Just like many others, I have found myself amazed by the possibilities of electric vehicles. The torque and instant power provide quicker acceleration than traditional combustion engines. Ergon Energy reports that they are better for the environment, due to less emissions. Maintenance is cheaper thanks to less moving parts relative to regular engines. They also report savings in running the vehicle, claiming “The electricity to charge an EV works out around a third as much per kilometre as buying petrol for the same vehicle.” However, working on a study of the Tesla Model Y for another story, I found that savings traditionally cannot justify purchasing a Tesla.
While there are savings associated with purchasing and operating an electric vehicle, they also tend to cost more than combustion engine counterparts. During my research, I found that most of the savings coming from maintenance are minimal, because when you do need maintenance they tend to be more expensive procedures. The most significant savings came from charging vehicles rather than pumping gasoline. This prompted me to conduct a more detailed analysis on how much people can save by driving electric vehicles. After all, if the future is in electric vehicles, we should all have a better understanding of the costs associated with them.
The Study
In order to complete this study, there are assumptions that need to be made. I wanted to give electric vehicles the best chance to succeed given my original skepticism. Since it is cheaper to charge at home than paying at charging stations, the study assumes that all charging is done at home. I used the battery of a Tesla Model 3 as reference, since it is currently the most efficient electric vehicle in the market. It is also safe to assume that this technology will continue to quickly get better over time. Finally, the fuel efficiency used for a combustion engine vehicle was 25 mpg, which is based on an industry average for the United States.
The study starts by researching the cost of electricity for each state. According to Choose Energy, the average cost of electricity in the U.S. is 12.85 cents per kWh as of Febuary 2020. This ranges from 8.88 cents per kWh in Louisiana, to 33.37 cents per kWh in Hawaii. The wide range in cost of electricity made this study even more interesting to me. One would assume that savings would be greater in Louisiana since electricity is so cheap. On the other hand, the cost of gasoline will also vary by state.
Starting to analyze the cost of fuel, it is important to distinguish between the different grades of gasoline. AAA luckily tracks the cost of gasoline throughout the country, and shows the cost of each grade by state. Their results show that gasoline averages range from $1.85 per gallon for regular, to $2.41 per gallon of premium gasoline. Ironically Hawaii still has the most expensive form of fueling the vehicle for any form of gasoline. Oklahoma consistently has the cheapest fuel in the country.
Next, we need to see the information in a common unit of measure. The information gathered can be transformed to a cost per mile for each fueling method and state combination. Much like studies conducted by Ergon Energy, I was able to conclude that it is cheaper to power a battery than the average combustion engine. While a mile driven on an electric vehicle costs about $0.03 per mile, the cost of a vehicle using regular gasoline is $0.07 per mile. If using premium gasoline, the cost goes up to $0.10 per mile.
Now that there is a common unit of measure, we can begin to compare the two sources of energy. I compared the cost of electric powered miles, versus each type of gasoline. On average, the cost per mile of an electric vehicle is 41% of regular gas. In other words, there is a 59% savings in cost to power the battery. That number increases to 68% for a vehicle of same gas mileage fueled by premium gasoline. Since the automotive industry has started shifting to the use of turbo charged engines to increase fuel efficiency, more vehicles now use premium gasoline than before. By percentage, electric vehicle owners in Washington will see the highest savings, while those in Connecticut and Hawaii will see the least amount of savings.
At this point — the analysis could have been considered complete, but I wanted to one step further. While Washington may see the highest savings by percentage, people living in Seattle will most likely drive less miles than those in the outskirts of Atlanta. A study conducted by CarInsurance.com found that the average American drives 13,476 miles per year. This ranged from 6,801 miles driven each each in New York, to 16,410 miles in Wyoming. Combining the information of miles driven by state with the costs of powering vehicles respectively, we have a better understanding on the actual savings associated with driving an electric vehicle. Ultimately, the highest average savings are achieved in Wyoming due to the high number of miles driven by the average person. The least amount of savings actually vary by fuel type. Connecticut sees an average of $192 per year saved with regular gasoline, but Rhode Island beats them in least amount of savings using premium gasoline at $380.
Conclusion
Ultimately, the decision to purchase an electric vehicle could be justified financially in some states, but others will struggle to see any returns. An individual could save over $10,000 over ten years by driving electric. On the other hand, a driver in Rhode Island would need to drive over 5 times further than the average resident in the state to achieve the same savings. Overall, I foresee this information becoming more tribal and hurting the electric vehicle market. Hundreds, if not thousands, of current owners will realize they are barely saving any money on monthly expenses and opt for a traditional combustion engine vehicle on their next purchase. Although the future of the automotive industry will still be electric, it will need to make significant changes before becoming the norm.
Below you can see the overall results for each state.
If you would like the file used to gather numbers and conduct calculations feel free to reach out. — JouzSang
