The World's #1 Renewable Energy Network for News, Information, and Companies.
Untitled Document

Report: Electric Cars Cost Less, But Watch the Assumptions

Pike Research just released a report on the Total Cost of Ownership of Alternative Fuel Vehicles for Fleet Operators. The report compares the purchase price plus lifetime fuel cost of mid-sized cars available in the US.

Although the authors hesitate to declare any alternative fuel the cheapest option, the chart below clearly shows that the “BEV-100″ (Battery-Electric with 100-mile range, a.k.a. the Nissan Leaf) to be the least expensive option even at high electricity prices ($0.14/kwh) and low gas prices ($3/gallon.)  However, the Leaf only has a clear lead when the $7,500 tax credit is taken into account.

The other vehicles in the chart are (from left to right):

  • A conventional car with a 4 cylinder, 2.4 liter engine
  • A flex-fuel vehicle (FFV) with a 4 cylinder, 2.4 liter engine
  • A car with a four cylinder diesel engine.
  • The diesel car running on biodiesel.
  • A conventional car (same engine) with start-stop technology which turns off the engine when the car is stopped.
  • A mid-sized hybrid-electric vehicle with a 2.4 liter engine.

Also compared in the report (but not shown in the chart) were natural gas (CNG), plug-in hybrid (PHEV) vehicles, and also vehicles of various sizes.  The following chart shows the total cost of ownership of these at today's fuel prices.

So Cost-Conscious Fleet Managers Should Buy the Leaf?

Even with the tax credit, there are a few caveats.  

  1. This analysis does not account for the time value of money.  A cost-conscious fleet manager would be discounting future fuel costs at his company's cost of funds.  For the US government, that may be only a couple percent, given what Treasury bonds are selling for these days.  But most public companies cannot borrow at nearly so low a rate, and raise a good portion of their funds through more-expensive equity, so a discount rate in the 5 to 15 percent range would be more appropriate.  This will make fuel costs relatively less significant, and disadvantage BEVs and PHEVs relative to other vehicles.
  2. No account is taken of the need for additional fueling infrastructure.  This gives an advantage to BEVs, PHEV-40s, and natural gas vehicles relative to the rest.  PHEV-10s (i.e. the plug-in Prius) have small enough batteries that they should be able to get by with inexpensive level 1 (120 V) charging.  A decent extension cord would do the trick.
  3. No account is taken for differences in maintenance costs, which are lower for pure electric vehicles, and may be somewhat lower for PHEVs as well, when they are run primarily on electric power.  
  4. Flex-fuel and start-stop technology are currently only available on higher-end vehicles, which makes these inexpensive technologies seem much more expensive than they really are.  Fleet operators wishing to use such higher end vehicles already may find them to be more attractive options than they look like in this comparison.

Conclusion: Get the Prius

After I make back-of-the envelope adjustments to the report’s results for maintenance, charging infrastructure, and the time value of money, the plug-in Toyota Prius (PHEV-10) seems to have the lowest cost of ownership in most cases among mid-size vehicles.

Fleet operators with low cost of funds (discount rates) will still prefer the Leaf, while operators with relatively high costs of funds will find normal hybrids to be the most cost effective mid-sized cars.

Even cheaper options exist with the largest cost savings coming by down-sizing to a small or compact car, especially if it is a hybrid.

With a larger vehicle you pay for the extra size twice: First you pay for all the extra metal directly, and you pay again in all the extra fuel needed to move that metal around.

This article was first published on Forbes.com and AltEnergy Stocks and was republished with permission.

Untitled Document

RELATED ARTICLES

Don’t Like Obama’s Clean Power Plan? Fine, Here’s Cap and Trade

Mark Drajem and Lynn Doan, Bloomberg Republican governors who boycott the Obama administration’s new power-plant regulations may instead get an offer they...

Renewable Energy Gains Greater Opportunity in US Clean Power Plan

Elisa Wood After a year of being pummeled by opponents, Obama’s final carbon reduction plan emerged this week with an even stron...

US Clean Power Plan Could Include Carbon Trading

Mark Drajem, Bloomberg Some businesses that back President Barack Obama’s plan to curb greenhouse gases are making a late lobbying push to a...

Listen Up: Vampires Sucking Power from your House

The Energy Show on Renewable Energy World Here’s a nightmare for you: at night, when you’re asleep and you think things are quiet, there are vampires sucking p...

PRESS RELEASES

Appalachian's Energy Center assists counties with landfill gas to energy projects

The Appalachian Energy Center at Appalachian State University recently completed a proj...

Array Technologies’ DuraTrack HZ v3 Continues to (R)evolutionize at SPI

Array Technologies, Inc. (ATI) prepares to showcase its recently launched tracking syst...

Redesigned HydroWorld.com Video Gallery

Hydropower news and information, and interesting promotional announcements are now avai...

30 days to GRC Annual Meeting & GEA Geothermal Energy Expo

The Geothermal Resources Council (GRC) has announced that it is only 30 days to go to t...

FEATURED BLOGS

Appalachian's Energy Center assists counties with landfill gas to energy projects

Activity supported with Z. Smith Reynolds Foundation funding BOONE—The Appalachian Energy Center at Appalachia...

Discounted Room Rates for Geothermal Event end Friday

Discounted room rates for GRC Annual Meeting & GEA Geothermal Energy Expo end Friday Room rates for this prestigi...

3 Reasons To Follow-Up

It’s very important to begin nurturing your relationship with a customer immediately after the project you sold...

Who are the Solar Early Adopters? - the “Tipping Point” is Looming

We all know why people go solar: investment purposes, immediate savings, environmental concerns, and grid independenc...

FINANCIAL NEWS

Tom Konrad is a private money manager and freelance writer focused on Peak Oil and Climate Change as investment themes. He manages portfolios for individual clients and is Head of Research for the JPS Green Economy Fund (http://jpsgreeneconomyfund...

CURRENT MAGAZINE ISSUE

Volume 18, Issue 4
1507REW_C11

STAY CONNECTED

To register for our free
e-Newsletters, subscribe today:

SOCIAL ACTIVITY

Tweet the Editors! @jennrunyon

FEATURED PARTNERS



EVENTS

Intersolar North America 2016

Exhibition: July 12 - 14, 2016; Conference: July 11 - 13, 2016 Intersola...

ees Europe 2016

Exhibition: June 22-24, 2016; Conference: June 21-22, 2016 ees Europe 20...

Intersolar South America 2015

Exhibition and Conference: September 1-3, 2015 Intersolar South America ...

COMPANY BLOGS

Less Is More

When you’re giving a presentation, one of the easiest things to do...

Captivology

One of the biggest challenges we face as efficiency sales professionals ...

How To Optimize Your Meeting Schedule

Do you spend more time in meetings than you do actually working? While m...

NEWSLETTERS

Renewable Energy: Subscribe Now

Solar Energy: Subscribe Now

Wind Energy: Subscribe Now

Geothermal Energy: Subscribe Now

Bioenergy: Subscribe Now  

 

FEATURED PARTNERS