There is a complex range of factors to consider when comparing the cost of using an electric vehicle with a combustion engine or hybrid vehicle. It requires a specific approach with a number of EV-related factors that must be considered for an objective comparison in addition to the elements that traditionally make up the TCO.

Understanding the total cost of ownership (TCO) is a necessary approach for the adoption of the electric vehicle.

Whether for an individual or a company, the total cost of the vehicle is more important than just the purchase price. Because of high list price and technical specificities, a TCO approach is essential for electric vehicles to take into account the items of expenditure throughout the use of the vehicle to appreciate precisely its cost for the consumer.

The residual value is the major element that makes up the calculation of the TCO. Today, it represents on average 40% of the cost of a vehicle over a three-year cycle. Electric vehicle residual value is lower than the combustion engine, mainly due to the image of obsolescence given to the vehicle batteries that can represent a third of the value.

If we attribute a lifetime of eight years to an EV battery against 12 years for a combustion engine vehicle, it means that a substantial amount of the vehicle, in this case, the value of the battery, depreciates 50% faster. Other factors also have a negative impact on the residual value, such as the very high purchase cost today, which is related to the constraints that the electric vehicle imposes or the sales and after-sales forces, still little involved in the market because of low customer demand.

All studies today highlight a number of factors that favour the EV TCO and can be classified into two categories. There is the technical aspect on the one hand as the cost of fuel, gasoline or diesel compared to the kilowatt-hour domestic and maintenance, which is less expensive thanks to a much smaller number of wearing parts.

There is also the tax aspect, which includes the ecological bonus and the local subsidies that are clearly in favour of the EV. Regarding the ecological bonus, a decrease of the incentive can be expected in connection with the increase of registrations, which could neutralize the decline of EV prices promised by manufacturers. In this context, we can expect certain stability of the purchase cost (vehicle price, ecological bonus deducted) for several years.

Studies usually stop at these factors, which are typical of a vehicle’s TCO, but a number of other elements specific to electric vehicles should also be considered in order to capture a less theoretical cost of ownership.

The cost of installing a charging infrastructure is a variable element that is often underestimated. Indeed, beyond the charging station itself which can cost between 700 and 1200 € for domestic use, the installation of it can cost several thousand euros depending on the chosen location and the obsolescence of the electrical installation. These costs, however, remain related to the purchase of a first vehicle and will not necessarily be considered as part of a renewal, except in case of moving, or evolution of the charging station. It should be noted that the government has put in place specific financial incentives for charging infrastructure but they only cover a small part of the overall cost.

Comparing the cost of a litre of fuel with the price per kilowatt hour is an approach that does not take into account the reality of everyday use. The charging device, whether public or private, can have a significant impact on the user’s budget. The home charging station remains the most economical solution.

Charging on public terminals can generate a substantial cost because of exponential prices: one hour of charging can be relatively attractive (1.5 to 2 times more expensive than a private infrastructure), but the hours of overflow can be charged at a higher price. Public chargers can see the cost triple per kilowatt.

Required mobility services

Mobility is also a crucial consideration when comparing an EV and a hybrid or combustion engine vehicle. Electric vehicles available today and in the next two to three years have more limited autonomy in terms of equivalent use and especially a recharge time well above a full tank. This constraint for the user must therefore legitimately be offset by an additional mobility solution, especially for long journeys. Several options exist from vehicle rentals to public transport and carsharing. On average, a budget of 900 € annually will be expected for a family of four for a mixed solution.

In the future, other elements could come to improve the TCO of the EV like the free parking or the free recharge in the public space for example. The “smart grid” could also allow users to benefit financially by making available the energy of the vehicle to supply the public network. But in the immediate future, the development is progressive and the adaptation of infrastructures little developed. It seems unlikely that the electric vehicle can compete with the combustion engine or hybrid vehicle in terms of cost of ownership for several years without any additional tax regulation.