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ITF analysis finds that societal costs for electric cars and vans range from €7K to €12K more than fossil-fueled equivalents

Crist
Sample consumer and societal break-even curves for BEVs, with data points for a compact diesel for comparison. Source: Philippe Crist — Discussion Paper 2012-03. Click to enlarge.

Electric passenger cars currently cost €4K to €5K (US$5,079 to $6,349) more to their owners than an equivalent fossil fuel car over the vehicle’s lifetime, according to the latest policy brief from the International Transport Forum (ITF), an intergovernmental organization with 54 member countries at the OECD. ITF acts as a strategic think tank for transport policy and organizes an annual summit of ministers. The brief is based on a longer discussion paper published in April.

The analysis, “Electric Cars: Ready for prime time?”, finds that the societal costs for electric cars and vans range from €7k to €12k (US$8,889 to $15,238) more than fossil-fueled equivalents. This additional cost represents what society is willing to pay in order to promote electromobility. The ITF calculation ignores taxes on fuel (as from society’s point of view these are a transfer rather than a net cost); includes subsidies; and accounts for air pollution impacts.

The current generation of electric cars represents a significant improvement over previous ones. Nonetheless, electric vehicles remain more expensive than their fossil-fueled equivalents and may need government assistance to trigger wide-spread uptake. In line with strategic decarbonization goals, governments have provided research and development funding and, in many cases, direct and sometimes substantial purchase subsidies. One reason is the belief that the shift to a low-carbon transport is inevitable but that an early (and assisted) shift to electro-mobility will reduce the overall burden on society.

The “early-shift” rationale stresses that not only is government intervention in electric car markets necessary (on a sometimes large scale) but that society ultimately benefits due to a reduction of the oil import bill (with knock-on productivity impacts throughout the economy). An alternate storyline might highlight the elevated upfront opportunity costs of reducing energy dependency and greenhouse gas emissions via electric cars as opposed to advanced internal combustion engine vehicles and hybrids.

Comparison of fossil-fueled vehicles and electric cars is not always easy as conventional cars rarely have equivalent electric counterparts. Several models marketed in France do, however, exist in both fossil-fuel and electric versions, built on essentially the same body and offering similar comfort levels. Because of the small set of vehicle pairs studied, our findings can only be taken as an indicative snapshot of the relative costs of electric cars though many of the lessons derived from the analysis should be applicable elsewhere.

—“Electric Cars: Ready for prime time?”

The analysis concluded that comparing the costs to own and operate an electric compared to an equivalent fossil-fuel car was highly conditional—depending on the user and on the viewpoint taken (e.g. personal or societal expenses), as well as how far the car is driven and how much the battery costs to produce.

Owners of the electric cars studied can expect to pay €4,000 to €5,000 more than a fossil-fueled passenger car over the vehicle’s lifetime under typical use scenarios (30-35 km/day, 365 days/yr). However, a higher use scenario—say that of a delivery van travelling 90 kms a day during weekdays—would, on the contrary, save its owner about €4,000 over the vehicle’s lifetime. Under high travel scenarios (fleet use, deliveries, taxis), one might expect that a market already exists for electric cars if potential buyers have confidence in the advertised driving ranges and dealer support for these vehicles. Even without the €5,000 purchase subsidy, people travelling longer daily distances would likely already benefit from an electric car.

—“Electric Cars: Ready for prime time?”

In ITF’s analysis, electric passenger cars under typical use scenarios emit about 20 tonnes less CO2 than their closest fossil-fueled equivalents, translating into a societal cost of around €500 to €700 per tonne of CO2 avoided. This is somewhat higher than many other measures to reduce CO2 emissions, the report noted, even within the transport sector.

Other findings included:

  • The uptake of electric vehicles is intractably linked to fuel efficiency improvements in petrol and diesel cars—at least to around 2020. Gains in fuel efficiency will have a greater impact on widening the cost of ownership gap in favor of fuel cars than gains in electric efficiency (both of production and propulsion) in reducing this gap.

  • Electric cars are “displaced emission” rather than zero emission vehicles since electricity production may generate emissions. However, except in some cases where electricity production is highly carbon intensive, efficient electric cars will generate fewer lifecycle CO2 emissions than comparable fossil-fueled counterparts. Exactly how much less depends on the carbon intensity of marginal electricity production used to charge electric vehicles, the full lifecycle emissions (including production) of comparable electric and fossil-fuel powered vehicles (and their fuels) and the relative energy efficiencies of those vehicles.

  • Electric vehicles already promise financial savings for certain operators without subsidies.

  • It is also not clear that households will buy electric vehicles as “like-for-like” replacements for fossil-fueled cars; a two-wheeler or other small, purpose-built, low range, agile, easy-to-park and congestion-beating urban electric vehicle may be the EV of choice—as is already the case for electric bicycles in China.

  • The current market for electric cars is uncertain; overcoming this uncertainty is the rationale for government intervention.

Some commentators argue that the costs of intervention will be more than compensated by future savings (on reduced oil imports and avoided environmental costs). Others suggest that high levels of government support for electric cars diverts attention from other, possibly more cost-effective investments. Are direct purchase subsidies for electric cars a “good bet” for society? Our analysis does not conclusively answer that question but cautions that in those cases where electric cars already compare favorably to fossil-fueled vehicles, subsidies may be superfluous and that where they do not compare favorably, the onus is on demonstrating that subsidies represent value for money.

—“Electric Cars: Ready for prime time?”

Resources

Comments

Engineer-Poet
BEV's are not driven enough to recoup the investment in battery capacity before calendar-life issue erode the battery's capacity.
There goes the argument against V2G operation.
Sean Prophet

Roger, you won't have to replace the Prius battery. I had one for seven years before I bought my Volt. The Toyota dealer I used to take the Prius to said he'd never replaced a Prius traction battery. And he serviced plenty of cabs with 300K plus miles. Enjoy your Prius!

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