Consumers who purchase an electric vehicle will find that lifetime costs to own the vehicle are competitive with conventional and hybrid vehicles, according to an analysis conducted by the Electric Power Research Institute (EPRI). The study is based on pricing for the automotive products for the 2013 model year.
The baseline analysis relies on a cost-of-ownership model that examines only current vehicles; current fuel prices; and a relatively conservative set of customer values. In particular, the report analyzes the Chevrolet Volt and Nissan LEAF in comparison with a limited set of current conventional and hybrid vehicles. The EPRI analysis focused on the LEAF and Volt because the plug-in vehicles have been on the market the longest, have generated the greatest sales volume and provide data on real-world performance.
Given the cost premium associated with PEVs [plug-in vehicles], there is considerable uncertainty about how sales will evolve over time. This EPRI report attempts to address one of the key questions surrounding the acceptance of PEVs in the marketplace: When compared to a hybrid or conventional vehicle, is a PEV worth the additional up-front cost to consumers?
This question is difficult to answer due to significant differences between PEVs and conventional vehicles that affect how they will be perceived and used by customers. PEVs are typically plugged in at home and charged overnight instead of being refueled at a gas station, so they are typically more convenient than conventional cars for short range driving. However, they can be relatively inconvenient for long-range driving, depending on the vehicle design. An investigation of conventional tools and methods for evaluating customer valuation of vehicle technologies showed that existing tools were inadequate for analyzing the differences between conventional vehicles and PEVs. This report describes the development of and initial results from a cost-of-ownership model created to analyze the impact of these differences.—“Total Cost of Ownership for Current Plug-in Electric Vehicles”
The EPRI analysis does not attempt to model customer adaptation; it does use data that is new to EPRI transportation modeling in order to estimate the range of values for customers with different driving patterns.
Following are key results of the analysis:
With current incentives and prices, financial factors should not be a deterrent to a PEV purchase for most buyers. In terms of both total lifetime costs and monthly outlay, PEVs are typically within +/- 10% of comparable hybrid or conventional vehicle options. Because increased capital costs are well balanced by operating cost savings, the decision to purchase a PEV can usually be made based on personal values rather than financial limitations, assuming that the purchase of any vehicle is within a customer’s financial capabilities.
However, the analysis revealed that some drivers have driving patterns that are poorly matched to the characteristics of a given PEV and would experience a negative impact from a PEV purchase.
The LEAF is less expensive than competing options on average, but has a wide variation in value for different drivers, suggesting that battery-electric vehicles will require more careful consideration when making a purchase decision. In the worst case, the Volt can be operated in hybrid mode with roughly the same range and usage characteristics as other hybrid vehicles, so the risk of a significant negative impact is relatively low.
Because the LEAF is a battery-electric vehicle, it has a fixed range limitation that may result in significant cost or inconvenience for some customers given current charging availability. However, the relatively low capital costs for the LEAF and very low operating costs mean that well-matched drivers can incur substantially lower costs with the LEAF than other available options.
These variations suggest that tools to help inform customers of potential savings will be particularly important for battery-electric vehicles. Additionally there appears to be significant potential for customers to affect their ownership costs through adaptation.
The sensitivities suggest that increases and decreases in gasoline prices will have a significant impact on the relative costs of PEVs, but that state incentives or rebates and equivalent vehicle price changes will have an even larger impact on cost tradeoffs. The analysis indicates that capital costs and operating costs are reasonably well balanced at the current time for most vehicle comparisons.
Changes in the price of gasoline will affect this balance and will cause significant changes in payback time, but will result in relatively small changes in total ownership costs or monthly expenditure. Favorable state incentives or equivalent changes in capital costs for vehicles will have a larger impact than fuel prices, significantly improving payback time, total ownership cost, and monthly expenditure.
The study assesses both cash and financed purchases for electric, hybrid and conventional vehicles. The monthly outlay during the loan period is is a key indicator of affordability and may obscure the overall cost-competitiveness of vehicles for the life of the vehicle or the entire time of ownership.
The report also finds that lifetime costs for the Volt are close to the comparison conventional vehicle and comparison hybrid, indicating that increased up-front costs are offset by fuel savings. The variation in costs is relatively low between the best-matched and worst-matched, at about 5%. This makes the Volt a low-risk cost option for buyers interested in a plug-in electric vehicle (PEV).
Our analysis indicates that capital costs and operating costs are reasonably well balanced at the current time for most vehicle comparisons. Changes in the price of gasoline will affect this balance and will cause significant changes in payback time. Favorable state incentives or equivalent changes in capital costs for vehicles will have a larger impact than fuel prices, and will significantly improve payback time, total ownership cost, and monthly expenditure.—Dr. Mark Duvall, Director of Electric Transportation research at EPRI
Total Cost of Ownership for Current Plug-in Electric Vehicles (EPRI 3002001728)