Eight Factors Determining Total Cost of Ownership of an Electric Car

By · July 16, 2014

Piggy Bank

1Actual Price of Vehicle

It’s easy enough to pinpoint the MSRP for a car, but most calculations use the lowest base price, rather than what most people pay before driving off the lot. Options and trim levels can mean a swing of thousands of dollars. Then, there are dealership incentives and deals, regardless of the model, that can add thousands more in variation. If you want accuracy, use a number that comes directly from the dealer for the specific car you plan to buy.

2Tax Credits and Other Incentives

Nearly everybody immediately drops $7,500 directly off the price of an EV, because that’s the “up to” federal tax credit amount that could be used on your tax returns. But many tax-paying buyers end up claiming less than that, due to your specific tax liability in the year that you are claiming the credit, and the Alternative Minimum Tax. (State and regional rebates are also key factors, and are very much based on geography.)

3Depreciation

EVs have not been on the market long enough for us to know what a robust used electric car market looks like. In times of high gas prices, conventional hybrids have done very well. But it’s a harsh reality that EV range diminishes over time, especially for battery-powered cars that don’t have active thermal management. What happens to used EV prices when the market discovers that LEAFs and other cars have 10 percent or less range after several years? Only time will tell.

4Price of Fuel

The common assumption is $0.12 a kilowatt-hour for electricity and about $4 a gallon gas. There’s little doubt that lower fuel costs put EVs at a distinct advantage over time. That edge can grow wider when gas prices spike. But the actual cost for a kWh varies widely across the U.S., and can swing wildly even within a location based on utility rate plans, season, tiers, time-of-use programs and home solar. Forecasting actual EV fuels costs is a tough challenge.

5Miles Driven

Based purely on anecdotal information, EV owners clock fewer miles per year in their electric cars (given limited range) than in internal combustion automobiles. So, using a national average of 12,000 or so miles in a lower cost-per-mile analysis is problematic.

6Maintenance Costs

EVs benefit from not requiring oil changes or other maintenance costs for exhaust systems. Studies have shown that this represents a 35 percent decrease in cost over time. Some calculations peg this to about 3 or 4 cents per mile of maintenance cost in an EV versus closer to 6 cents in an internal combustion car. But it’s hard to know for certain.

7Home Charging Equipment

It’s the rare calculation that figures in anywhere from $500 to $1,500 of upfront cost for buying and installing an EVSE, the 240-volt wall-mounted box that funnels electricity into your car.

8Insurance Rates

A number of forward-thinking insurance companies offer small discounts for EV owners, but it’s also common for vehicles with advanced and unproven technology to get slapped with higher rates.

Read next: Guide to Buying Your First Home EV Charger

Comments

· · 1 year ago

Point #7: Home Charging Equipment: misses some points.
a) 30% Federal Credit for installing EVSE charging.
b) cost of a home charger has dropped substantially in last year (see eBay/Amazon/hardware store for many $800-$1200 models). e.g. ClipperCreak has 5kW EVSE for $600.
c) installing a standard 220V outlet & plugging your own plug equips station can greatly lower permit & electrician costs
d) average EV owner only uses ~8kWh per day on average, so 120V Level 1 (emergency charger that is included with EV) would be useable if driving less than 35 miles per day (amount of range on a night of Level 1 charging). There are no limitations to driving EVs max. range of EV, but it would require driving less miles a couple days to regain higher range capacity.

Point #5: EV Range & "Miles driven Per Year" are not related for majority of EV owners. Many Leaf and Volt owners average over 18,000 miles per year. I know one Leaf owner that has close to 80,000 miles after 2 years. There are also many non-EV vehicles with less than 8,000 miles per year. See TheEVProject.com (study of 8000 Leafs & Volts) or VoltStats for real-world data.

Point #4: Fuel Price concern is not so much of pump price, or cost per kW; but historic & seasonal trends! Electric costs have very consistent pricing around the globe. Gas pump prices are on upward trend ($1 in 1999, $4 today, $xx in 2020?) not to mention seasonal refinery issues & global geo-political influences.

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  6. Eight Factors Determining Total Cost of Ownership of an Electric Car
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