Abstract

Battery electric vehicles (BEVs) are an important pathway for decarbonizing transportation and reducing petroleum dependence. Although one barrier to adoption is the higher purchase price, advocates suggest that fuel and maintenance savings can make BEVs economical over time. To assess this empirically, this paper analyzes the five-year Total Cost of Ownership (TCO) for conventional, hybrid, and electric vehicles in 14 U.S. cities from 2011 to 2015. Results show spatial variation due to differences in state and local policies, fuel prices, insurance and maintenance costs, depreciation rates, and vehicle miles traveled. Yet in nearly all cities, the BEV's higher purchase price and rapid depreciation outweighed its fuel savings. Extensive sensitivity analyses highlight the impact of key parameters and show that both federal and state incentives were necessary for BEVs to be cost competitive. Future BEV cost competitiveness may improve if innovation and scaling lead to significantly reduced BEV purchase prices, but our analysis suggests that it will be challenging for BEVs to achieve unsubsidized cost competitiveness except in the most optimistic scenarios.

Original languageEnglish (US)
Pages (from-to)238-249
Number of pages12
JournalEnergy Policy
Volume120
DOIs
StatePublished - Sep 1 2018

Fingerprint

electric vehicle
Hybrid vehicles
Electric vehicles
ownership
cost
Costs
Depreciation
competitiveness
savings
Insurance
need
subsidy
city
Battery electric vehicles
battery
incentive
spatial variation
innovation
Crude oil
Innovation

Keywords

  • Battery electric vehicles
  • Fuel economy
  • Hybrid vehicles
  • Resale value
  • Total cost of ownership

ASJC Scopus subject areas

  • Energy(all)
  • Management, Monitoring, Policy and Law

Cite this

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title = "Do electric vehicles need subsidies? Ownership costs for conventional, hybrid, and electric vehicles in 14 U.S. cities",
abstract = "Battery electric vehicles (BEVs) are an important pathway for decarbonizing transportation and reducing petroleum dependence. Although one barrier to adoption is the higher purchase price, advocates suggest that fuel and maintenance savings can make BEVs economical over time. To assess this empirically, this paper analyzes the five-year Total Cost of Ownership (TCO) for conventional, hybrid, and electric vehicles in 14 U.S. cities from 2011 to 2015. Results show spatial variation due to differences in state and local policies, fuel prices, insurance and maintenance costs, depreciation rates, and vehicle miles traveled. Yet in nearly all cities, the BEV's higher purchase price and rapid depreciation outweighed its fuel savings. Extensive sensitivity analyses highlight the impact of key parameters and show that both federal and state incentives were necessary for BEVs to be cost competitive. Future BEV cost competitiveness may improve if innovation and scaling lead to significantly reduced BEV purchase prices, but our analysis suggests that it will be challenging for BEVs to achieve unsubsidized cost competitiveness except in the most optimistic scenarios.",
keywords = "Battery electric vehicles, Fuel economy, Hybrid vehicles, Resale value, Total cost of ownership",
author = "Hanna Breetz and Deborah Salon",
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language = "English (US)",
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pages = "238--249",
journal = "Energy Policy",
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publisher = "Elsevier BV",

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AU - Breetz, Hanna

AU - Salon, Deborah

PY - 2018/9/1

Y1 - 2018/9/1

N2 - Battery electric vehicles (BEVs) are an important pathway for decarbonizing transportation and reducing petroleum dependence. Although one barrier to adoption is the higher purchase price, advocates suggest that fuel and maintenance savings can make BEVs economical over time. To assess this empirically, this paper analyzes the five-year Total Cost of Ownership (TCO) for conventional, hybrid, and electric vehicles in 14 U.S. cities from 2011 to 2015. Results show spatial variation due to differences in state and local policies, fuel prices, insurance and maintenance costs, depreciation rates, and vehicle miles traveled. Yet in nearly all cities, the BEV's higher purchase price and rapid depreciation outweighed its fuel savings. Extensive sensitivity analyses highlight the impact of key parameters and show that both federal and state incentives were necessary for BEVs to be cost competitive. Future BEV cost competitiveness may improve if innovation and scaling lead to significantly reduced BEV purchase prices, but our analysis suggests that it will be challenging for BEVs to achieve unsubsidized cost competitiveness except in the most optimistic scenarios.

AB - Battery electric vehicles (BEVs) are an important pathway for decarbonizing transportation and reducing petroleum dependence. Although one barrier to adoption is the higher purchase price, advocates suggest that fuel and maintenance savings can make BEVs economical over time. To assess this empirically, this paper analyzes the five-year Total Cost of Ownership (TCO) for conventional, hybrid, and electric vehicles in 14 U.S. cities from 2011 to 2015. Results show spatial variation due to differences in state and local policies, fuel prices, insurance and maintenance costs, depreciation rates, and vehicle miles traveled. Yet in nearly all cities, the BEV's higher purchase price and rapid depreciation outweighed its fuel savings. Extensive sensitivity analyses highlight the impact of key parameters and show that both federal and state incentives were necessary for BEVs to be cost competitive. Future BEV cost competitiveness may improve if innovation and scaling lead to significantly reduced BEV purchase prices, but our analysis suggests that it will be challenging for BEVs to achieve unsubsidized cost competitiveness except in the most optimistic scenarios.

KW - Battery electric vehicles

KW - Fuel economy

KW - Hybrid vehicles

KW - Resale value

KW - Total cost of ownership

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