Electric cars already cheaper to own and run than petrol or diesel?

cars So says the Graun. Indeed it claims an Exclusive: Pure electric cars cost less over four years than petrol or diesel cars in the UK, US and Japan, researchers say, but China is set to lead the market. Quite how it can claim an exclusive when this is based on published research (Total cost of ownership and market share for hybrid and electric vehicles in the UK, US and Japan by KatePalmer, James E.Tate, Zia Wadud and John Nellthorp) is a mystery to me; and anyway I'm pretty sure I've seen similar elsewhere. It is a nice headline and points the way to the future but you won't be shocked to learn that there are a few little details in there to be careful of.

The details are all around the fact that while we're all very interested in money, only evil capitalist scum regard money as the bottom line; we of course care about ecological cost. So we need to notice that Pure electric cars receive a sales subsidy of about £5,000 in the UK and Japan and £6,500 in the US. “The subsidies are reasonably expensive at the moment but they are expected to tail off,” said Tate. He estimates that an electric car such as the Nissan Leaf will become as cheap to own and run as a petrol car without subsidy by 2025. Renault expects this to happen in the early 2020s. Unfortunately it isn't easy to add the £5k onto the chart above; but since they use a depreciation rate of a little under 20%, for a simple approximation, add £1k to the Pure Electric, which still (by eye) leaves it a shade under the Diesel.

Further, its kinda odd that the fuel cost for electric is so much lower than for diesel or petrol. If you ignore nuclear and renewables, then electricity is produced by burning things; burning oil is expensive and falling out of fashion but the cost should be comparable to diesel (within a factor of two, perhaps, in some handy-wavy expectation, mixing in the higher efficiency of large-scale combustion with the losses in power lines). And of course it is; the difference is tax: petrol and diesel in the UK are taxed at about 66% whereas electric is essentially tax free (there's a small carbon tax but I think it is significantly smaller than for diesel) so the diesel cost should shrink for comparability. Of course that's true now. In the glorious future when all our electricity is produced fossil-free the electric regains it's pure advantage; so in a sense this is a pointer to the future.

And the big pale blue elephant in the room is depreciation, which is by far the largest part of the cost for any of the types. This is a real financial cost and a real ecological cost, since it represents the cost of the raw materials to make the car, and the cost of the labour etc. to make it. It is reasonable to suggest that electric will come down in the future, since it is a newer thing; and reasonable to hope that electric cars are fundamentally simpler.

Lastly, there's the things we'd need to add onto the diesel (and to a lesser extent petrol) to be fair: costs of particulates and so on. I don't know what those are, numerically.

Prior art from Brian in 2015: EV costs at a tipping point for un-American countries.


crandles said...

"Pure electric cars have much lower fuel costs – electricity is cheaper than petrol or diesel – and maintenance costs, as the engines are simpler and help brake the car, saving on brake pads."

Yet the maintenance cost looks similar for all except diesel?

Also where are battery prices headed? Currently around £400/KWh:

[quote author=Bob Wallace link=topic=438.msg134698#msg134698 date=1511550250]
Some speculations about where battery costs may be when the Tesla tractors start rolling out of the factory...

500 mile semi = $150,000
300 mile semi = $120,000

200 miles more range for $30,000 additional

< 2 kWh per mile. Musk. And there are studies which back this up.

First, well under 2 kWh per mile...

500 miles at 1.5 kWh per mile = 750 kWh
300 miles at 1.5 kWh per mile = 450 kWh
300 kWh

300 kWh for $30,000 = $100/kWh. Retail.

Then, just under 2 kWh per mile...

500 miles at 1.9 kWh per mile = 950 kWh
300 miles at 1.9 kWh per mile = 570 kWh
380 kwh

380 kWh for $30,000 = $79/kWh. Retail.

Selling at a loss? Selling at cost? The new cost of batteries?

If this is indicative of batteries falling to quarter of current price in next couple of years, then it will quickly become a no-brainer to choose electric.

Smoother ride
Cheaper fueling costs
Cheaper maintenance
Easier refueling (just plug in at home)
Better driving experience

Only things not to like at present are financing higher cost of vehicle, difficulty finding recharging places for long journeys. Give these a couple of years, and situation could change rapidly. Does limited availability push depreciation on ICE cars up and on electric cars down?

Gareth said...

You don't have to believe everything that Tony Seba says, but he has some good points to make. In particular, as battery prices fall and sensitivity to diesel particulate emissions increases, then there will be significant changes in the residual values (depreciation rate) for IC engined vehicles.

It has also been argued that the residual value in EV batteries (reused for domestic/other storage where "range" isn't as important, eg as Panasonic want to do, but they can't get enough old batteries at the moment) is large enough to give EVs a huge advantage over IC vehicles in retained value - especially in a world where no-one wants noisy smelly vehicles...

I think that we are close to an inflection point - close enough to make vehicle purchasing decisions difficult ...

Phil Hays said...

"EVs convert about 59%–62% of the electrical energy from the grid to power at the wheels. Conventional gasoline vehicles only convert about 17%–21% of the energy stored in gasoline to power at the wheels."


William Connolley said...

> Also where are battery prices headed?

Almost without doubt downwards, since they are newish tech at this kind of scale.

> EVs convert about 59%–62%

Sounds believable. However, power stations only convert X% of the fuels they burn into electricity, and of that Y% is lost in transmission. So the disparity is much smaller than your figures would suggest.

David B Benson said...

At least in the USA the consumer taxes on transportation fuels are used exclusively to maintain the transportation systems. Somehow the electric cars and trucks need to pay their share...

David B Benson said...

William, you need to complain to Paul Krugman about misappropriation of your mustelid.

Phil Hays said...

Takes energy to refine gasoline from crude oil. So the the disparity is larger than you imply.




World wide, 92%

David, I pay $100 per year more to the state to own an electric car. What do you pay to belch toxins into my air?

crandles said...

>"Almost without doubt downwards, since they are newish tech at this kind of scale."

That isn't saying a lot. There is trending downwards and then there is heading to a quarter of current price.

David B Benson said...

What state?

I walk.

Phil Hays said...


David B Benson said...

Me too.

crandles said...


How much data does it take to convince establishment to improve its predictions?