A team at Arizona State University has analyzed the five-year Total Cost of Ownership (TCO) for representative electric, hybrid, and conventional vehicles—the Nissan Leaf (BEV), Toyota Prius (HEV), and Toyota Corolla (ICEV)—in 14 US cities from 2011 to 2015.
The results, reported in a paper in the journal Energy Policy, show spatial variation due to differences in state and local policies, fuel prices, insurance and maintenance costs, depreciation rates, and vehicle miles traveled. Despite those differences, in nearly all cities, the BEV’s higher purchase price and rapid depreciation outweighed its fuel savings.
Sensitivity analyses highlighted the impact of key parameters and showed that both federal and state incentives were necessary for BEVs to be cost-competitive.
Future BEV cost competitiveness may improve if innovation and scaling lead to significantly reduced BEV purchase prices, but our analysis suggests that it will be challenging for BEVs to achieve unsubsidized cost competitiveness except in the most optimistic scenarios.—Breetz and Salon
To estimate ownership costs as realistically as possible, Breetz and Salon used a five-year ownership period (Fiscal Years 2011–2015) and city-specific data on vehicle mileage, fuel prices, insurance costs, maintenance and repair costs, resale values, and taxes, fees, and subsidies.
They also conducted sensitivity analyses exploring the impact of fuel prices, discount rates, depreciation rates, length of ownership, and driving distances—and what it would take for the Leaf to achieve cost-competitiveness without federal and state subsidies.
We find that although ownership costs varied considerably across cities, the Leaf cost substantially more than the Corolla in all cities and more than the Prius in all but one city. A principal reason is that the Leaf depreciated faster than the gasoline vehicles, losing more in resale value than it gained in fuel savings in the first five years. In addition, the Leaf’s higher purchase price resulted in higher sales tax, ad valorem taxes, and insurance costs. Sensitivity analyses demonstrate that an owner may save money with the Leaf compared with the Corolla or Prius, especially if they have access to free or reduced-rate charging. Government incentive programs were still necessary, however, for the Leaf to achieve cost competitiveness.—Breetz and Salon
Five-year TCO by city and car. Breetz and Salon.
Hanna L. Breetz, Deborah Salon (2018) “Do electric vehicles need subsidies? Ownership costs for conventional, hybrid, and electric vehicles in 14 U.S. cities,” Energy Policy, Volume 120, Pages 238-249 doi: 10.1016/j.enpol.2018.05.038