A new report shows that the lifetime costs of owning electric vehicles (EVs) could be not just on par with conventional vehicles, but for many owners, cheaper than a gasoline vehicle.
The report, Total Cost of Ownership Model for Current Plug-in Electric Vehicles, authored by the Electric Power Research Institute (EPRI), compared two plug-in vehicles (the Nissan LEAF and Chevy Volt) to similar gasoline and gasoline hybrid vehicles. Savings in fuel and maintenance mean EVs can be cheaper to own despite often having a higher sticker price. In most cases, the plug-in cars have total costs within +/- 10 percent of conventional vehicles, so EV buyers can take advantage of benefits like less trips to the gas station, parking, and commuting preferences, or just polluting less without a large financial penalty.
Incentives have a large effect on total ownership costs
Using California’s rebate program as a model, the EPRI report demonstrates that incentives from state and local government agencies, in addition to a federal tax credit, have a large effect on the lifetime cost difference between EVs and gasoline-powered cars.
With incentives, the cost of buying, fueling, and maintaining the Nissan LEAF is about $10,000 less than a conventional vehicle over the lifetime of the vehicle and has a payback period of less than five years.
For Chevy Volt owners in California, the average driver would save almost $6,000 and have a payback period of 6-12 years. Without the incentive, the lifetime cost of the Volt is on par with a conventional vehicle, but the payback period rises significantly. This illustrates the critical importance of incentives in the early stages of EV sales.
It is also important to note that these calculations assume a constant gasoline price of $3.62 per gallon. If gasoline is more expensive (and it is likely to be so), EVs become more cost-effective and the payback period is shortened.
Your driving needs are important to saving with a plug-in vehicle
One key aspect of this study was that the researchers went beyond looking at the “average” driver. Because the battery range of plug-in vehicles is a critical factor in both consumer savings and the utility of EVs, it’s important to look at real driving habits to evaluate these cars. With a gasoline car, it doesn’t cost less to drive 20 miles each day versus 140 miles once a week. However, those two scenarios are much different when owning an EV. For example, using a Chevy Volt to drive 20 miles each day would require essentially zero gasoline, while longer trips would require the Volt’s gasoline engine to run for much of the trip. Similarly, the LEAF owner would have no problem with operating exclusively on electricity to travel 20 miles a day, but the 140-mile trip would require recharging mid-trip or the use of an alternate car.
To estimate how much people can save by replacing a conventional vehicle with an EV, the dataset for this report included the daily trips for about 400 cars for over a year’s driving. The authors matched these daily driving records to the EVs’ battery range to project the cost savings of these drivers switching to a plug-in vehicle. The result of this analysis is that battery-only electric vehicles (like the LEAF) are more variable in their costs, mostly due to the cost of a replacement vehicle for longer trips. For the case of the LEAF, the lifetime savings can differ by about $12,000 between the drivers that are best and worst suited for the car’s 75-mile range.