Comparing Ownership and Operational Costs for Electric Vehicles (EV) vs. Internal Combustion Engine (ICE) Vehicles Over Five Years

When considering the long-term costs, electric vehicles (EVs) and internal combustion engine (ICE) vehicles present different financial propositions. Over a period of time, such as five years, the cost structure, maintenance, and overall expenses vary between the two. Understanding these differences is crucial for making informed decisions when purchasing a vehicle.

Introduction to Ownership Costs

When comparing the total ownership costs of EVs and ICE vehicles, several factors come into play, including electricity versus petrol/diesel, repair costs, depreciation, and battery costs.

Electricity vs. Petrol/Diesel

Electricity prices can vary significantly by region. In regions like the UK and Europe, electricity is often more expensive than petrol or diesel. This immediately presents a barrier for EV owners who do not have the luxury of charging at home. Without easy home charging options, the total cost of ownership for EVs increases, making it less financially viable for those based in regions with high residential electricity costs.

Depreciation and Long-Term Use

Differences in depreciation rates and expected life spans are another key factor to consider. ICE cars, particularly in regions where they are widely used, often have a long lifespan of 20-30 years. They are also known for their ease of repairing and maintaining over time. In contrast, EVs can depreciate quickly and may need to be replaced sooner due to technological obsolescence or higher repair costs. Modern EVs are designed to last, but the critical cost remains the batteries, which can fail well before the rest of the vehicle.

Battery Costs and Lifespan

The battery packs in EVs are a major expense. In regions like the UK and Europe, where there may not be reliable or cost-effective public charging infrastructure, replacing a battery can cost thousands of dollars. This can significantly impact the total ownership cost of an EV over time. For instance, a Tesla owner who replaced his 50,000 AUD car’s battery after only 4-5 years faced a substantial financial burden, as it cost 20,000 AUD to replace the battery. While the car received a 15,000 AUD trade-in value for a new Hyundai, it still represents a hefty expense for a vehicle owner.

Operational Costs Per Mile

The operational costs per mile for both EVs and ICE vehicles can be calculated by factoring in the cost of fuel and electricity, along with other maintenance and repair expenses. Here’s an example to illustrate this point:

ICE Vehicle Cost Calculation

For an ICE car, the cost per gallon divided by the miles per gallon gives the cost per mile. For instance, if gas costs 3 AUD per gallon and the car achieves 30 miles per gallon, the cost would be 0.10 AUD per mile.

EV Vehicle Cost Calculation

For an EV, the cost per kilowatt-hour (kWh) divided by the miles per kWh provides the cost per mile. Using the example given, if electricity costs 0.12 AUD per kWh and the car achieves 4 miles per kWh, the cost would be 0.03 AUD per mile. Imagine a scenario where you’ve installed solar panels on your roof, bringing the cost of electricity to 0 AUD per kWh, effectively making the cost per mile 0 AUD for an EV. This is a significant savings compared to ICE vehicles.

Additional Savings in EVs

EVs offer additional savings compared to ICE vehicles, such as lower maintenance costs, no need for oil changes or tune-ups, and the cost of evaporating gasoline. EVs also have higher torque from a stop, leading to faster acceleration and potentially quicker tire wear. However, the fun and performance of acceleration often outweigh this. The ongoing costs of battery cell replacement and tire maintenance can be managed with regular budgeting and planned expenses.

While there is a learning curve and initial cost for EVs, the long-term savings and lower operational costs can make them a more attractive option over a period of five years, especially in regions with high electricity costs and accessible charging infrastructure. As battery technology improves, these costs are expected to decrease, making EVs even more competitive.

Conclusion

The decision to switch to an EV or an ICE vehicle depends on a variety of factors, including your location, driving habits, and budget. While EVs present a significant upfront cost, the long-term savings and lower operational costs can be substantial. As the technology continues to evolve, EVs are becoming more viable and cost-effective, making them a compelling choice for many consumers.