Jun 02 2008
How much does an electric car cost?
First off, I’m not an economist. I took one undergraduate-level macroeconomics course. And I did stay at a Holiday Inn last night. Therefore, I judge myself to be fully qualified to be admitted as an expert witness in economics. Luckily, the topic of today’s post is simple, and if I misuse any real economics buzz words, I ask that you politely point them out instead of chopping off my head.
When assessing the total cost of an automobile, there are two main areas categories: the initial investment and recurring costs. Figuring out the initial investment is easy; it’s the price on the window. The recurring costs are more difficult, and depend on how much a person drives.
Yearly Driving
The US Department of Transportation (via CNN) said that “[in March] Americans drove an estimated 4.3 percent less — that’s 11 billion fewer miles”. From this information, we can figure out how much the “average” American drove during the month of March. Since 4.3% is equal to 11 billion miles, that means that 100% would have been around 260 billion miles.
There are around 300 million people in the United States, so simple division says that the average American will drive around 850 miles during a month. Further, multiplying this by 12 gives a yearly average of around 10,000 miles, which is what I remember from another source.
Price of Gas!
This section had a stupid math mistake and has been corrected.
The same CNN article linked about says that the average price for a gallon of gasoline is almost $4. This is $40,000 per year just to drive your car! If you’re thinking, “But that’s more than I paid for my car”, you’d most likely be right. Assuming that your car got 20 miles per gallon, that would be $2,000 per year. In my quick search, I couldn’t anything for last year, but in 2006 the average price of a new car was $28,400 according to the FTC.
Now consider a fully electric car. There would be no gasoline to buy; so immediately you’d be saving $40,000 $2,000 per year. If all 300 million American bought an electric car, and I counted all my zeros correctly, we’d save $12 trillion $600 billion per year that wouldn’t be exported to oil producing countries.
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Initial Investment versus Recurring Cost
The downside is that electric cars have a higher initial investment. Let’s look at a very nice electric car from Tesla Motors. The base price for their fully electric car is $110,000. This is almost 4 times as much as the average cost of a new car. The good news is that it is almost free to operate a fully electric car. Their site says that it costs about 1 cent to drive a mile. They say this is based on charging at night, when electricity is cheaper. This comes out to about $100 per year to operate.
Clearly there becomes a point when buying an electric car is cheaper than buying a gasoline powered car. And we can find the answer using simple algebra.
For a gasoline powered car, the price at any time t (in years) after buying the car you will have spent:
$28000 + $40000*t
$28000 + $2000*t
On the other hand, the electric car from Tesla Motors will cost you:
$110000 + $100*t
To find the time where it would cost exactly the same, we set these equal:
$28000 + $2000*t = $110000 + $100*t
Group like terms:
-$82000 + $1900*t = 0
The price of the average gasoline powered car will cost the same as an electric car when t is a little over 2 43 years. (And “they” said that I’d never need high school algebra. Hah.) [Added: Looks like I could have used a refresher course. Oops.]
I’m not sure how long the typical consumer keeps a new car, but I’d hope it’s longer than 2 years. [But it's probably not longer than 43 years.] Note the above calculation is not really dependent upon the price of the gasoline powered car or the efficiency of the electric. It depends mostly on the price of the electric car and the cost of driving the gasoline car (which is dependent upon the price of gasoline, the fuel efficiency and how far is driven).
For instance, if we do the same calculation for the Chevy Aveo (priced at $10,900), the time when the price is equal is around 2 and a half years roughly the same.
The obvious problem is that the “average” American doesn’t have $100,000 of disposable income to spend on a car. They don’t have $28,400 either, so they have to finance it. And financing on $100,000 is going to be a lot more than on $28,400. This was not taken into account in the above calculation.
There are other notable deficiencies in electric cars: they have a fairly short range (~200 miles for the car from Tesla Motors), and they take a long time to charge (3.5 hours for a full charge). In combination, this makes driving long distances challenging.
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20 Responses to “How much does an electric car cost?”
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I could be wrong, but I think most cars get a little more than 1 MPG
I have t=43.158 years assuming the gasoline powered car gets 20 MPG.
…and of course there’s more to recurring costs than just fuel consumption. For example, I wonder how much insurance costs for the Tesla. Ever try to replace a carbon fiber bumper?
[Reply: I'm not sure how I went from 10,000 miles per year (in post) to 10,000 gallons per year (on my scratch paper), but I surely would have failed that high school algebra class.
10,000 miles would be equal to 500 gallons, assuming 20 miles per gallon. Or $2000 per year.]
What?? You may want to stick with atmospheric analysis
$40,000/year to drive your car?
that sounds like 10,000 miles * $4/gallon, or 1 mile/gallon.
What kind of car gets 1mile/gallon? even a Hummer gets 14 mpg.
[An Abrahms M1A1 gets <1 mile/gallon, as do many of our neighbor's tanks, but most cars do better.]
10,000 miles at (say) 25 mpg = 400 gallons * $4 = $1600.
Put another way, that’s $.16/mile versus $.01/mile.
