So You Think Buying Electric Over Gas Will Save You Money? Think Again!

One of the common beliefs surrounding Electric cars is that you don't need to buy fuel anymore and that very quickly negates any added costs to the vehicle. Thus making purchasing an electric car both an emotionally appealing purchase and an economically sensible purchase as well.

Well, why don't we have a look at the numbers and see exactly how long it will take to reimburse these costs.

First, some assumptions
-Gas cost is $3/gallon
-Electricity cost is $0.08/kWh
-Recharging Batteries is 80% efficient

Now the vehicles and their quick specs.

Nissan Leaf
$32,750 -> Corrected to $25,280 thanks to the American tax payer
24kWh battery
100 miles per charge
$2200 Quick Charger

Chevrolet Volt
~$40,000 -> Corrected to $32,500 again thanks to the American tax payer
16kWh battery -> Run at 8.8kWh to ensure battery life
40 miles per charge
~$2000 Quick Charger (note, prices not revealed, but since it has to store less of a charge I allotted a smaller price tag.)

Tesla Model S
$57,400 -> Corrected to $49,900
~90kWh battery
300 miles per charge
~$5000 Quick Charger, (price not released but the thing is gonna be massive to store enough energy to charge a ~90kWh battery)

And their competition...

Toyota Prius (Hybrid Competitor)
$22,800
50mpg Combined

Ford Fiesta (Economy Car Competitor)
$13,320
33mpg Combined

BMW 5 Series (Model S's luxury Competitor)
$45,950
25mpg Combined

Now for the calculations...

Nissan Leaf
24kWh/(80% charge efficiency)=30kWh to charge
30kWh*($0.08/kWh)=$2.40 Per Charge
$2.40/(100 miles)=$0.024 Per Mile

Chevrolet Volt
8.8kWh/(80% charge efficiency)=11kWh to charge
11kWh*($0.08/kWh)=$0.88 Per Charge
$0.44/(40 miles)=$0.022 Per Mile

Tesla Model S
90kWh/(80% charge efficiency)=112.5kWh to charge
112.5kWh*($0.08/kWh)=$9 Per Charge
$9/(300 miles)=$0.030 Per Mile

Toyota Prius
($3/gallon)/(50miles/gallon)=$0.060 Per Mile

Ford Fiesta
($3/gallon)/(33miles/gallon)=$0.091 Per Mile

BMW 5 Series
($3/gallon)/(25miles/gallon)=$0.12 Per Mile

Clearly the Electric cars do hold an advantage for every mile they drive, but how long will it take to get their fuel economy advantage back?

Check The Graph Below.

Things to note from it
-The quickest payback is the Tesla when compared to the 5 series, but this only happens after a whopping 100,000 miles.
-The Nissan Leaf beats the Prius in monetary terms after about 140,000 miles.
-Then the Nissan Leaf beats the Fiesta after a about 250,000 miles.
-The Chevy Volt, Ford Fiesta, and Toyota Prius, all hit the same cost to own just over 300,000 miles.

Unfortunately, the jury is still out on the lifespan of these new batteries. But from my perspective, electric cars are feasible this day and age, but they still haven't beaten good old fashioned gasoline.

Agent009 - 6/10/2010 2:34:41 PM

+3 Boost

Yep, we appreciate it when someone sits down and sorts through the hype and passes on their hard work to everyone.

topneuro - 6/10/2010 3:37:57 PM

+2 Boost

There are some problems with your assumptions.
“Cost of gas is $3.00 per gallon”.
The lowest possible average cost at present likely to increase in the future and very unlikely to decrease.
A calculation based on $4.00 per gallon is a better projection.
“Electricity cost 8 cents/KWH”.
Cost of electricity depends on Power generation source:
Coal: 4.8 – 5.5 cents/KWH, currently ~38% of global electricity demand.
Gas: 3.9 – 4.4 cents/KWH, currently ~15% of global electricity demand.
Nuclear: 11.1 – 14.5 cents/KWH, currently ~24% of global electricity demand.
Wind: 4.0 – 6.0 cents/KWH, currently ~1.4% of global electricity demand.
Hydro: 5.1 – 11.3 cents/KWH, currently ~19.9% of global electricity demand.
Geothermal: 4.5 – 30.0 cents/KWH, currently ~0.23% of global electricity demand.
Solar: 15.0 – 30.0 cents/KWH, currently ~0.8% of global electricity demand.
Tide: 2.0 – 5.0 cent/KWH.
Thermal Electric: 3.0 - 15.0 cents/KWH.

