High Gas Prices Boost Electric Vehicle Value Proposition in 2021
Patrick L. Anderson, Principal and CEO
Alston D’Souza, Senior Analyst
2nd Edition of comprehensive fueling cost study shows that, for EV drivers primarily charging at home, mid-priced EVs typically cost 50 cents more; luxury EVs $5 less per 100 miles
Anderson Economic Group has released the second edition of Comparison: Real World Cost of Fueling EVs and ICE Vehicles, the most comprehensive analysis of the real-world costs of operating Internal Combustion Engine and Electric Vehicles. Newly expanded to illustrate additional use cases and reflect higher energy prices in 2021, the over-50-page report is the culmination of two years of research by automotive industry experts.
As in the first edition, AEG calculated all four categories of costs involved in fueling both EVs and ICE vehicles across benchmark use cases that reflect real-world driving conditions for U.S. households. The costs included:
- The cost of the underlying energy (gasoline or diesel fuel, or electricity)
- State excise taxes charged on fuel and EVs for road maintenance
- The cost of operating a pump or charger
- The cost of driving to and from fueling stations (deadhead miles)
The authors methodically examined information on commercial and residential charging rates, yields and usage of commercial chargers, prices for gasoline and electricity, taxes charged on gasoline and diesel fuels and on EVs, driver reports on reliability of EV chargers, the EV charging infrastructure in metro areas of the United States, and the miles driven by typical American drivers. All use cases reflected 12,000 miles per year and amortizing the costs of any residential charging equipment over 5 years, as well as energy prices for 2021 and taxes charged in the State of Michigan. The benchmark use cases for ICE vehicle drivers assume the use of commercial gasoline stations, and for EV drivers those routinely charging at home and those that rely primarily on commercial charging services.
Study author Patrick Anderson notes “The core principles guiding this analysis remain the same as in the first edition: we count all categories of costs for both types of vehicles and apply them to comparable EVs and ICE vehicles that fulfill real-world driving duties. The results give American drivers a credible assessment of their likely costs, should they purchase a new EV or ICE vehicle in the coming months.”
The second edition notes that prices for both electricity and gasoline increased in 2021, but gasoline prices increased much more than residential utility rates and commercial charging prices. “As a result of these higher gas prices, electric vehicles in two major segments became a much better value proposition in 2021 than in prior years,” said Patrick Anderson.
The findings by major segment include:
- Mid-priced cars
ICE vehicles continued to have a cost advantage over comparable mid-priced EVs, even with higher gas prices in 2021. For most mid-priced EV drivers charging primarily at home, the costs of electricity at commercial and residential chargers, charging equipment, road taxes, and deadhead miles made driving 100 miles about $0.50 more expensive than a comparable ICE vehicle. For EV drivers reliant upon more expensive commercial chargers, the cost advantage for ICE vehicles was about $4 per 100 miles.
- Luxury cars
EVs gained a significant cost advantage in 2021 for drivers of more expensive cars, which typically have powerful engines and lower fuel economy. Counting all four categories of costs, luxury car drivers needed over $17 to fuel ICE vehicles for 100 miles in 2021, but less than $12 to fuel a luxury electric car (assuming mostly home charging). Even luxury EV drivers who relied primarily on commercial chargers had a cost advantage, saving $1.50 per 100 miles.
- Pickup trucks
There was no contest in the truck segment in 2021. Using the same categories of costs and assuming real-world driving requirements, a typical ICE pickup truck driver would pay about $15 for 100 miles of driving. There were insufficient EV trucks in the market in 2021 to offer pickup drivers a viable alternative. However, we expect an onslaught of truck models from Ford, Rivian, General Motors, and others in 2022.
- Entry-priced cars
Again, there was no contest in this segment in 2021, since we found no electric cars with an entry-level purchase price. For ICE vehicles in this category, drivers incurred about $10 in fueling costs per 100 miles.
The report notes that the costs of charging an EV vary considerably, depending on whether the user must rely on more expensive commercial charging services or can rely upon a residential charger. To aid purchasers considering their options, the report includes an expanded array of cost calculations that vary by the share of power they gain from commercial and residential chargers.
EV Transition Brings Serious Public Policy and Infrastructure Issues
The transition to electric vehicles brings serious public policy and infrastructure issues. The report notes several of these, including:
- Need to broaden charging infrastructure. Purchasing of EVs through 2021 was dominated by relatively affluent purchasers that lived in metro areas of the country. “Not all EV drivers are metro area homeowners with a charger in the garage and a short commute,” explains study co-author Alston D’Souza, “It is important to consider common driving conditions and the charging infrastructure in rural areas, as the nation looks to transition away from its ICE fleet.”
- Need to broaden product offerings, including for entry-priced vehicles. EVs continued to be priced significantly higher than ICE vehicles in the same segments. For purchasers of entry-priced vehicles, there again were no comparable EVs in 2021.
- Avoidance of Federal and State Road Taxes by EV Drivers. All drivers of ICE vehicles pay state and federal gasoline taxes, which are dedicated to the repair and maintenance of roads. However, EV drivers in only about half the states pay a comparable tax, and there is currently no federal tax on EVs that is comparable to what is levied on ICE vehicle drivers.
- Safety Issues. EV batteries have been implicated in a series of incidents, forcing at least one major recall and a manufacturer warning to park EVs outside. As we gain more experience with EVs, these safety issues will become very important.
Obtain the Report
Read the full study here.
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