Power Institute Study: Total Cost of Ownership Cheaper for Electric Cars

By · June 13, 2013

TCO for Chevrolet Volt

Earlier this week, the U.S. Department of Energy released a fuel price calculator that illustrated how much cheaper it is to refuel an electric car compared to a gasoline one. But what about the total cost of ownership (T.C.O.), from driving it off the dealer’s lot to paying for annual servicing, fuel and other consumables? Does paying a high sticker price for a new electric car pay off over time compared to a conventional gasoline car?

The answer, according to the pro-EV non-profit Electric Power Research Institute, is a resounding yes, at least for those who hold onto their car for a significant amount of time. In an exhaustive new study published yesterday, E.P.R.I. examined the T.C.O. of the 2013 Nissan LEAF and 2013 Chevrolet Volt against conventional gasoline and hybrid cars. Rather than assume cars were purchased outright, it factored in a five-year (50 month) finance package into its calculations.

Assuming identical finance packages and an average gas price of $3.62 per gallon, the Volt proved marginally cheaper to run over a five-year period compared to a conventional gas or hybrid car, despite having the highest sticker price of any car in the survey. Meanwhile, the LEAF proved as much as $7,000 cheaper to run over five years compared to gasoline or hybrid cars.

Charging, Driving, Key Factor

For both cars, the study looked at two separate driving pattern scenarios: one in which 83 percent of driving days were less than 40 miles in total; and another where 53 percent of all driving days were less than 40 miles. The study assumed both cars would only be charged at home, negating the real-world impact of public or at-work charging. Consequentially, it assumed LEAF owners needing to drive beyond the range of a single charge would need to hire a back-up vehicle with an assumed gas mileage of 24 m.p.g. Over the course of five years, the study has factored $4,000 of rental or replacement car fees to the LEAF’s T.C.O. calculation.

By making the assumption that LEAF owners are resourceful enough to charge away from home, and live in an area with an abundance of Level 2 and rapid charging stations, the LEAF’s T.C.O. over the five year period falls by another $4,000, making it $11,00 cheaper over the five-year period than its cheapest competitor.

Californian influence

Things get even better for Californian drivers, with incentives dropping the T.C.O. even further for both the Volt and LEAF. As a consequence, the study concluded the LEAF has a T.C.O. $10,000 less than its gasoline counterpart, even accounting for $4,000 of replacement car hire for days requiring more than the LEAF’s E.P.A.-approved 75 mile range. Use public charging and never hire a replacement car, and the cost benefits rise to an astonishing $14,000.

Of course, both LEAF and Volt TCO figures are affected by rising and falling gas prices. Even with a $1 drop in the price of gasoline however, both vehicles still remain within 10 percent of the TCO figures for gasoline and hybrid cars. Raise the price of gasoline by $1, and the cost benefits rocket, making both cars between $10,000 and $15,000 cheaper to run than comparable gasoline or hybrid cars.

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