Are Electric Vehicles Cost-Effective to Drive?
by Bob Shively, Enerdynamics President and Lead Facilitator
A recent study by the consulting group Anderson Economic Group purported to show that it is more expensive to charge an electric vehicle (EV) than it is to fill an equivalent vehicle with gasoline. This, of course, made for plenty of media headlines. If true, such conclusions would take away one of the key benefits that many EV buyers hope to achieve. But many other research groups have concluded that the Anderson study is flawed, and that it is indeed cheaper to fuel an EV. These include Atlas Public Policy, Car and Driver, and Energy Innovation. So, what’s the difference?
Is it cheaper to fuel a gasoline or EV car?
Like many analyses, the answer can be changed by assumptions used. Here are some of the key questions to consider:
- What is the cost of gasoline?
- What is the driver’s variable home cost for electricity?
- How often does an EV driver need to charge at a public station, and what is the cost at a public station?
- Should potential higher state annual registration fees for EVs be included in the fueling cost?
- Should the upfront cost of installing a charger at home be included in the fueling cost?
- Should the time and cost associated with driving to a public gas station or electric charging station be included in the fuel cost?
If you answer all these in one way, you might conclude that it is more expensive to fuel an EV. But most analysts would disagree that registration fees and upfront capital costs for a charger are legitimate “fuel costs.” If you take these costs off the Anderson analysis, then it too shows that fueling a personal EV is cheaper than fueling a gasoline car.
My own personal vehicle is a 2022 Hyundai Tucson Plug-in Electric Vehicle (PHEV), which means I can choose between gasoline or electricity at any time if my battery is charged. Here’s how I calculate it out:
Gasoline cost:
- Gas usage average: 35 miles/gallon
- Gasoline cost: $3.89/gallon (as of October 5, 2023)
- Per mile cost: $3.89/35 = $0.11/mile
Electricity cost:
- Miles per charge average: 33 miles
- kWh per charge: 13.8 kWh
- Variable cost per kWh: $0.091 (this is my home rate, I have never used a public charging station)
- Cost per charge: 13.8 kWh x $0.091/kWh = $1.26
- Per mile cost: $1.26/33 = $0.038/mile
For me, the choice is obvious. I want to maximize my use of electric driving since for every 1,000 miles I drive electric, I am saving $72 in fuel cost. Of course, your results may vary depending on what car you drive, what your gasoline costs are, what your variable electric rate is, and whether you need to use a public charging station.
What about the overall cost of ownership?
Cost of ownership of a vehicle is about a lot more than just fuel costs. Included in overall cost are the upfront purchase price, tax credits for EVs, registration costs, fuel costs including what percentage of the time EVs are charged at public stations, maintenance costs, miles driven annually, and depreciation in the vehicle value over time. Last year Car and Driver did an analysis of the three-year cost of ownership comparing gasoline vs. EV costs for two vehicle types – the Kia Kona and the Ford F-150 Lightning. If you want to try to figure this out for yourself, reading the article is highly recommended. Here’s what they concluded:
For situations where state or federal EV tax credits apply, the numbers would be lower for the EV vehicles (tax credit rules keep changing so you need to check this out if you are contemplating buying an EV).
What can we conclude from this?
First, anytime you see an analysis you need to look at it critically and see how it determines its numbers. Second, true numbers are highly dependent on various factors that you must understand to get a true picture. But it does appear that fairly soon, if not already, the short-term cost of ownership for an EV is at least close to if not lower than a gasoline vehicle. While many consumers aren’t quite ready to make the transition, I suspect the majority of us will be buying electric vehicles sooner than we might imagine.
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