Electric Car Costs

Electric cars have dramatically lower fuel costs than gasoline ICE cars.
The lower fuel costs allow you to spend more up front the electric car and pay less in the long run.
How much less?

Here is a chart of the two largest costs of owning a car, this example is a Ford Fiesta that cost $16000 and gets 33mpg and drives 12000 miles per year.
Gasoline is assumed to cost 4$ a gallon and increase at the same rate it has for the last 10 years – 8.5% per year.

Here is a similar chart for a Nissan Leaf that cost $26000, using electricity at 11cents per kWh ( national average for 2011 ) that gets 3 miles per kWh and drives 12000 miles per year.
Electricity is assumed to increase at 4% per year, and a battery replacement is assumed to be needed at 100,000 miles and assumed to cost $6000.

Lets look at a selection of cars to compete with the Nissan Leaf:

Now lets look at the cost over time for all those cars.
Fuel economy is assumed to be: 33mpg for the Fiesta, 26mpg for the Mazda6, 22mpg for the Hyundai SanteFe, 28mpg for the Mazda3, 45mpg for the Prius.
Same fuel assumptions are made $4/gallon increasing at 8.5% per year, and 11cents per kWh increasing at 4% per year.
We’re going to look at only 2 costs, depreciation and fuel. We assume that the ICE car immediately depreciates 15% on day 1, and then 15% per year after that.
Assume the electric car does the same, except we depreciate the battery even faster. Assume that the battery needs to be replaced after 100,000 miles ( this is a guess ) and the value of that battery depreciates to zero at that point ( and then you pay to buy a new one, and it starts depreciating ) The cost of the battery replacement is a guess.
There is reason to believe that the ICE cars will actually depreciate faster – depending on how bad their fuel economy is and thus how much it will cost to fuel them down the road – but we’ll ignore that for now.

The Leaf takes only 4 years to defeat its lowest cost competitor – the Ford Fiesta.
After 10 years, the total cost is dramatically lower than all the cars compared.
This comparison requires that you remember that a Nissan Leaf has significantly less utility than all those other cars for long trips due to its limited range.

Now lets look at the 160 mile range Model S.
We’ll compare the Model S to cars that cost dramatically less. ( The Model S will have better performance, occupant room, cargo room, and will only lose on range )

The fuel economy for the BMW 325 and Lexus ES350 is assumed to be 23mpg.
Again we assume that we will have to replace the battery at 100,000 miles and we make a guess at what that battery replacement will cost ( 8 years from now in 2020 )
How do the costs stack up:

The Model S easily defeats luxury cars that cost a lot less, and even defeats the Hyundai Sante Fe that costs less than half as much after about 9 years.

Now lets jump up to the super expensive 300 mile range Model S which provides a range that is almost no compromise over a gasoline car.
We compare it to cars that should provide similar luxury and performance.

And now the running costs:

The luxury cars that cost around $10000 less than the Model S are quickly dispatched, and even the Lexus that is priced $24000 less is bettered after about 10 years.


9 responses to “Electric Car Costs

  1. Can you clarify what mileage/gas-consumption assumptions are made here? I don’t have MPG figures for the cars off the top of my head, and obviously if this analysis includes fuel costs, some assumption of miles driven must have been made.

    • Thanks for adding the clarifying graphs at the beginning of the article.

      For what it’s worth, there are going to be significant regional differences, of course. For example, here in WA, price inflation for both gas and electricity are significantly higher than assumed in this article, at around 9.5% and 4.8%, respectively over the last ten years. But I think we get the general idea. 🙂

  2. Also, not to take away from the analysis (which is interesting), but in truth I don’t think most Americans (and probably most people worldwide) approach the question with this sort of rationality.

    Rather, I think there’s a good chance that the mere spectre of rising fuel costs can push consumers towards electric vehicles faster than plain economics might suggest. Of course, I suppose it could go the other way too; fear of the unknown causing consumers to hold on to their gas-powered cars longer than is economically wise.

    Either way, I think that any prediction of the future of the internal-combustion engine has to take non-rational thought into account. 🙂

  3. Thanks for another great post!

    What about maintenance costs?

    Electric cars don’t need oil changes. Things that wear out on gas cars don’t exist on electric cars like the LEAF and Model S: transmission, muffler, catalytic converter, exhaust system sensors, timing belt, spark plugs, alternator, engine gaskets, fan belts, etc. Instead of those parts, electric cars have a motor with one moving part (and some bearings) and a single speed gear box. When you replace the battery pack after 100,000 miles, you have a drivetrain that’s essentially as good as it was new. After 100,000 miles in a gas car, you have an old car that’s leaking oil and much more likely to need a major repair than a new car would.

    The increased risk of major repair comes in via depreciation, and so the EV depreciation is likely to be more favorable. Is routine maintenance too cheap to affect things? As I recall, the cost of the recommended annual services goes up pretty dramatically as you start hitting the 50,000 and 100,000 mile marks.

    • Actually, I would be interested in seeing some real figures on maintenance/lifetime for electric motors and related systems (including thermal control). Electric motors don’t last indefinitely, and that’s even for low-load applications such as the various fan motors around.

      Heat takes its toll on wiring, circuit boards and components. Bearings need lubricating at a minimum, if not rebuild/replacement. Thankfully, no brushes to worry about any more in most motors, but the controller is a lot more complicated.

      I for one look forward to having a simpler car, with many fewer parts to wear out and to worry about. But I hope no one really believes that the drivetrain, minus the battery, of an electric car is going to be as good as new after 100K. A true comparison that takes into account maintenance costs will have to accurately balance the real costs found in both types of cars.

      That said, it would be surprising to me if maintenance costs were higher for an electric vehicle over its lifetime. So it seems like this article’s analysis (and similar ones) are fine. If anything, they may be conservative, and for sure it’s unlikely they are omitting any important data that would undermine the thesis.

      • If you want to know how long a powerful, heavy-duty brushless electric motor lasts, look at electric train engines. Yes, they’ll last well over 100K miles. If the controller has to be replaced, this is actually a relatively cheap piece of electronics. It’s other parts which wear out first, including rectifiers (AC/DC conversion) and transformers. I’d actually expect the brakes, with a lot of hydraulics involved, and the cooling system (likewise) to be more trouble than the engine.

  4. I would imagine people in the luxury car class would replace a car after 9 or 10 years, new battery or not.

  5. Several points for anyone doing their own TCO computations.
    (1) This is conservative in its assumptions (favors the gas cars): maintenance on an electric car should run lower than on most gas cars; gas cars should depreciate faster than electric cars.
    (2) The comparison to luxury cars leaves out the fact that they all require luxury, high-octane gas… so again it is conservative, the Tesla is even better than presented.
    (3) But the critical number is miles driven. If you drive a whole lot less than these numbers expect, then the electric car is a lot *less* valuable and may well cost more. Gas cars are cheaper than electrics if you drive them rarely, because the upfront cost is smaller. If you drive a lot more, the value of the electric is much greater.
    (4) Price movements in gas and electricity vary wildly across the country, but the *relative trend* (gas going up faster than electric) seems to be constant. Here in the Finger Lakes region of upstate NY, gas and electric prices match the article estimates almost exactly.

  6. highspeedcharging

    I hope to do an analysis of maintenance costs soon…

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