Joe_Limon - 6/10/2010 3:49:20 PM

0 Boost

Until the prices change, my assumptions remain correct. I could assume that we find a source of free electricity and that gas prices could quadrouple, but that would make my results biased and skewed.

Next, I've read the average household power rate is about $0.10 per kWh. So $0.08 per kWh is actually conservative.

http://www.eia.doe.gov/fuelelectric.html

Also, for now $3/gallon is very conservative, only a few places in the USA are over that rate.

And finally, read lower and I posted another similar analysis for if you live in the UK where gas is closer to $6.50 a gallon. My numbers hardly changed.

Joe_Limon - 6/11/2010 2:10:58 PM

+1 Boost

how am I totally wrong?

monster - 6/10/2010 2:00:16 PM

+2 Boost

Very interesting. Thanks for doing the math. A gas engine does not sound that bad now. However the only difference is that there is no emission coming out from the car.

They should have made the MSPR below 20k then it would have been sweet.

bmwdrvr - 6/10/2010 2:16:00 PM

+5 Boost

Electric cars have little to do with saving money on fuel as it does simply not using fuel at all....., you could make several easy arguments as to why just sticking with regular petrol engines are cheaper but thats totally missing the point...

Joe_Limon - 6/10/2010 2:26:40 PM

+1 Boost

I stated that there are two main reasons why people want to buy electric cars. The reason you pointed out is the emotional argument, where by buying a "green" car, you think you are doing something "good", whether it is to help the environment, or to help reduce the countries dependence on oil. Most people when they want this emotional feeling satisfied look over the economic terms of their choice before making an action. The whole how far you can travel on $1 is a perfect example of people trying to justify an emotional purchase with economic terms. Unfortunately, as I've proven here, the cost of fuel over electricity isn't as huge of a difference as most people think it is.

S1000RRman - 6/10/2010 2:23:53 PM

+1 Boost

Interesting... If you convert UK £/litre to $/USg.... = approx $9.50

Only doing some quick basic calculations, but using your numbers, and the figure above, I believe the Tesla makes up the premium over the 5 series after about 12,000 miles.... or roughly one year of average motoring....?

Joe_Limon - 6/10/2010 2:55:29 PM

-1 Boost

UK... lets see... it's currently at € 1.41/liter= $1.71USD/liter = $6.47USD/Gallon

€ 0.138/kWh= $0.167/kWh

Using these numbers, and getting rid of the $7500 rebate you aren't allowed. I updated my graph. And no it's still about 90,000 miles.

http://img.photobucket.com/albums/v39/joe_limon/morenumbers.jpg

100tnega - 6/10/2010 2:25:40 PM

+1 Boost

Add carbon footprint in the mix and multiply it by a million units (average no. of people in a city). What's the cost savings versus the environmental impact?

Joe_Limon - 6/10/2010 2:29:15 PM

+1 Boost

What is the environmental impact on the "carbon footprint"? What's a bad number? and how bad is bad? and what are the direct consequences of such a bad number?

Joe_Limon - 6/10/2010 2:29:49 PM

0 Boost

impact by the*

Joe_Limon - 6/10/2010 2:32:32 PM

-1 Boost

@100tnega

When you can give me numbers to work with, it'll be a argument based on logic. Until then you are providing me an emotional argument which no one can prove right or wrong.

Joe_Limon - 6/11/2010 2:13:17 PM

+1 Boost

My numbers were conservative in the favor of electric cars. The cost of electricity is about $0.10 and I used $0.08, the average price of gas is closer to $2.70 and I used $3. If anything my numbers are biased against my argument.

Joe_Limon - 6/11/2010 2:13:18 PM

+1 Boost

My numbers were conservative in the favor of electric cars. The cost of electricity is about $0.10 and I used $0.08, the average price of gas is closer to $2.70 and I used $3. If anything my numbers are biased against my argument.

