EEcon 101

Gasoline cars have complicated engines with thousands of moving parts, transmissions, mufflers, catalytic converters, fuel systems.
Electric cars have an electric motor with 1 moving part, most need no transmission, an electric motor controller ( which is solid state electronics ) and a battery.
The combination of electric motor + motor controller should be significantly less expensive than all the corresponding gas car parts. The gar car parts will wear out after several years and the electric motor and controller will probably not wear out before the rest of the car falls apart. An electric car will have a lower maintenance cost and last longer than a gas car.

Currently a 33 kWhr battery for a 150 mile range car would cost about $10000, making an electric car probably $8000 more than an equivalent gas car.

The average American driver who drives 12000 miles a year would need about 9 years to make their money back on the more expensive car considering just fuel savings at $3 a year. However gasoline is projected to be over $5 a gallon by 2016, and at $5 a gallon, it would take 5 years. Someone who drives 20000 miles a year would only take 3 years to recover that cost at $5 a gallon.
When the extra cost of the batteries is down to $6000 dollars, and gas is at $4 a gallon it will take the average driver 5 years to recover their cost.
Also remember that if you buy a car in 2010 and gas is $3 a gallon, and you keep it for 5 years, and the cost of gas is $5 a gallon in 2015, you’re average cost of gas is $4 over those 5 years.
So where will the numbers meet?
The cost of the batteries is going to keep coming down.
The cost of gasoline is going to keep going up.
When the lines cross, and the payback is under 5 years, everyone will need an electric car.
Will they cross in 2012? 2014? 2016?
Hopefully the manufacturing capacity to make them by the millions will be available when it does.

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3 responses to “EEcon 101

  1. Frankly, the idea that any car should “fall apart” is, to me, ridiculous. Electric or gas, a car should be able to last a very long time, and the maintenance costs should not be very great (i.e. much much lower than the cost of acquiring a new vehicle). The current social idea that cars are disposable just seems absurd to me.

    For perspective, the newest vehicle I own is 12 years old. The next newest is 19 years old, and the remaining one is 21 years old.

    Only the 19-year-old car has required significant major service unique to a gas vehicle. About 15 years into its life, we rebuilt the transmission, replaced a bunch of hoses, put in a new head gasket, and some other stuff. Total bill was under $10K (i.e. comparable to the cost of replacing an hybrid or EV’s battery pack) and the work included a bunch of stuff that would fall under regular maintenance (brakes, plugs, oil change, coolant, etc.).

    On-going maintenance costs for all three vehicles unique to a gas car include regular oil changes and of course fuel. Relatively low expenses, but these expenses do help in the pro-electric argument.

    Electric vehicles are somewhat simpler to be sure, but even a 1-speed has a transmission of _some_ kind. Lacking multiple gears, it’s simpler of course and should require less maintenance, but it’s not a zero-cost item. EVs also have many of the same costs a gas vehicle does, including brakes, tires, wiper blades, lights, etc. And an EV does have equipment none of my gas vehicles do, such as the super-sophisticated computer required to manage the whole thing, and a battery cooling system (for the Roadster…I assume not all EVs have that).

    Suppose gas will in fact be up to $5 (again) in five years. But should we expect electricity isn’t going to go up in price either? I’d love to think that battery prices will come down, but a laptop battery has remained solidly in the $100 ballpark for years. It’s not clear to me that it’s a foregone conclusion the economics are going to work out as expected.

    I sure hope that some day, and hopefully in the near future, EV will be a no-brainer. But for now, it’s not and I think it will be a complicated question for some time to come.

    150 is not enough range for a utility vehicle, which many of us need (heck, even 250 is borderline…our vehicles have ranges of 250, 400, and 600-700 and we’ve pushed the limits on each), even the marginally practical EVs don’t come large enough for families with kids, and the current price premium can’t be made up in fuel cost savings, even if electricity were completely free. And of course, there is the question of discarding a vehicle that works perfectly well to replace it with a brand new one (there’s also the environmental effects of that, but since this is an “econ” topic, we’ll leave that question alone 🙂 ).

    Of course, if we were really paying all the embedded costs of all of these various competing technologies, I think that EV would come out ahead _today_. There are a lot of hidden costs associated with oil-based vehicles, and even alternative fuel ones. If we were actually incorporating those costs into the economics, I doubt any of this would even be open for question. But we’re not, and so from a strictly current economics point of view, I think the jury will be out for some time.

    • highspeedcharging

      Transmissions need rebuilds/replacement because they have clutch plates and gears that wear against each other when shifts happen. A direct drive transmission that is 1 speed only has a reducing gear and should last much longer and need less maintenance.

      Gas cars need oil & fuel filters, engine gaskets, timing belts, spark plugs replaced. The need valve jobs when the valves are gunked up. The exhaust systems rust out and need to be replaced.
      Because of the regen in my EV I very rarely use the friction brakes, they will probably never need to be replaced.
      I believe that the computers that monitor and control internal combustion engines in todays cars are a similar level of complexity to the ones that control batteries and electric motors, if not more so.

      If the price of gas doubles from $3 to $6 dollars, the fuel costs to drive 12000 miles double from $1200 to $2400. If electricity costs double from $.10 per kWhr to $.20, then cost of those 12000 miles doubles from $300 to $600, so the difference increases from $900 to $1800 dollars.
      However the forces that I believe will cause gasoline prices to increase will not significantly affect electricity prices.

      I didn’t mean to imply that people will abandon their functioning gas cars en masse for electrics. There are millions of new cars sold every year to replace older cars. As we replace older cars we choose what to replace them with. Of course the operating cost of the vehicle should be a factor when considering whether to replace it.

  2. “I didn’t mean to imply that people will abandon their functioning gas cars en masse for electrics. There are millions of new cars sold every year to replace older cars.”

    Sorry, I got carried away and my main point got lost. I’m wasn’t responding to any particular implication you might or might not have been making. Rather, I was motivated to comment by the _fact_ that, at least in the US, people “replace older cars” even when those cars still work fine. A fact merely hinted at by this blog article.

    Cars are viewed as disposable, when in fact they are highly durable goods that with proper maintenance can last nearly indefinitely, at a far lower expense and impact to the environment than replacing them every ten years.

    This isn’t the EV industry’s fault, even if to some extent they benefit from it. It’s just that to me, there’s a certain degree of the EV analysis that simply assumes that these cars will be replaced, even though there’s a much lower energy consumption for the already-built car being maintained, even when you take into account the added costs associated with burning gas instead of using electricity.

    In other words, from the point of view of worldwide energy consumption, it seems to me that we’d be much better off if we had a better philosophy toward reusing the cars we’ve already built. Sure, it would’ve been better if we’d built EVs instead of gas burners, and sure if a car _really_ has to be replaced, replacing it with an EV is much better. But the preferred option should be to not replace in the first place.

    I realize that this isn’t the sort of thing that auto manufacturers are going to be at all helpful with. They, like almost all commerce in our capitalist society, rely on constant replacement of their goods to ensure a steady cash-flow (inasmuch as it’s worked at all…even with that wasteful philosophy, they’ve had trouble!). But, it sure would be the right thing to do.

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