Electric Vehicle University - 220b ECONOMICS OF EV OWNERSHIP
THE CENTRAL QUESTION ...
What are the key factors that I should consider when I try to cost justify the purchase of an EV??
An introduction to the economics of EV ownership is presented. The EV purchase premium is discussed along with the qualitative examination of the factors that must be considered as an economic analysis is conducted. Fuel and maintenance costs, including battery replacement issues, are explored. To obtain a copy of the EVU study guide for this and other available EVU courses, please complete the form on this page.
Looking back at what we discussed in part 1 of this EVU mini-course,
>> Today, you will pay a premium to purchase an EV, mostly due to high battery costs, and >> An economic analysis must take that premium into account. >> Both qualitative and quantitative considerations should be taken into account, and >> Savings do exist, but they’re affected by many factors
Let’s take a look at the cost of ownership.
>> To begin, it’s important to understand the cost components that you’ll need to evaluate the cost of ownership of an EV.
Overall cost of Ownership combines >> Fuel costs + >> Resale Value + >> Maintenance costs (encompassed by: >>Repairs >>Consumables >> Support costs (that include: >>Insurance >>Financing costs >> Building a home charging infrastructure >>In addition, federal, and in some cases, state tax credits are available for certain classes of EVs. These reduce the initial purchase price and help defray the so called EV premium that currently exists.
We’ll discuss some of these qualitatively at this point, and then quantitatively in the next mini-course in this series.
As I mentioned earlier, fuel costs account for almost 25 percent of yearly ownership costs for ICE cars.
It’s important to determine how much can be saved by getting your “fuel” from a wall socket in your garage as opposed to getting your fuel at a gas station.
>> Project fuel costs for >>Gasoline today and into the future >>Electricity rates today and in the future Then, >> Use fuel efficiency data for there automobiles you’re considering >> MPG >> MPGe >> kWh / mile And finally, >> Use # of miles per year and # of years of ownership to estimate overall fuel cost and fuel cost savings
>> First, note that the used car market for EVs is very new, so it’s hard to draw broad conclusion about resale values Also, any resale value projections of more than two years represent best estimates, not actual data.
>> However, early (and relatively sparse) data indicate that >> Small BEVs (e.g., Nissan Leaf, Ford Focus Electric, Chevy Spark) take a resale value hit that can be significant when compared to comparable ICE vehicles. We’ll discuss the amount in the second mini-course in this sequence.
>> Large BEVs (e.g., the Tesla Model S) depreciate at about the same rate as comparable ICE cars, although most data for large EVs are anecdotal.
>> PHEVs do considerably better than small BEVs with a resale value differential of only a few percentage points less than a comparable ICE vehicle.
So, if you’re buying a small BEV, a detailed economic assessment should consider the resale value differential in favor of comparable ICE models
The Institute for Automobile Economics (IFA) reports that
>> “electric vehicles partially compensate for high initial purchase prices by granting owners savings up to 35 percent in maintenance costs.” This study was conducted in Europe for cars that traveled only 5000 miles per year, far below US averages. But it’s fair to assume that addition miles traveled would increase, not decrease maintenance costs.
The table on the right of your screen illustrates the different maintenance required for ICE vehicles and EVs over 50,000 miles or about 5 years. Most of the typical maintenance expenses encountered for ICE vehicles simply disappear for EVs.
Also note that the relative inconvenience and time associated with auto maintenanc visits are reduced considerably. Most EVs require only a yearly service visit, and that’s it.
You may wonder why we show a brake caliper change for ICE cars, but not for EVs. There is MUCH less brake wear for EVs because of regenerative braking, so brake calipers need to be changed infrequently..
>> If you intend to own your EV for many years, battery replacement cost is worth considering in an economic analysis, but it’s not as serious some media hype indicates
>> BEV batteries can lose as much as 10% of their capacity at 50,000 and about 20% at 100,000 miles, assuming the typical number of charging cycles associated with that level of mileage
>> But a mildly degraded battery still works fine. You get less range, but otherwise, your EV keeps operating with no ill effects.
It’s likely that by the time you might have to replace your battery, (say at about 150,000 to 200,000 miles, costs will likely be in the $100 - $200 per kWh range, meaning that a large 85kWh battery (for the Tesla Model S, say) might cost about $8500 to replace.
That’s about the same cost as replacing an ICE engine and transmission, which might need to be replaced in the same timeframe as an EV battery replacement.
>> There is a cost premium when you by an EV. The question is, do you get that premium back (and more) due to savings in the costs of ownership?
>> The Costs of owning an EV break down into the same categories as the costs of owning an ICE vehicle: >> Fuel costs >> Resale value >> Maintenance costs >> Support costs (insurance, financing and home charging infrastructure costs)
>> Overall, the long-term costs of owning an EV can be demonstrably lower
In the next EVU mini-course in this sequence, we’ll take a quantitative look at EV ownership costs.
Electric Vehicle University - 220b ECONOMICS OF EV OWNERSHIP
This course is presented as part of
Evannex University—a free, open
learning environment that presents
concise, video-based mini-courses for
those who have interest in electric
vehicles (EVs) …
Looking back at part 1 …
You will pay a premium to purchase
an EV, mostly due to high battery
An economic analysis must take the
premium into account
Both qualitative and quantitative
Savings do exist but are affected by
EV—Cost of ownership
Overall cost of Ownership =
Fuel costs +
Resale value +
Maintenance costs +
Build a home charging infrastructure
Project fuel costs
Gasoline today and in the future
Electricity today and in the future
Use fuel efficiency data
kWh per mile
Use # of miles per year and # of years
First, note that the used car market
for EVs is very new
However, early data indicate that
Small BEVs take a resale value hit
Large BEVs depreciate at about the
same rate as comparable ICE cars
PHEVs do considerably better than
“ … electric vehicles
partially compensate for
high initial purchase prices
by granting owners savings
up to 35 percent in
The Institute for Automobile Economics (IFA)
Maintenance ICE BEV
Oil change 10 changes 0
Fluids 1 change 0
Tires 2 changes 2 changes
Muffler 1 change 0
Brakes 1 change 0
Transmission Service possible none
Plugs Service possible none
A cost worth considering in an
economic analysis, but it’s
not as serious as the hype
BEV batteries can lose as
much as 10% of their capacity
at 50,000 miles and about
20% at 100,000 miles
But a mildly degraded battery
still works fine.
There is a cost premium
Costs of owning an EV break down into the same categories as
the costs of owning an ICE vehicle:
Overall, the long-term costs of owning an EV are
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all EVU mini-courses is
available for download
from our website …
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courses and the study guide,