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Are Electric Cars Really That Much Cheaper to Operate than ICE?

Recently, I engaged in a conversation about the cost-effectiveness of
electric vehicles (EVs) compared to internal combustion engine (ICE)
vehicles with a friend. This discussion prompted me to conduct a
detailed analysis of the potential cost savings associated with
owning an EV, particularly focusing on fuel savings and overall cost
return.

In this article, I will try to explore various aspects of owning EVs
versus ICE vehicles, from initial investment to long-term savings.

Key Findings

  * Higher Upfront Costs but Lower Operating Costs: EVs tend to cost
    more at purchase but are cheaper to run over time.
  * Break-Even Point: The typical break-even distance for EV buyers
    is around 140,000 kilometers, which varies based on charging
    habits and incentives.
  * Maintenance: EVs require about 30% less maintenance than ICE
    vehicles.
  * Charging Costs: Home charging is significantly cheaper than
    public charging options.
  * Driving Habits Matter: The financial advantages of EVs heavily
    depend on individual driving patterns.

Current Market Trends

In 2024, the top-selling vehicles included several electric models.
But why are EVs gaining popularity? Are they truly the
environmentally friendly option they claim to be?

Most Sold Vehicles in 2024

Current market distribution of passenger vehicles based on full-year
sales data

In my calculations below, I conclude that it is cheaper to buy an EV
in the long run compared to a conventional vehicle, assuming you
don't have battery problems.

Cost Comparison: EVs vs. ICE Vehicles

Initial Investment

The price gap between EVs and ICE vehicles continues to narrow but
still presents a significant difference:

  * Average Mid-Range EV Cost: EUR45,000
  * Average Mid-Range ICE Cost: EUR32,000
  * Price Difference: EUR13,000

Cost Comparison of Running an EV vs. ICE Vehicle per 100km

Cost comparison of running an EV vs ICE vehicle per 100km

Electric Vehicle Costs

Using current European average electricity rates (EUR0.1867 per kWh)
for a typical mid-size EV:

Costelectricity=18kWh/100km,0.1867EUR/kWh=3.36EUR/100kmCost_{electricity}
= 18 { kWh/100km} , 0.1867 { EUR/kWh} = 3.36 { EUR/100km}Costelectricity 
=18kWh/100km,0.1867EUR/kWh=3.36EUR/100km

Notes:

  * Consumption varies from 15-22 kWh/100km depending on driving
    conditions.
  * Home charging rates can be significantly lower (EUR0.15-0.20/kWh).
  * Night tariffs can reduce costs by 40% to 60%.

Traditional Vehicle Costs

Using current European fuel prices (EUR1.80/L) for a comparable ICE
vehicle:

Costfuel=7L/100km*1.80EUR/L=12.60EUR/100kmCost_{fuel} = 7 { L/100km} *
1.80 { EUR/L} = 12.60 { EUR/100km}Costfuel =7L/100km*1.80EUR/L=12.60EUR/100km

Notes:

  * Consumption varies from 6-8 L/100km based on driving conditions.
  * Urban driving typically increases consumption by 15% to 20%.
  * Current fuel prices fluctuate significantly by region.

Long-Term Cost Analysis (100,000 Kilometers)

TotalEV=Costinitial+Costelectricity+CostmaintenanceTotal_{EV} = Cost_
{initial} + Cost_{electricity} + Cost_{maintenance}TotalEV =Costinit
ial +Costelectricity +Costmaintenance 
TotalEV=45,000EUR+3,360EUR+2,000EUR=50,360EURTotal_{EV} = 45,000{ EUR} + 3,360{
EUR} + 2,000{ EUR} = 50,360{ EUR}TotalEV =45,000EUR+3,360EUR+2,000EUR=50,360EUR

Total Cost for ICE Vehicle:

TotalICE=Costinitial+Costfuel+CostmaintenanceTotal_{ICE} = Cost_
{initial} + Cost_{fuel} + Cost_{maintenance}TotalICE =Costinitial +C
ostfuel +Costmaintenance 
TotalICE=32,000EUR+12,600EUR+5,000EUR=49,600EURTotal_{ICE} = 32,000{ EUR} +
12,600{ EUR} + 5,000{ EUR} = 49,600{ EUR}TotalICE =32,000EUR+12,600EUR+5,000EUR=
49,600EUR

Break-Even Analysis

The break-even distance can be calculated as:

Distancebreakeven=PricedifferenceCostsavings,per,kmDistance_
{breakeven} = {Price_{difference}}{Cost_{savings,per,km}}Distancebre
akeven =Pricedifference Costsavings,per,km 
Distancebreakeven=13,000EUR*0.0924=140,000kmDistance_{breakeven} =
{13,000{EUR}} * {0.0924} = 140,000 { km}Distancebreakeven =13,000EUR*
0.0924=140,000km

Where:

Pricedifference=CostEV,initial-CostICE,initial=45,000EUR-32,000EUR=
13,000EURPrice_{difference} = Cost_{EV,initial} - Cost_{ICE,initial} =
45,000 { EUR} - 32,000 { EUR} = 13,000 { EUR}Pricedifference =CostEV,initia
l -CostICE,initial =45,000EUR-32,000EUR=13,000EUR
Costsavings,per,km=CostICE,per,km-CostEV,per,km=EUR12.60-EUR3.36=EUR0.0924EUR
/kmCost_{savings,per,km} = Cost_{ICE,per,km} - Cost_{EV,per,km} =
EUR12.60 - EUR3.36 = EUR0.0924 { EUR/km}Costsavings,per,km =CostICE,per,km -C
ostEV,per,km =EUR12.60-EUR3.36=EUR0.0924EUR/km

EV vs. ICE Vehicle Cost Comparison Over Distance

Break-even analysis showing total costs including purchase price and
running expenses

For most users, the break-even point typically hovers between 150,000
and 200,000 km, assuming primarily home charging. However, with
government incentives and optimized charging practices, this could
drop to between 100,000 and 120,000 km.