SteedPub - 6/10/2010 2:58:31 PM

0 Boost

Electric cars still create pollution in one form or another. It might not be right in front of the owner's eyes and nose, but it is off a distance somewhere else. There is still a coal, natural gas, or nuclear power plant somewhere out of the owner's little world putting out waste of some sort. Then there are all the chemicals, mining and waste involved in the creation and disposal of batteries.

kpaxx - 6/10/2010 3:33:14 PM

+1 Boost

Would have to agree there is no environmental advantage for electric or hybrids cars!

monster - 6/10/2010 3:46:04 PM

+1 Boost

The gas you put in your car does not come directly from the ground to your car. there is the transportation and refining process which has it's own carbon foot print.

thstone - 6/10/2010 4:21:18 PM

+3 Boost

Electrical power plants are FAR more efficient in producing power than an individual petrol engine. Thus, for an equal amount of energy, electricity is a far less polluting source of power.

SteedPub - 6/10/2010 4:35:28 PM

-1 Boost

The carbon footprint involved in the mining, transportation, refinement and manufacture of the batteries alone make the electric car more "costly" to the environment than that of most gasoline powered cars in their life cycle.

This is why a Prius has a larger carbon footprint than a Hummer H2

And we haven't even talked about mass disposal and recyling that will be necessary for fleets of batteries.

800over - 6/14/2010 1:02:48 PM

0 Boost

"This is why a Prius has a larger carbon footprint than a Hummer H2"

that's been debunked many times....the article that references that asssumes that a Prius last 100,000miles on the original battery and that a Hummer will last 300,000 miles. Not factual at all. You might as well be a Birther.

100tnega - 6/10/2010 3:30:07 PM

0 Boost

Fellow Albertan?

Joe_Limon - 6/10/2010 3:56:32 PM

-1 Boost

yup

Whelan - 6/10/2010 3:47:56 PM

+2 Boost

Nothing here applies right. At least not to my area. electricity is in a range of .09 to 11.5 cents per kWh. And the logic on the VOLT is once again massively flawed. How many articles need to be written about the mechanics and electronics of the car. The car runs on pure electric for 40miles, then the gas engine (generator) kicks on and the car is not running like a diesel-electric locomotive where the engine charges the batteries and runs the electric drivetrain. The VOLT ALWAYS runs on electric power. But unlike the Tesla, Leaf, etc. it can keep going once the charge is used. So much so that the following lies true.

50 mile round trip commute each day. 40 miles a charge means that you would use 10 miles with the engine running. If you have a 10 gallon tank only you can easily drive your car MUCH longer and cheaper in the long run than all the rest. 10 miles a day for work means 50 miles in a week for work. In a month you would have only used 200 miles of driving and then the charging overnight when the charges for such are OFF PEAK means you use even less energy.

Joe_Limon - 6/10/2010 3:53:53 PM

0 Boost

You are right. I chose a conservative rate for electricity. And I chose to run the volt in its most conservative way possible. My hopes in being so conservative was to show that even with a bias towards the electric car, the numbers still aren't in its favor.

thstone - 6/10/2010 4:18:52 PM

+3 Boost

I agree 100% that there is no real cost savings to an electric car (at this point). But there ARE huge benefits that otherwise offset the delta in terms of reduced polution, reduced reliance on foreign oil, and

alderman - 6/10/2010 5:45:43 PM

+2 Boost

For electric cars there is still the huge advantage of not having to take time to travel gas stations to refuel, the considerably lower rate of incident in the engine, lack of oil changes, and brakes last longer on hybrids and electrics thanks to regenerative braking.
Programs exists for electric cars in Israel where you do not purchase the battery of the car; it is owned by re-charging stations. This significantly reduces the price of the car. To recharge the vehicle you go to the charging stations where an automated process swaps your battery for a fully charged set in approximately 5 minutes. Thus owner payback is much more immediate.
GE is currently working on developing and integrating smart grid system in major cities which allow for a system of buying and selling electricity. You charge your car at night during low demand, sell back during high demand and get a cheque for the profit from the utilities companies. This offers a potential payback of $493/yr, assuming each day you manage to sell half of the charge of you battery, and are only making a profit of $0.03/kWh. The more your car sits and is plugged into the smart grid the more money your car makes you.

