Are Electric vehicles the way to go? A mathematical look at the economics of EVs

There have been a lot of items in the news about electric cars recently – many states have rebate for new vehicles, and federal tax incentives will be a complicated and interesting opportunity next year. The car company website would certainly say you will save a lot purchasing their vehicles, but there is a surprisingly easy way to estimate for yourself whether an EV is cost effective.

The first thing to consider is the range – many of the first generation electric cars had batteries without active cooling/warming and have degraded over the years. Most new ones should have battery coolant systems, and 250 or more miles on a full charge. If you are looking at a lesser range car as a possibility, you might consider an e-bike depending on the availability of bicycle lanes and safe bicycle routes for your regular routes. If you are traveling long distances very often, then fast charger stations that output a large surge of power may cost significantly more than plugging in to your standard 120 or 240v outlet.

The second thing to consider is whether you are looking for used or new. There may be a plethora of gas or diesel vehicles, but depending on where you live there may be very few electric options that get snatched up shortly after they are made available on Craigslist or other marketplaces! If you consider buying new, it is highly preferable to buy a car that will likely emit half the greenhouse gasses throughout its lifetime, and contribute in a smaller part to the health effects of fossil fuels according to NEJM. Not to mention increased reliability and decreased maintenance costs of EVs.

Another thing to consider in buying any vehicle is the brand and brand reputation. Tesla cars for example might be both more expensive to purchase and more expensive to insure.

Calculating long term costs

Another thing to consider, which you may have considered especially in 2020 is, is it cost effective to get an electric car if I drive (x) miles a year? There are calculators online but being provided by the car companies they just might be biased… So, it’s time to fire up the spreadsheet… 🙂

Here I calculate a hypothetical difference between the long term cost of electric vs gasoline costs in a new spreadsheet. There are a few values you will have to look up for your situation and for your area:

  • Miles per year – If you have been doing regular maintenance and records on an ICE engine you should have the date and mileage of the last oil change or maintenance. Divide the mileage driven since maintenance by the number of months ago for the mileage per month and multiply by 12.
  • Cost of electricity and gasoline – these are going to vary and even vary within the same area. Check what prices you pay in your area.

Setting up the spreadsheet

Once you have these basic parameters for considering a car purchase, you can make some calculations. For gasoline cars most of us know how to use the listed MPG, Miles/Gallon = some constant you can look up, so Cost = Miles / MPG * cost of gallon of gas.

When you look up an electric vehicle you will find a similar value listed as MPGe (considering 33.7kwh of energy to be generally equivalent to a gallon of gas). For a more calculation-friendly value you may want to find the specification of average kwh/miles. For example – Chevy Bolt is 29kwh/100mi, Tesla 3 AWD averages 30kwh/100mi, Hyundai IONIQ is 34kwh/100mi and these values should be pretty similar across EVs. In this case the cost calculation is, for example: miles/(100miles) * 30 * kwh-cost. For a hypothetical example, see this spreadsheet:

Car:Miles/yearCost per kWH or Gallon gasCalculated cost/yr
Chevy Bolt10000$0.15$435.00
Tesla 3 performance10000$0.15$450.00
Hyundai IONIQ10000$0.15$510.00
Crosstrek 201910000$5.00$1,785.71

Here the Chevy Bolt formula is =B2/100*29*C2

The Crosstrek (or other gas car) would be =B5/28*C5

Now that is an interesting comparison – gasoline cars are significantly more in fuel costs. What if one were to want to see after how many years would you be making back the cost of the initial investment? If you want to build out the table, you can add columns for number of years and difference in cost of some vehicles over others:

As you may know, you can drag that corner fill to the right or left, above or below to fill the formula around the sheet. It is a little known trick that is very handy, that you can lock a row or column with “$”, for example in the above the $1 will make it always row 1, $D will make that number always grabbed from the D column as it gets filled out. Otherwise filling the values down or to the right will reference the wrong values! Fill this and you may get values like this:

Miles/yearCost per kWH or Gallon gasCalculated cost/yr24810

As you can see, throughout the lifetime of a vehicle the cost of fuel may make an important difference. The numbers for cost per KWH or per gallon in the above are purely hypothetical and you need to fill in whatever values for the energy costs in your area. You might find a surprising difference in that some electric vehicles may pay for themselves throughout the useful life of the vehicle.

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