Over the long term, electric and PHEVs should be lighter and cheaper to maintain, having gotten rid of the mechanical drive train [just as diesel-electric locomotives have]. Serial PHEVs look especially attractive for many people: it’s clear the auto vendors will be tinkering around with combinations of:
- range on electric only
- range when gas/diesel turns on to charge battery/capacitors
-vs battery weight & gas mileage
Obviously the ideal is to have the minimal battery weight to handle the bulk of your local trips, and minimal engine to provide adequate longer range for trips.
It is weird to worry about costs for a Tesla, it’s like worrying about gas mileage and luggage space in a Ferrari.
Wikipedia on electric cars is an OK starting place.
[Reply: I chose the Tesla because it's the only electric car that I know of that looks good. I'm not sure which genius decided that "green" cars should be ugly (eg EV1), but I don't buy it.
Side note: I find it somewhat creepy that when I make a stupid math error there are several comments within minutes of me making it. But thanks.]
Thanks to James and John for pointing out that the average car probably gets better fuel economy than 1 mile per gallon. Post (hopefully) fixed.
*Prepares a tree stump and is sharpening an axe as he asks Atmoz to place his head on the stump*
Ok, I won’t chop your head off. Two points though. I would think that the average monthly distance Americans drive around would be significantly higher than what you calculated. You divided distance by the size of the population. But I would strongly suspect that the percentage of people who drive in this country would be much less than 100%. I read earlier today in an issue the AARP Bulletin (April 2008, Vol. 49, No.3, page 3) that there are 133 million taxpayers. I doubt everyone who pays taxes drives and everyone who doesn’t pay doesn’t drive. Anyhow, this affects your calculations by a factor of two.
I as well took an undergrad course in macro. But I also had to take engi. econ which sucked. I can hear my teacher lecturing me to multiply the savings of owning an electric car by the future given annual factor.
Good post nonetheless.
According to the US DOT, the average passenger vehicle is driven 12,000 miles per year and averages 17.2 mpg. At $4 per gallon, that’s $2,780 per year in fuel. Except for diesel engines, which would be about $3,400 @ $4.70 per gallon, assuming they also get an average of 17.2 mpg.
The same website shows that there are 250 million registered passenger vehicles, so it makes more sense to divide by that number instead of 300 million. Obviously not everyone in the US is old enough to drive! In fact, almost 25% of the population is under the age of 18.
http://www.bts.gov/publications/national_transportation_statistics/html/table_04_09.html
http://quickfacts.census.gov/qfd/states/00000.html
http://tonto.eia.doe.gov/oog/info/gdu/gasdiesel.asp
Since the “all electric” car has to be recharged… [generally from coal powered turbine-generators fed by diesel haulers] and since it has plastic parts just like its gasoline drinking cousins; how is the Tesla petroleum free?
More importantly, comparing Hummers to a zapped up sports car plays to the fringes of the automotive argument.
Atmoz,
You’re being a good sport about this.
I thought it was another “beginning of the month joke.”
Hmmm, if 300 million people bought electric cars and tried to charge them at night, I suspect the electricity would cost quite a bit more. Then again, by the time a bunch of people bought these cars and used them for a couple of years, gas will probably be a lot more than $4 per gallon.
An electric bike costs, what, $2000? Interestingly, despite the relatively low price, I don’t see folks getting out of their cars and switching. And I’m not switching from my old-fashioned gas (O2) guzzling version.
You seem to be a bit off on the mileage. Searching for “annual miles driven” shows 2003 annual passenger car mileage in the US to be about 1660 billion miles and growing slowly. Assume about 1700 billion miles today.
Perhaps the statistic you saw was passenger miles rather than vehicle miles. Or you may have realized it was passenger miles and forgotten to divide by avarage occupancy when calculating gas comsumption.
“They say this is based on charging at night, when electricity is cheaper.”
Time-of-day pricing for consumption of electricity is not available everywhere. I pay about 15 US cents per kW-hr 24/7.
Plus, as demand for electricity to charge batteries increases, the cost will very likely increase. Likewise as the demand for gas decreases, the cost will decrease. All theoretical concepts, of course.
I too don’t understand how all 300 million in the US drive. But 10-12,000 miles per year is a number that I see all the time.
There’s also the problem of all that electricity being produced by use of fossil fuels.
ya know kid, when you publish your screw ups, your credibility goes up. One day I sat in a day long briefing about the life cycle cost ( gas,spares, and what not) of aircraft. I would rather stick red hot knitting needles my eyes than go through those calculations again. Same thing with cars. Anthony has an electric car ( effin golf cart, sorry AW).
back in the day I rode a scooter. kevin long. cool guy
http://youtube.com/watch?v=TG_PxWqH0oY&feature=related
http://youtube.com/watch?v=XEiQ5hqT00U
1) Tesla’s claim of reaching 220 miles doesn’t necessarily mean it’s advisable to do so - deep discharge is the best way to ruin a battery. So assuming they do a 2/3 discharge of their 53kWh battery pack to reach that distance and estimating 95% battery efficiency this would mean ~0.16kWh/mile. Consumer electricity tariffs need to be less than 6$ct/kWh to make it 1$ct/mile.
http://gizmodo.com/gadgets/gadgets/tesla-roadster-wont-meet-original-range-promises-253287.php
2) At present their 53kWh battery pack costs an estimated 20,000$ or even more. Their goal is to reach about 10,000$:
>http://www.teslamotors.com/display_data/Tesla_rebuttal_ZEV_expert_panel.pdf
Read somewhere that around 160,000 miles total battery lifetime could be expected, adding 6..12$ct/mile due to battery degradation costs.
