value for a 12 year old car. Those were not part of the scandal and only have cats for emissions controls.

I’m not sure the Leaf specifically would do better over a 10 year period, considering that it would almost certainly need a battery replacement at some point over such a time span…

Well, we are 7+ years into that ten year period and the have been a few batteries swapped out (2011-12 I believe) but not a thousand out of the 300, 000 built, so I think making ten will be easy for 97% of Leafs.

That seems very unlikely. Statistics collected by a large number of Leaf owners show that most Leaf 24 kWh batteries are falling below 70% after about 6-8 years; the 30 kWh ones even faster…

Looks like the Corolla wins without subsidies, but the Leaf’s tax breaks give it the edge. I’d also be interested in a used car analysis when there are enough electric vehicles on the road to compare. That would be more useful for me, as I’m unlikely to ever be able to afford a new car.

Sorry, you have to be able to afford a new Corolla 🙂 Study rules.

We need more detail. the Corella to be comparable, would have the be the $24,000 version, to match the Leaf’s safety features.

And there is no comparison comparing the quality of the ride experience from an EV to an ICE. The EV is a superior product in day to day driving.

Edit: Study reveals, hopefully not “Stuy reveals”.

Stewie reveals!
https://goo.gl/images/97qGbE

They put the maintenance cost equal for the three cars, I have experienced maintenance cost to be about 10% of any ice or hybrid.
So I am putting in question the seriousness of the study.

Yeah, that surprised me too. The battery problems and thus depreciation of the Leaf are well known; but I haven’t heard of it having such high maintenance costs?

After a little digging I found in a Montréal French newspaper an article, where they compared the total cost over 5 years of two pairs of cars, the focus vs focus ev and the golf and the golf ev, and in both cases, after 5 years the total cost was lower for the ev. So I’m am pretty sure that this study is FUD !……

Fake news and false info is alive and growing strong in the US.
With a dictator in training in the White House, oil and coal in charge of the EPA.

Montreal has very, very low electricity rates. It would be somewhat higher in NYC, even with the electricity the city in effect ends up buying from you guys. Even though they lose a lot of it on the trip, it is still cheap by comparison.

Dictator in training? For which county is he training to be a dictator for? heheh… You guys always pick on us Tesla Roadster owners. I wonder how many miles he has on his Tesla Roadster or if he even still has it?

I’d like to see a 10 year study, i.e. after 5 years when the ICE vehicle begins to cost you an arm and a leg to repair major components! I bet that would be an evening-out point.

Especially considering the average age of a car on U.S. roads is over 11 years old, a five year study seems pointless.

It should be stated that a lot of those 11 year old vehicles are not on their first owner. So a five year study looking at *new* cars might not be that unreasonable.

Correct, the median length of first ownership is now just over 5 years. Which happens to be why 5 year TCO is the standard that is used in many places across the web.

But to his point, keeping an EV for 10 year will greatly improve the TCO average for each year. Mostly because the impact of subsidies on used EV’s will be less after 10 years. Especially once the Fed incentive dies.

I’m not sure that’s true in the case of the Leaf, since it’s almost certain to need a battery replacement over that time span…

Fair enough. Perhaps against any EV with thermal management, then?

Which model with tms is 10 years old now to compare?

None, I don’t think. I’m just saying I’d like to see the numbers on such a (hypothetical) study.

Well, yeah… but then the results won’t be in favor of ICE and the study won’t get funded.

Early Tesla Roadsters would qualify, just barely…

Right. But then you would have to make a cost analysis between a $100k+ car and a corolla.

EV’s have changed considerably since 2011, including their costs. This to me is a major flaw in the study. The technology and economics of ev’s is changing way too rapidly for long range studies like this.

I was reviewing AZ’s “flawed” solar policies. Those consumers get shorted there, too. Not sure if looking at things fairly is cultural yet, in Arizona. And, about clean…? Solar City left it, over fixed and demand charges:

SRP’s demand charges kick up at 3KW, and max out above 7KW. Charge a Volt(new), i3, Tesla, Pacifica and you’re likely to trigger the maximum demand charge, with *nothing* else in the home on. Normal 200 amp service is ~23KW (200a*115V) because the homes of today frequently need it. That gives a sense of how low these are.

Are you saying that where you are, a domestic ‘residence’ customer pays demand charges? Do ALL residence customers pay them? You didn’t elaborate exactly how the 7 kw figure works in practice. An electric clothes dryer all by itself can be 6 kw. A normal 200 ampere service in North America is 46 kw, since you have basically 2 chances to use 200 amperes since the 120 volt loads are in series with each other. The utilities basically ignore the 120 volts and if you look at your “REVENUE METER” at the back or side of your house and it says FORM 2S, then the only voltage measurement is at the 240 volt level. That is why the meter says 240 since the 120 voltage level is not measured, (but the current indirectly is).