Joe_Limon - 6/10/2010 6:01:09 PM

-1 Boost

I'm interested, in israel, what are they charging at these recharge stations? What are the prices of cars, and what would happen if everyone started doing this plugging in thing, all of a sudden your battery is competing against millions of other batteries and I highly doubt in such a scenario you'd be making a profit of $0.03/kWh. I dunno, I'd like to do a full comparison, but I really do lack numbers.

synchronicityii - 6/10/2010 6:32:18 PM

+4 Boost

What's missing from this analysis -- not by mistake, but simply because the author had a different focus -- are the negative externalities, the negative impacts of our actions that affect others. Negative externalities are complicated.

If you live in an area where you get your power from hydroelectric or nuclear sources, and if you could do all your daily driving on a charge, then you would dramatically reduce your CO2 impact on the atmosphere by driving a Volt or a Leaf. You'd also dramatically reduce your contributions to particulate emissions, which are linked to higher rates of disease and death. On the other hand, if you live in an area that is served by coal-fired power plants, well, you might not do as much good in terms of CO2 and particulates by switching to an EV.

The original analysis looks plausible to me; it's simply that it's written solely from the standpoint of a consumer asking, "Is this good for me financially?" And that's a reasonable question to ask. But my guess is that we as a society are going to have to start paying far more attention to negative externalities, to the harm we cause others by our actions. And by "pay attention" I mean we're going to account for those costs in what we do. If gasoline were taxed in such a way as to account for the negative externalities of its extraction and usage, this analysis would look different.

cdoke - 6/10/2010 6:52:18 PM

+2 Boost

You bring up a good point, of course, but the issue is more complicated, as I am sure you know, than simply accounting for externalities in the mathematics. Externalities by definition have no pricing mechanism.

It is theoretically simple to determine the optimal level of pollution (it is not 0) it is simply where marginal social cost (MSC) equals marginal social benefit (MSB). But the problem is essentially impossible because there is no way to determine the actual costs and benefits, in what would you measure them?

That's one benefit of a credit trading system- it at least sheds some light on the factors through internalizing the problem to the market. Then, of course, it isn't an externality.

tinhart - 6/11/2010 2:40:35 AM

+1 Boost

Seems like you failed to factor in these additional costs the electrics (Leaf/Model S anyway) would not suffer and would thus give them just a touch more of an advantage than you showed us: no oil changes, no oil filters, no mufflers, fewer break pad/rotor services (over gas only Fiesta) due to regenerative breaking, less antifreeze/transmission/other fluids (assumed), no valve adjustments, timing belts, or other liquid fueled engine components to keep up on, lower taxes on licensing (in many regions taxes are in part based on emissions levels, and in my state - Washington - there is no sales tax on zero emissions cars, whereas there would be for the gas only Fiesta), and whether or not owners are generating their own power (I have enough solar panels, already bought and paid for, to completely power my Leaf by the sun) - though this last one, would of course have to include some cost I paid for solar panels in the first place... and I do realize there are probably some maintenance items PEV's would have that gas only would not have.

It seems obvious that electrics are still going to take many miles to equalize costs with (currently) cheaper gas/hybrid cars... my point is just that your objective review seems to leave out at least some additional advantages PEV's have over gas powered/traditional hybrid cars that would, at least to a small degree, decrease the overall "break even" point that separates the different types of cars.

Joe_Limon - 6/11/2010 10:16:04 AM

0 Boost

I also ignored the $18,000 cost of the leaf battery... and who know what the tesla/volt's cost.

stylekyle - 6/11/2010 9:51:13 AM

+2 Boost

not to mention, he ignored the fact that the leaf is fully loaded. he should be comparing it with cars that have a similar feature set... not the ford fiesta! if all i was buying into is a device that got me from point A to point B for the cheapest amount possible, the clear choice would be a motorcycle. And as other have mentioned, the cost of ownership will be cheaper. How much cheaper is unclear, but with 35 components not in an EV that are in a combustion engine, some of which require regular maintainence. (No timing belts, no transmission, no engine oil, spark plugs, etc.). Nissan's website states that the cost of ownership will be the same as or cheaper than a traditional car.

Joe_Limon - 6/11/2010 10:21:23 AM

0 Boost

lol fully loaded? with what? a $200 nav screen? Ya cause that's going to change my results.

MeanVulcan - 6/11/2010 10:18:56 AM

+1 Boost

your assumption is not only inappropriate it is misleading. Gas prices will definately increase. Supply is running short, demand is increasing rapidly not only in the US but China and India.