Tip: Consider your annual mileage carefully. Higher mileage leads to
faster break-even points due to lower operating costs.

Maintenance Costs

EVs typically require 30% less maintenance than their ICE
counterparts. In terms of cost:

  * Annual servicing for an EV in Croatia costs around EUR100, compared
    to EUR300 for an ICE vehicle (Croatian Auto Association, 2023).

Long-Term Savings Comparison Example (10 Years)

     Vehicle       Initial Cost (EUR) Running Cost (EUR) Total Cost (EUR)
Renault Zoe (EV)   40,000           1,800            41,800
Renault Clio (ICE) 30,000           7,800            37,800

Total Cost of Ownership Comparison

Cumulative costs for EV vs ICE vehicles over a 10-year period

Real-World Cost Comparisons

Case 1: Luxury Segment Comparison - BMW i4 e40 vs BMW 430i

In this analysis, we will compare two vehicles with identical body
styles but different powertrains:

  * BMW i4 e40 (Electric Vehicle): Base Price $57,100
  * BMW 430i (Internal Combustion Engine): Base Price $47,600

We will look at the annual fuel costs for both vehicles based on an
annual travel distance of 12,000 miles.

Annual Fuel Costs:

For the BMW 430i, we can calculate the annual fuel costs as follows:

CostICE=12,000miles27mpg*$4.50/gal=$2,000/year{Cost_{ICE} = {12,000 {
miles}}{27 { mpg}} * \$4.50/{gal} = \$2,000/{year}}CostICE =12,000mil
es27mpg*$4.50/gal=$2,000/year

On the other hand, for the BMW i4 e40, the annual electricity cost is
calculated like this:

CostEV=12,000miles3.7mi/kWh*$0.13/kWh=$420/year{Cost_{EV} = {12,000 {
miles}}{3.7 { mi/kWh}} * \$0.13/{kWh} = \$420/{year}}CostEV =12,000mi
les3.7mi/kWh*$0.13/kWh=$420/year

Break-even Analysis:

To determine the time required to break even on the price difference
based on fuel savings, we use the formula:

Timebreakeven=PricedifferenceAnnualsavings=$9,500$1,580+$200=5.3years
{Time_{breakeven} = {Price_{difference}}{Annual savings} = {\$9,500}
{\$1,580 + \$200} = 5.3 { years}}Timebreakeven =Pricedifference Annua
lsavings=$9,500$1,580+$200=5.3years

This calculation indicates that, assuming no maintenance costs are
incurred and with a fuel price difference of $9,500, it would take
about 5.3 years to break even on fuel savings alone.

BMW i4 e40 (EV) vs BMW 430i (ICE) Total Cost of Ownership

Comparison of cumulative costs including purchase price, fuel/
electricity, and maintenance over 9 years. Break-even occurs at 5.3
years.

However, when factoring in regular maintenance, particularly for the
430i, we must account for oil changes. With two oil changes needed
per year at an average cost of $100 each, the additional expense
shortens the break-even period by approximately 0.5 years. While I
lack precise data on the complete scheduled maintenance for the 430i,
we can assume that the i4 will incur fewer maintenance costs due to
its nature as an electric vehicle, which requires less frequent
servicing.

Moreover, traditional internal combustion engine (ICE) components
tend to wear out more rapidly as mileage accumulates, further
amplifying the longevity and cost-effectiveness of the EV when
considering overall ownership costs.

Maintenance Cost Comparison

Consumer Reports conducted a comprehensive survey assessing the costs
associated with battery electric vehicles (BEVs), plug-in hybrid
electric vehicles (PHEVs), and ICE vehicles over an extensive mileage
period. Their findings confirm that BEVs and PHEVs typically incur
maintenance costs that are approximately half that of ICE vehicles
over the first 200,000 miles.

Charging costs also vary considerably and depend on local electric
rates. For example, my own experience with a PHEV shows that
home-charged electric miles generally cost between one-third and
one-half of the price of gas miles. Public Level 2 (L2) charging
stations may be free if government-owned, whereas privately owned
stations often charge rates comparable to those of gasoline.

Moreover, BEVs utilizing fast chargers during road trips may incur
costs slightly higher than gas per mile. These expenses are highly
variable based on network, location, and time of day.

To maximize savings, having the ability to charge at home is
essential

For those seeking economical options, a used hybrid electric vehicle
(HEV) often emerges as the most cost-effective choice. Fully
subsidized models like the Tesla Model 3 or Chevy Bolt, or a used
Nissan Leaf, can also serve as affordable alternatives if they align
with your requirements.

Next, we explore the cost per mile associated with different charging
methods compared to gasoline vehicles:

Cost per Mile Comparison

Comparison of cost per mile among home-charged PHEVs, public
charging, fast charging, and ICE vehicles.

Conclusion

In conclusion, electric vehicles (EVs) are a smart choice for those
seeking long-term savings, despite their higher upfront costs. They
offer significant reductions in fuel and maintenance expenses, making
it easier to recover that initial investment over time. With the
break-even point typically falling around 140,000 to 200,000
kilometers, drivers who accumulate mileage can see real financial
benefits.

As charging infrastructure continues to improve and incentives make
EVs more accessible, they're becoming a practical choice as well as a
greener option. For many, switching to an EV means saving money while
contributing positively to the planet. If you're considering the
switch, now could be a great time to embrace the future of driving.

       

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