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| Fig. 1: One of the main cost savings of an electric car is that it sources its energy from the electric grid rather than gasoline. Here, a car charges at a public charging station. (Source: Wikimedia Commons ). |
One of the many promises of electric cars has been their ability to reduce spending on a vehicle over the course of its lifetime. However, lifetime vehicle spending is complex, uncertain, and not readily available at the time of purchasing the vehicle. I attempt to model the lifetime cost of these vehicles in order to determine the expected savings associated with purchasing an electric vehicle. To calculate this, we sum the costs associated with the main cost drivers of cars: vehicle purchase, fueling, and maintenance. We then compare these values for electric and traditional (internal combustion engine) vehicles.
First, we learn that the majority of electric cars cost $8,000 - $16,000 more than comparable gasoline-powered vehicles. We will take the average value, $12,000. [1]
We then calculate the lifetime maintenance and fueling costs. For this, we assume a lifetime mileage of 100,000 miles. Since electric cars are so newly popular, there do not exist good data on the lifetime mileage of the vehicles. However, based on the lifetimes of the batteries in electric cars compared to the mechanical complexities of ICE vehicles, it makes the most sense to compare them with equal lifetimes. The reason for selecting 100,000 miles is that federal law requires electric car manufacturers to cover batteries up to 100,000 miles of use for the first 8 years of car ownership. While most electric cars are likely to surpass that distance, this makes it a guaranteed point of comparison.
To find the lifetime expected maintenance for the vehicles, we use a study that finds an average maintenance cost of $.061/mile for electric cars and $.101 for ICE vehicles. [2]
We continue to fuel costs. The average US price of electricity for residences in October 2022 was $0.1609 $/kWh. [3] To convert this to $/joule, we divide by 3.6 × 106 J/kWh to find $4.5 × 10-8 J-1.. The average price of gas in the US in the same quarter was $3.43/gal. [4] We convert this to $/joule by dividing by 1.2 × 108 J/gal. This produces $2.9 × 108 J-1.
We now find the energy used by our IC vehicle over the course of its lifetime. Under the Trump administration, car manufacturers were required to target a fleetwide average of 32 MPG, so we will use that for our analysis. While this figure has risen in the past few months, new cars are likely not yet targeting the higher level. [5] (100,000 miles × 1.2× 108 J/gal) / (32 mi/gal) = 3.75 × 1011 J. Multiplying this by our gasoline cost of $2.9 × 10-8 J-1, we find lifetime fueling costs of $10,875.
We know that electric cars are approximately 3 times as efficient as IC vehicles in converting energy to distance, so we use that to determine the energy used by the electric car to travel the same distance. To find the energy used by the electric vehicle, we divide the energy needed to travel this distance in the IC by 3, producing 1.25 × 1011 J. To find the price of this, we multiply by our price of electricity, $4.5 × 10-8 J-1, producing $5625. Subtracting this from our price of gasoline, we find savings of $5250
To find the total difference in cost between the two types of vehicle, we add the upfront purchase price difference to the product of the expected mileage and the sum of the fueling and maintenance prices costs as outlined above. We find electric cars, over the lifetime of the vehicle, save $2750 over their gasoline counterparts. While not a large proportion of the lifetime cost of the vehicles, it may be a surprising result to consumers who see electric cars as more expensive based on the purchase price of the vehicles.
Overall, we have shown that electric vehicles currently on the market pose slight cost savings compared to their traditional car counterparts. This addresses a common claim about electric vehicles, and it shows that price-sensitive consumers should not be dissuaded from electric cars on the basis of price. At a time when electric car prices and limitations are dropping, it seems likely that future consumer decision-making will continue to move towards the side of electric vehicles. However, it's worth recognizing that electric cars are still fundamentally different experiences for their owners. For example, as shown in Fig. 1, electric cars require time to charge, which can be an inconvenience.
There are three main limitations of this analysis. First, the lifetime spending on electric cars is still uncertain, as only a few electric cars have been around for long enough to assess how long they stay working and maintenance spending over time. Second, electric cars are developing at the fastest rate yet, and we're likely to see major technological changes over the next few years that will impact these numbers. Third, this model does not discount costs to the time they are incurred, instead treating them all as costs accrued at the time of purchase. While from an economic perspective, this is inaccurate, it is unlikely that consumers are considering discounted cash flows in their purchasing decisions.
© William Golub. The author warrants that the work is the author's own and that Stanford University provided no input other than typesetting and referencing guidelines. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.
[1] H. L. Breetz and D. Salon, "Do Electric Vehicles Need Subsidies? Ownership Costs For Conventional, Hybrid, and Electric Vehicles in 14 U.S. Cities." Energy Policy 120, 238 (2018).
[2] A. Burnham et al., "Comprehensive Total Cost of Ownership Quantification for Vehicles with Different Size Classes and Powertrains," Argonne National Laboratory, ANL/ESD-21/4, April 2021.
[3] "U.S. Electric Power Monthly," U.S. Energy Information Administration, December 2022.
[4] J. De Avila, "US Gas Prices Are Dropping: Here's How Much Lower They Might Go," Wall Street Journal, 2 Dec 22.
[5] D. Shepardson, "U.S. Boosts Fuel Efficiency Rules as Biden Reverses Trump Rollback," Reuters, 1 Apr 22.
