How Much Will Driving an Electric Car Save You? Experimenting With Flat-Fee Charging Rates

· · 7 years ago

How much will driving an electric car save on transportation costs? It's one of the biggest questions people have as they consider the switch from internal combustion to electric drive. For people accustomed to per gallon calculations, entering the world of plug-ins involves a bit of new thinking and some extra consideration.

Across the U.S., electricity rates vary from lower than 3 cents per kWh in central Washington state to more than 27 cents per kWh in Hawaii. In some regions, such as much of California, electricity rates vary drastically by the time of day the electricity is being used (it becomes more expensive during high demand periods, typically the middle of the day). Given these huge variations from state-to-state, and sometimes hour-to-hour, figuring out how much you might save by driving an electric car can get to be a bit tricky.

For those of you not interested in the particulars, suffice it to say that, even at 27 cents per kWh (currently the most expensive in the U.S.), you will be paying about half as much per mile in "fuel" costs as your average family sedan at $3 per gallon gas. On top of that, you won't have to go to the service shop for oil changes anymore (saving about $30 every 3-4 months for most Americans). And, at the average US electricity rate of 12 cents per kWh, you would be paying about a quarter as much for "fuel" costs—dropping your yearly fuel bill from about $1,400 to $350.

But what if you live in an area that has time-of-day use charges? Will you always be able to charge in the wee hours of the morning when rates are lowest? How do you start to figure out how much it might cost you to charge your vehicle every month? Detroit Edison (DTE), a Detroit, Michigan, utility company, has decided to experiment with charging rates for electric vehicles to help satisfy consumer anxiety about the issue.

Yesterday, the Michigan Public Service Commission (MPSC) approved two rate options for eligible DTE EV customers: one that provides a lower rate for charging during low demand periods (between 11 p.m. and 9 a.m. Monday through Friday) and another that provides for a monthly flat fee of $40 per vehicle no matter how many kWhs are used.

"As manufacturers begin to sell plug-in electric vehicles, it is important that Michigan's electric utilities be ready as well," said MPSC Chairman Orjiakor Isiogu. "The program approved today will help Detroit Edison evaluate the effect of electric vehicles on its electric system, offers off-peak rates that customers can use to charge vehicles, and offers the infrastructure required to charge these vehicles."

The experimental electricity rates will initially only be available to 2,500 residential customers. As part of the program, the users will be eligible for up to $2,500 of installation of a separately metered circuit and charging station, or will have up to $2,500 of installation costs reimbursed by the installing company if their station meets the program's needs. If participants want to take advantage of the grant money, they will need to sign an agreement with DTE that specifies the "terms and conditions regarding the use of such equipment."

So is the flat fee worth it? It appears that DTE off peak rates average about 9 cents per kWh, and on peak rates are about 16 cents per kWh. For the sake of comparison, if you were able to charge your vehicle completely off peak (I know it's unlikely, considering you'd need to charge it on the weekends), you'd spend about 2.25 cents per mile driven. At those rates, in order to make the flat $40 rate worth it, you'd have to drive more than 1,800 miles per month (21,600 per year).

I know my numbers are speculative because DTE hasn't announced their rates for the experimental program yet and I'm just going off of what they currently charge for off-peak usage, but even so, 21,600 miles per year is a lot of mile for a vehicle that goes 100 miles on a charge. It's possible, but you'd have to drive almost 60 miles each and every day. If that sounds like your driving pattern, and you live in Detroit, the $40 flat fee could be worth it. In any event, the program is enticing if only for the $2,500 charging station installation grant.

Image Credit: Some rights reserved by kevindooley


· · 7 years ago

This assumption is that all would charge only one time a day @ home, not several top off charges between trips .so rates would vary. location / home based.

· · 7 years ago

I can tell you how much I have saved in 14 months with my MINI-E. I've driven the car 38,000 miles. The car has a 35kwh pack, of which 28 is usable. I averaged about 90mpc (more in the warm weather, less in the winter) but 90-95 would be very close to the average. 28kwh X .11(my cost per kwh) is $3.08 for 90 miles, so $3.41 for every 100 miles I've driven which equates to $1,300 in electric.

My other car is a 2009 Toyota Tacoma. I know it's not a fair comparison, but it is my other car and what I would have driven if I was not accepted in the Trial Lease program. The Tacoma gets 18mpg so I would have had to buy about 2100 gallons of gas. If I use $2.70/gallon I would have spent $5,700 in gasoline, or $4,400 more.

Even if I use a better comparison vehicle, say an ICE MINI Cooper and use 36mpg the gasoline cost would have been $2,850 and still paid $1,550 more. Then you have to figure the maintenance costs like the 8 oil changes I didn't need to do as well as tune ups and filters and other things that need to be replaced periodically with ICE cars. Also, with regenerative braking my brake pads are practically new and I'll probably go 100,000 + miles before they need to be replaced. I'm sure by now I would have had to replace the pads if I was driving an ICE car.

Then consider that my home solar PV system generates all my electricity so I can be fairly confident that my electric costs will be stable for a long time even if rates go up and you cannot say that about gasoline prices.