Typically – it is for solar customers. Non – solar customers pay for electricity use and that covers it. When a solar customer uses no electricity, there is a good argument for some base charge – like demand based.
I lived for 5 years with a solar tied demand charge. Dryers are the biggest load that you want to use during the day. Hot water is another big one. I usually kept my demand to 5 which was about $30 a month in the summer. But I used tricks like 120V for the lower hot water element, keep drying to evenings or weekends or sunny days.

In my system we didn’t pay demand at night/weekend so 10kw charging was not an issue.

In a typical structure, a customer pays $100 a month. $50 of that is for the always on connection/maintenance/infrastructure. $50 is for the electricity. So solar messes with that economic model.

Perhaps just listing the rate charges would be clearer since you didn’t answer any of the questions I had – or if you were even talking about this utility in Arizona. People, when using acronyms, should define them first. I don’t know what a SRP is or what is the extent of its franchise area, and whether it is public or private.

Yeah, determining the costs of an EV bought seven years ago doesn’t really tell us much about the competitiveness of EVs available today…

Yep.

Inflation-adjusted price per kWh of battery in 2011 LEAF was $1,564.

2018 LEAF is $750.

Why not compare two cars built on the same platform, like the Soul, or the smart fortwo vs. the Electric Drive variant, where both depreciate rapidly? Honda and Toyota both have shallow depreciation curves compared to Dodge or Mitsubishi.
https://usedfirst.com/cars/smart/fortwo/

Bolt vs. Sonic might also be interesting 🙂

Sonic-Hatch has 110 cu. ft.
Sonic-Sedan has 103 cu. ft.
Bolt has 117 cu .ft. of interior space.

Comparing them is not relevant. Please note that Bolt is also very smooth in driving and this can never be matched by Sonic.

You have to give some credit to what an electric vehicle is.

To echo the others, this study is bogus. Why does the maintenance cost of the Leaf equal the 5-year fuel cost of the Leaf? And why does the maintenance cost line up with the corolla and prius?!

Judging from the size of the bars, it comes out to $3000 over 5 years. Even playing devil’s advocate, here’s the expected breakdown:
prius/corolla (12k miles per year):
– 20 oil changes ($20 each = $400)
– 1 set of brake pads ($200)
– 30k + 60k maintenance inspections ($200?)

leaf/prius/corolla (12k miles per year):
– 4 tire rotations + 1 set of new tires ($20 each rotation + $150 each tire = $680)
– 1 set of wiper blades ($50)
– cabin air filter ($50)

+ $1000 other unknown maintenance?

what am I missing? At the very most, the leaf’s maintenance would be half that of the other two.

I don’t know too many Corolla that needs oil change every 3,000 miles. In fact, most modern cars don’t need that frequent oil changes anymore. 6k miles oil change is more than sufficient.

Also, 60k miles don’t require a new set of brake pads unless you are a terrible driver. It is more likely to be 80K miles or 100K miles depending on whether it is hwy or stop/go driving condition.

I hate Corolla but I wouldn’t exaggerate it. In fact, most Toyota comes with 2 year of free service. So, that is 2 years out of 5 years free oil changes, at least.

If there aren’t as much maintenance needed by the corolla, then that just makes the $3000 maintenance estimate even worse. What ARE they estimating?!

Honestly for a new car having $3000 in actual maintenance would be a disaster. That figure does seem totally ridiculous.

LEAF service requires a brake fluid flush and a battery report every year.

You have to add in the cabin air filter as well, which is part of the Annual Leaf service, which is around $200.oo per year.

There is a $15 filter that takes 20 minutes. The battery check was absurd and I never paid for one.
But thanks for reminding me to change the filter. I do it about every 2 years.

It would be more interesting to convert this study to an ongoing version, dropping off a year at the beginning and adding one at the end, to be a 2012-16, 2013-17, etc., then have the ongoing comparison from the base year of 2011 to see where costs are going. That would likely be more useful overall, though I know a lot of people doing these studies don’t like approaching it that way.

The interior space (Passenger + Cargo put together) of
Corolla: 111 cu. ft.
Prius: 118 cu. ft.
Leaf: 116 cu. ft.

There is no way you can compare a 4 door Corolla with a 5 door Prius or Leaf. You can keep bigger boxy stuff in a hatchback, but not in a sedan. A weird and biased comparison.

Go check the Camry with 115 cu. ft. of interior space to the Prius / Leaf and you will see it makes sense to buy a Hybrid / Plugin / Electric car.
We have seen many such biased comparisons and despite all this, the new energy vehicles continue to increase.

Why not they compare the BMW 3 Series with Tesla Model-3. When the SR version comes, things will change for good while their analysis will be a laughing stock.