Second, you did not consider a very important fact. Electric cars are in early development as so are batteries (relatively). Costs of batteries will undoubtedly decrease due to the gobs of research money being pored into developing more efficient and less costly ones. Mass production will also start decreasing the production costs.

Lastly, electric cars are being developed not to compete in price (immediately that is) with ICE cars. The main purpose is to introduce a technology that will immediately help reduce GHG emissions. Every scenario of an electric car (coal power charging or NG, coal with CSS, etc) is better than a ICE car by far. I expect that in less than 10 years, electric cars will be comparable in price and performance to ICE cars.

People interested in electric are so due to the positive environmental impact, not cost. If you also happen to think that you will loose performane you are way mistaken too.

This is why your article is misleading to consumers. The current snapshot you provided does not account for any of the factors I discussed. People should be aware of the trends here. You show a lot of simple math but very little analysis.

I just presented a thesis on sustainability of alternative fuels so I happen to know the facts, such as, the so called inefficiency of charging a battery you mention is more than offset by the much higher efficiency of power conversion of an electric motor (~75%) over an Internal combustion engine (~20%).

Now if you start factoring the billions of dollars per month spent defending our oil supply in the middle east and the costs of oil spills plus other environmental impact from oil production (emissions, decrease air quality leading to billions a year in lung and heart disease treatments), your argument for ICE vehicles becomes very very weak. If a climate-energy bill supports clean energy the way it needs to, I do not expect to see ICE vehicles being the best choice in terms of performance or cost in 10 years.

Joe_Limon - 6/11/2010 10:48:37 AM

0 Boost

"your assumption is not only inappropriate it is misleading. Gas prices will definately increase. Supply is running short, demand is increasing rapidly not only in the US but China and India."

What do you base this media hyped speculation on? I've read somewhere that we have only really tapped into 1/3rd of the worlds total oil supplies.

"Second, you did not consider a very important fact. Electric cars are in early development as so are batteries (relatively). Costs of batteries will undoubtedly decrease due to the gobs of research money being pored into developing more efficient and less costly ones. Mass production will also start decreasing the production costs."

Like I said before, this is current costs. And currently it's not more feasible then gasoline. And like I said before, I could speculate that we would find a source of free electricity and oil prices would quadruple, but would be based off of nothing and be blatantly biased.

"Every scenario of an electric car (coal power charging or NG, coal with CSS, etc) is better than a ICE car by far."

How are they better? I could say cars are better than horses because horses poop in the streets and thus yield more environmental damage and have the ability to measure the impact. I can't say the same thing for electric cars which require expensive rare earth metals that we don't have enough to supply the world with.

"People interested in electric are so due to the positive environmental impact, not cost."

I've stated this emotional aspect numerous times on this page. I also stated numerous times that most people try to do a quick economic analysis to justify their actions. And as such, electric cars aren't yet better economically.

"the so called inefficiency of charging a battery you mention is more than offset by the much higher efficiency of power conversion of an electric motor (~75%) over an Internal combustion engine (~20%)."

This is great, you totally neglected the well to wheel efficiency. Congratulations, your results are even more biased then mine.

"billions a year in lung and heart disease treatments), your argument for ICE vehicles becomes very very weak"

Ok, now that is pure bs, please stop making up random things that support your view.

Thank you, come again.

Joe_Limon - 6/11/2010 11:00:00 AM

0 Boost

now this is totally blowing numbers out my ass, but if you're allowed to do it, so can I.

~75% electric motor efficiency * ~80% battery charge efficiency * ~90% electrical transfer efficiency (power plant to car) * 50% power plant efficiency = 27% overall efficiency

which isn't far off of the 25% modern gasoline engine efficiency.

ahogg - 6/11/2010 12:31:28 PM

0 Boost

Forget the oil changes, forget rising gas prices, forget carbon emissions etc. If you follow my numbers below (and if you dispute them please provide proof) you will see that starting with day one of ownership, a Nissan leaf is actually lower cost than a comparable Honda Civic (which is the car most like the Leaf in terms of power, size and ameneties)