3) If all 300 million Americans bought an electric car, driving 10,000 miles per year, consuming 0.16kWh/mile we have
10,000 miles/year/American * 1 year/8760 hours *160Wh/mile =183W per American increase in average power demand. Charging mainly at nighttime would add up to … say 400W additional nighttime load per American, or a total 120GW additional nighttime power demand. Given this improved load factor, low nighttime tariffs probably would not be maintained in the future.
OK guys! the whole point is that electric cars could be in the long run less expensive. I actually crunched the numbers based on my car at like 23mpg and i figured it costs me like $3200/ year to have my car (which is paid off) so assuming you don’t get a $100,000 tesla but a 30 to 40 thou electric like miles or phoenix are to put out. the differences add up fast. I tend to keep cars 10 or so years ( and would keep them longer if they didn’t start falling apart at 175 thou) I saw on the news today confirmation of what ppl have been saying for some time… electric cars are in demand and the car companies are way behind…. just think where we would be if Gm, toyota, ford and honda didn’t scrap their ev programs. HMMMMM
Well I’m sold on the concept. I’m the owner and daily driver of an electric car, a Ford Think 2002 model.
Yes it has all the limitations pointed out, speed, charge time, smallness.
But, for around town errands, it is far more practical than what I used to drive. I’ve put about 350 miles on my electric car in the first month. It has been fun, life goes by at a little slower pace, I plan my routes better, and I enjoy the frsh air since I have no a/c.
The best benefit? People wave as I drive by. I never got that in my Dodge.
For in-city use, electric cars make sense right now. When the new EEstor supercapacitor hits the market, long distance electrics will become practical and common.
see: http://en.wikipedia.org/wiki/EEstor
Unfortunately, your recurring costs only reference the major consumables (gas and electricity) not the total cost to drive. This would include oil for the gasoline auto and battery replacement (minor for the gas and major for the electric). I don’t remember the usable life of the lithium ion batteries but I believe your break even time line would not account for the multiple replacement of the batteries that would be required.
Good article. The Tesla is a high end sports car though. A standard like the Phoenix or several others would run about half the initial cost!!
Basically, like any new technology, it is still improving and catching up with tech that has been optimised and mass produced for years.
Personally I ride performance motorcycles almost exclusively. There should be one I can stomach(electric or fuel cell) within 5 years. We have a company here in the San Francisco area developing the technology for electric. They test at Infineon Raceway dragstrip!!
http://www.autobloggreen.com/2008/03/15/thunderstruck-motors-is-setting-electric-motorcycle-records/
Forget electric cars! Thieves will steal’em just to get the copper. Then they will just junk’em.
In BC, we have guys taking down lightstands just to get the copper wire. They also take the light standards.
They steal large section of telephone cables for copper.
They will probably steal battery packs and electric motors and then sell them to less- than-honest repair shops as replacemnets for OEM units that have damaged in wrecks.
They will steal cars and drive them into shipping containers for shipment to the far east where gasoline quite expensive.
[Deleted.]
Here is another problem. Suppose a car company gets a defective batch of battery packs, say 10,000 units. After a while in service they start to fail pematurely. How much would it cost the car company to recall the cars and replace the defective battery packs with good ones?
Attn: Phil
In Metro Vancouver thieves steal high-end luxury cars, put them shipping containers which they fill up with waste paper which is sent to the far east for recycling. This is easy to do because the Hell’s Angels control the docks, but that is just a rumor.
When copper was cheap, BC Hydro used copper ground wire for their elec utility pole. Thieves cruised around looking for poles with copper ground wires. When they found one, they would just rip the wire right off the poles. BC Hyro is now replacing copper ground wires with aluminium wire.
Recently a junkie broke into a sub-stantion who tried to steal copper ground wires. He got fried!
@Anthony (EEStor)
After having read their patent I don’t wonder no more why they’ve failed to prototype. IMO the problem is not with progress in high epsilon_r material as sometimes claimed in the press but with the processing. Otherwise they could have built a half-capacity (but still record-breaking) prototype using standard material.
According to the patent, they need 1,000 electrode-diel layers per module - that is 2,000 high-quality silk screen prints - or else the module’s breakdown voltage requirements might not be met. They need 2,500 modules for their 30F battery so that’s ~5 million high-quality silk screen prints per battery. Of course they can print multiple modules in parallel but screen size and screen lifetime are limited because of their high quality requirements - and the dielectric has abrasive properties.