Most of the EV savings comes in the 5-10 years period rather than the first 5 years. That is why EV comparison don’t look nearly as good in the first 5 years.

This is also why a “good” used EV beats an used ICE hands down.

Here is the simple price / fuel calculation for the MY-2019 Toyota Corolla and Honda Insight. I am taking the base L version of Corolla-Automatic. While the Insight costs $4,130 more upfront, the fuel cost of Corolla is $4,690 more over a period of 10 years. And even in size, the Insight has 2 cu. ft. extra space than Corolla. I’am sure the Insight will have much smoother drive because its driven by motor most of the time.

Make-Model, Price, Miles, MPG, Gallons / 120,000 Miles, Fuel Cost @ $3/Gallon
Toyota Corolla, 18700, 120000, 31, 3871, 11,613
Honda Insight, 22830, 120000, 52, 2308, 6,923

Difference, -4130,,, 4690

If you have difficulty reading this #, copy and paste this in a spreadsheet (Excel/Opencalc) and see.

It’s a bit of a double-edge sword, becuase the local and federal incentives are part of why the rapid depreciation happens.

In the US, the average new car is owned for about 6-7 years. The averages age of a car on the road is eleven years. So really should look beyond 5 years.

Glad research is being done, but as a practical matter this information is already 7 years out of date.

If the point is to inform *new* car buyers, we should be looking at TCO 2018-2022. 2011-2015 is 7 years old, which is quite a long time in a segment that is moving fast.

I can easily see this headline/story lazily used as anti-EV arguments for new car purchases. The people I talk with on a daily basis don’t know anything more than these headlines.

Inflation-adjusted price per kWh of battery in 2011 LEAF was $1,564.

2018 LEAF is $750.

“A principal reason is that the Leaf depreciated faster than the gasoline vehicles”

They didn’t factor in tax subsidies into their calculations but those subsidies and huge dealer incentives factor directly into the depreciation. This is either incredibly naive or disingenuous.

KBB’s five year cost estimates don’t include dealer or tax incentives either. They arrived at a cost figure of $38,258 for the Leaf and their ICEV winner was the Corolla at $30,856 meaning if you could get incentives of about $7,500 your cost is about as good as it gets for ICEVs.

Now factor in state incentives ($2,500-4,000 in Ca) and electric company incentives (typically $500 here) and add to that increased cost advantage of owning a solar PVA and you have a compelling financial case for EVs.

“rapid deprecation clearly outweigh any of the fuel savings….federal and state incentives – are necessary for BEVs to even be as cost-effective as their ICE (Internal Combustion Engine) counterparts.”

That is one of those chicken and egg problems. The rapid depreciation is caused by the federal and state incentives being passed through to second buyers. This is because used cars compete in price with post incentive prices of new cars.

But without the state and federal incentives, sales of first generation EV’s might not have been high enough in volume to drive down costs to build EV’s down to where it is today, and where prices clearly are going in the near future.

But there is one very clear way to beat this study’s numbers. Don’t sell your EV. Drive it into the ground until the bitter end. Then the depreciation that is such a big part of the 5 year study is less per year over the life of the vehicle.

I see a lot of emphasis on the Federal EV Subsidy and it always galls me to see these discussions go by without an acknowledgement of the Federal Subsidies for the Oil Industry. Which, unlike the EV subsidy is not scheduled to end – ever.

For perhaps the billionth time, the oil industry receives the same sorts of business tax breaks as other corporations. What are all these special subsidies you’re complaining about for oil — be specific or you’re not credible.

And don’t assume I’m just against EV’s. Within a few years, I’d expect the numbers to be much better re EV’s, especially if oil prices continue rising in the face of steadily rising global demand and questions about long term supply.

It’s early days yet. But the vast majority of the posts here trying to deny the data doesn’t help the credibility of the green movement any. There IS a reason the EV subsidies are needed in the short term.

No more ‘Oil Depletion Allowance’? My industry never benefited from that.

Types of energy subsidies… form wiki.

Direct financial transfers – grants to producers; grants to consumers; low-interest or preferential loans to producers.

Preferential tax treatments – rebates or exemption on royalties, duties, producer levies and tariffs; tax credit; accelerated depreciation allowances on energy supply equipment.

Trade restrictions – quota, technical restrictions and trade embargoes.

Energy-related services provided by government at less than full cost – direct investment in energy infrastructure; public research and development.

Regulation of the energy sector – demand guarantees and mandated deployment rates; price controls; market-access restrictions; preferential planning consent and controls over access to resources.

Failure to impose external costs – environmental externality costs; energy security risks and price volatility costs.

Depletion Allowance – allows a deduction from gross income of up to ~27% for the depletion of exhaustible resources (oil, gas, minerals).