However, the one big looming cost down the road is the inevitable battery replacement. I don't think we can really predict how much it will cost in 5 or 6 years from now. What will the cost per kw be then? $500? $400? $300? I don't really think anyone knows for sure, but I still bet the overall cost of ownership of EV's will be considerably less than conventional ICE vehicles once you add everything up.

· Devon (not verified) · 6 years ago

I think a major factor in determining the cost of an EV is figuring how much longevity you will be getting from your battery banks. The batteries are tremendously expensive and do not last forever.

This calculator helps you try fo figure in the cost:

· · 6 years ago

@Devon (not verified) · "The batteries are tremendously expensive and do not last forever."

Nothing lasts for ever.

If you are afraid of battery longevity - lease the car, like I've done.

· · 6 years ago

@Devon (not verified)

I am unable to look at the linked cost comparison (my work's filter blocks the link)

I assume the comparison assumes battery prices will stay the same. Battery manufactering is still ramping up. The costs will be high initially and probably for the next few years. A decade from now? Batteries will probably still be the largest single-item cost of EV cars but should be much cheaper than they are today.

As EVNow said, lease if you don't want to worry about battery life.

· Shine (not verified) · 6 years ago

Are electric cars more expensive than regular cars?

· Josh (not verified) · 6 years ago

The electrification of the automobile is a bet nearly every car company on Earth has taken. Even Porsche has said that it intends to produce the sensational 918 Spyder plug-in hybrid supercar it showed at the Geneva Auto Show. The future of cars is literally electric.

· · 6 years ago

Yes, the Lithium-ion batteries are recyclable. Additionally, unlike the batteries used to start gasoline cars, Lithium-ion batteries are non-toxic.
Any battery confusion comes from gasoline cars, not electric cars.

· · 6 years ago

@ex-EV1 - for completeness sake, many electric cars on the market (at least the Volt and the Leaf) have the same Lead battery in them. It doesn't start the motor, but it's still there to run the accessories.

· · 6 years ago

I keep doing this calculation over and over; it is a lot of money saved
I too have an SUV I am thinking of trading in for a LEAF.
In ten years I will spend $20,000 on gas alone at $3.50 a gallon
In ten years LEAF projection would be a lot less: maybe $3,000-5,000? 3 miles per KW means 33,000 KW at 10 cents to 15 cents per KW? It is a no brainer even if you have to buy a new battery in 10 years

It really reminds me of the good old days that I really cannot remember the 1960s?
Remember when old timers talk about 25 cents a gallon?
I was about 10 when the 1974 oil embargo hit and raised prices and cut supplies.

1)Recharging you need an outlet at home work or new public infrastructure:
a) regular outlet at home or work is 110 volt and would be slow 15-17 hours to charge from MT to full
b) special home chargers would plug in to clothes dryer 240 outlet and be quicker 4-6 hours to charge MT to full
c) Super Fast commercial charges DC charges would be 1/2 hour to charge

2) Traveling far would mean careful planning to hit the DC fast charges or renting an internal combustion engine car

· Mark (not verified) · 6 years ago

This article prompted me to look at some specific costs of electric driving, mainly for my own interest. Let me know if you find it useful or lacking! 

A useful comparison between petrol/diesel and electric driving per year in UK units:

Average 30 miles /day is approx 10,000 miles/year.

Fuel Cost:  
Petrol:  £1.30/litre
Miles/Litre= 10  for 45 Miles/Gallon
per mile = £ 0.13   
per Year = £1300 

per mile = £0.03 
per Year = £300

Savings = £1000 per Year on fuel

Additional savings:
Road Tax = £150

So at least a savings of £1150 per year.

What can reduce this is the added depreciation of the battery pack (£1000 per year?).

I personally think that the battery is where most buyers should scrutinise. A system where the customer does not own the battery pack could become the norm. This also enables battery swapping at filling stations to occur.The life time of the electric motor and drive train is expected to be much longer than that of conventional petrol/diesel cars. The electric car owner could then stand to benefit from lower overall depreciation in an system where the battery is swappable and leased.

Battery Lease cost per month is quoted as £65 for Renault and others.

Battery Lease / year = £780

So Basic savings per year = £1150 - £780 = £370

A battery lease car like the electric Renault Zoe or the Kangoo Van is  £13,600 after UK government grant.

The equivalent diesel van is £9000.

Thats a difference of £4600.

So the electric version would pay back the difference in at least 12 years.

Also factor in reduced maintenance costs for electric motor vs combustion engine per year. 

Since you can expect longer life-times out of your electric vehicle (without battery) compared to petrol/diesel than a payback time of 10 years is possible.

Over the next 10 years, the value of electric driving will only improve.

All in all, if you can afford the extra 50% upfront costs, you don't stand to lose very much in £'s .

New to EVs? Start here

  1. Seven Things To Know About Buying a Plug-In Car
    A few simple tips before you visit the dealership.
  2. Incentives for Plug-in Hybrids and Electric Cars
    Take advantage of credits and rebates to reduce EV costs.
  3. Buying Your First Home EV Charger
    You'll want a home charger. Here's how to buy the right one.