Here's some figures for San Jose California and for the leaf, which i intend to buy
1. 5.6c/kwh off peak, when most people will charge their Leafs.
2. $3.15 for a gallon of low octane at a cheapie station
3. Leaf is not going to go 100 miles - its going to go more like 65 - 75 miles on a charge.The 100 miles is the city spec. Combo of city and highway will be more like 65 if alot of highway and more like 75 if a little highway.
4. You should not apply the .85 charging efficiency. The charger itself is about 97% efficient and the lithium ion battery is about 99.9% efficient in terms of capturing charge.
5. The Nissan leaf is comparable to a mid-size family sedan. Therefore you should compare the leaf to cars of a similar size, power and amenities. The Ford Fiesta comes far from meeting that criteria. here in the US a better comparison would be the Honda Civic, which costs between 20 and 22k with the same upgrades and gets about 30mpg average.
6. In CA the leaf will cost $20k after CA tax rebate of $5k.
7. You will need to spend $1k to install the leaf charger in your home.


Using the figures above you get about $1.38 per full charge for the leaf. At 65 miles (being very conservative) you get a cost of 2.13c per mile. For the Honda you get a cost per mile of 10.5c/mile.

If you drive 12000 miles a year (again being conservative) then you save ($1260 - $255) = $1005 per year. Assuming the Honda is $22k then the leaf cost you $1k less after adding in the charger.

So, you spent $1k less to start with and then every year you are spending $1k less on gas, if you buy a Leaf instead of a Honda Civic.

If you say you drive 15k miles a year and gas is $4 then the numbers start to look way more favorable for the leaf ($2000 for honda vs $318) = $1682 per year in savings.

I welcome any feedback on my numbers....

Joe_Limon - 6/11/2010 2:10:31 PM

+1 Boost

Your numbers make sense, since you live in California. But only because your fellow tax payers are paying for you car. Also, do you get a rebate on the home charger? I found it to be $2200, not $1000.

ahogg - 6/11/2010 5:21:19 PM

+1 Boost

Regardless of who you are, who is actually paying for the "rebate" is irrelevant in the calculation of whether or not the car is a net positive deal for you personally. And that is what we are talking about here. Lets not muddy the waters with "future costs of gas", "carbon emissions", blah, blah. Otherwise we can start taking into account all the rebates gas companies get, and the rebates auto compnaies get, and start increasing the price of a gallon of gas to its "true cost" and do the same with an auto itself. Your article is about which is lower cost to buy and run - lets keep the focus on the oringal premise of the article. As such, i think i have proven irrevocably that the Nissan Leaf is in fact both lower cost to both buy and to run on an ongoing basis. if you disagree then please provide your numbers - with proof of validity.

Separately, you should know that only 50% of the people in the US who "could" pay taxes actually do. They do not because of tax breaks etc. And those 50% that do not pay are 90% poorer people, i.e. not "rich people" escaping taxes.

Take that info with the fact that my families taxes were over $120k last year, and you can see that i am in fact paying for my own rebate thank you very much!!

Eagerly awaiting anyone's comments who a) wish to stay on topic and b) can refute my numbers factually.

ahogg - 6/11/2010 5:22:23 PM

+1 Boost

Home charger - sorry forgot that part. The home charger is $2200, but you get a 50% discount from the feds, up to a max of $2000 per charger. Therefore the $2200 drops to $1100 cost.

alderman - 6/11/2010 10:16:20 PM

+1 Boost

I am not sure of the cost for the charging stations, but it is most definitely more costly than charging at home. The advantage is that you don't pay the 5-10 thousand for the batteries in the car, this makes it substantially cheaper for initially purchase and doesn't require the long term investment for payback on electric vehicles.

As for the $0.03/kWh, you listed your average price of electricity at $0.08/kWh, I was assuming the prices of electricity from peak to non peak would be at least plus or minus $0.015/kWh. Smart grids allow you to determine when your car's batteries buy and sell electricity and thus allow for the 0.03/kWh. This assumption is supported by 'ahog' who listed his off peak price at $0.056/kWh.

GE has some videos available demonstrating how the smart grid works, but it doesn't compete with other vehicles but allows power companies to limit the amount to power they must produce during peak hours. Rather then investing in additional capital they make use of the energy storage available in your vehicle.

There are a couple of videos that demonstrate the potential benefits of smart grids and electric vehicles. Currently, many of these advantages would not apply.

Saladman02 - 6/14/2010 2:43:52 AM

+1 Boost

Typical albertan analysis. Head stuck in his oil sands.