Electric vehicles face two major obstacles: Their battery range is too short, and they cost too much.
The first concern is easing as batteries gain capacity and efficiency. For the latest generation, range exceeds 200 kilometres and some claim more than 400.
Determining range is tricky enough, since it’s heavily impacted by driving style, load, terrain and temperature.
Cost calculations are even more complex. Common wisdom is that electric vehicles (EVs) are more expensive to buy than alternatives powered by internal combustion engines (ICEs), but cheaper to fuel and maintain. As a result, EV advocates argue, it’s only fair to calculate total costs over a vehicle’s lifetime.
But, as we shall see, that’s easier said than done.
Our aim here is to compare the total cost of ownership, or TCO, of Canada’s top-selling ICE vehicles with battery-powered alternatives of similar size, features and quality.
The category leaders are the Honda Civic sedan, Toyota RAV4 compact SUV, and, this country’s sales champion, Ford’s F-150 pickup truck.
To challenge the Civic, we chose the revamped Nissan Leaf S. Hyundai’s new Kona Electric takes on the RAV4. And, up against the F-150 is … well, nothing. At least, not yet. A few manufacturers are developing battery-powered pickups, but none will go on sale before the end of 2020 and their performance specifications remain sketchy.
TCO comparisons assume EVs have higher purchase or lease costs, including price, taxes and interest. Their fuel should be cheaper, in part because battery power is more efficient than internal combustion. With fewer lubricants and moving parts, and less wear on brakes, they ought to cost less to maintain – although experts disagree on how much less.
“Maintenance costs are largely unknown,” says Steve McCauley, senior director, policy, at environmental research and advocacy group Pollution Probe. “We’re still dealing with the first generation of EVs on the road.”
“It’s difficult to assign maintenance values because every person’s maintenance cycle is different based on frequency of use, road conditions in their area, weather conditions in their area, and so on,” says Brian Miller, communications co-ordinator at Plug’n Drive, a Toronto-based non-profit committed to accelerating the adoption of EVs.
But the deeper we dig, the more complex comparisons become.
Purchase price seems simple, except that while comparisons are usually based on suggested retail price, most manufacturers offer a wide range of discounts, which can even be influenced by a buyer’s bargaining skills. Interest rates vary from bank to bank and dealer to dealer, and with a buyer’s credit rating. Financing costs depend on those rates, as well as on how much the buyer borrows rather than pays in cash.
The cost of batteries – the main reason for EVs’ higher price – keeps falling. When the first Leaf hit the streets, it was about $1,000 per kilowatt-hour of capacity. It’s now around $200, and further drops will change the cost equation.
Fuel costs are, literally, all over the map. Gasoline prices vary from province to province, and can rise and fall dramatically. Electricity rates tend to be more stable but differ widely from place to place. In addition, most jurisdictions offer time-of-use rates, which generally mean you pay less if you consume electricity during off-peak times. One result is that per kilometre driven, electricity is occasionally more expensive than gasoline.
With all this in mind, we’ll plug some numbers into a TCO analysis worksheet – the most useful we found – developed by Tom Lombardo, a retired professor of engineering technology and now president of Tohoca, a communications company in Rockford, Illinois.
Here are our assumptions:
• We use each vehicle’s suggested retail price, for models that are usually a step up from basic. HST or its equivalent is set at 12%. We did not include delivery charges or other dealer fees or, for EVs, the cost of a battery charger.
• Calculations are based on manufacturers’ claims for range and Natural Resources Canada’s Fuel Consumption Guide.
• Each vehicle is driven 20,000 kilometres per year, the “rule of thumb” cited by Statistics Canada.
• The gasoline price is $1.20 per litre, roughly the current average in Canada’s largest markets. The electricity cost is 8.7 cents per kWh, the off-peak price in Ontario, based on the assumption that EV owners recharge their vehicles at home overnight.
• Based on data from Pollution Probe and Edmunds.com, a leading industry analyst, the lifetime maintenance and repair cost for an EV is about 75% that of an internal-combustion vehicle. We used $100 per month as an average for the ICE, based on data from Canada Drives.
• Repair and insurance costs are about equal.
• The ICE buyer pays all cash. The EV buyer pays the same amount in cash and borrows the cost difference at 4.5% interest, with a 72-month term – the length most Canadian buyers now use, according to various sources.
• Each vehicle is kept for 10 years, so depreciation is 100%.
• We do not include EV subsidies, now available only in Quebec, up to $8,000, and British Columbia, up to $5,000.
Given our inputs, we found the $23,770 Civic LX with automatic transmission would cost $66,020 over 10 years. The Leaf S sticker price $36,798, would cost $63,816 over that same period.
The 10-year TCO for the $33,690 RAV4 XLE with front-wheel drive would be $78,373. The $45,599 Kona Electric “Preferred” would cost $73,388.
So, the EVs win in these categories. But TCO comparisons are meaningful only with specific local numbers.
For example, electricity costs nearly 17 cents per kWh in Halifax, where the Leaf’s ownership cost rises to $65,555 and the Kona’s price climbs to $75,004. Since Halifax’s gasoline price is close to our assumption, the Civic and RAV4 retain almost the same costs.
In New York City, where electricity runs 31 cents (Canadian) per kWh while gasoline is just 84 cents per litre, EVs lose in the comparison. But in Norway, where electricity rates are in the same ballpark as Canada’s but gasoline costs twice as much, EVs win hands down.
No battery-powered pickup trucks are ready for comparison, and it’s uncertain which will make it to market. The list includes the Havelaar Bison, planned for Ontario, and two U.S. models, the Bollinger B2 and Rivian R1T. Tesla promises one, but with no firm timetable.
All claim impressive range, payload and towing capacity, but none has performed in the real world nor revealed how large loads and rugged conditions would impact their range – a crucial consideration for working trucks.
The Rivian R1T, backed by a recent US$700 million investment by Amazon.com, seems furthest ahead. With the biggest battery available, Rivian says its range will top 600 kilometres. But the price in the U.S. will start at about C$94,000, and that’s for a base version with only 370 kilometres of range, making it more than double the price of a similar F-150.
Our conclusion: It’s clear that EVs are more expensive to buy or lease, and whether they overcome that handicap with lower operating costs depends heavily on fuel and power prices where you live.
As battery costs fall, the price gap will shrink, making it more likely that EVs will win any cost comparison, just as they already beat ICEs on environmental impacts.
Peter Gorrie is a Victoria-based freelance writer and editor who has covered environmental issues for more than 30 years.