Church Road Garage Car Insurance Scheme

Most people ignore the real cost of car ownership. Therefore, is the “EV’s are too expensive” dismissal based on a vague understanding of the real car ownership cost?

Now that we’ve refreshed our memory on car ownership costs, we can honestly compare the ownership cost of gasoline versus electric cars.

We’ll see that EV’s give significant the cost savings over gas powered vehicles. Earlier we saw the EV Price Premium was about $15,000 at the “affordable” end of the electric car spectrum. That’s our first target, to identify $15,000 in savings, and the next target is to identify enough savings to completely pay for the car.

We can’t get away from spending money to own the car. What we’ll do instead is show enough in total cost of ownership savings, compared to an equivalent gasoline car, to at least pay for the purchase price.

The key is fuel cost savings – because electricity is a far cheaper fuel than gasoline.

On Facebook, I found an extreme example posted by Per Lyngemark, a Swedish electric car owner (

Just did a math exercise with a taxi driver in Shanghai…

They pay 250rmb (renmibi) a day for gasoline (about US $40), they drive 350 days a year and after 5 years they discard their car which cost 90,000rmb (about US $14,500). That’s a total of 525,000rmb plus various taxes (about US $84,600), repairs etc, making the total cost of ownership 550,000rmb (about $88,600) over five years.

If they instead bought an electric car for 150,000rmb (about US $24,000), their cost per day would be 12rmb for electricity (about US $1). For five years that’s 21,000rmb for electricity (about US $3,300), or 170,000rmb (about US $27,400) for total cost of ownership. There is no repair cost nor taxes for EVs, and the battery warranty is 8 years. Finally, they could potentially sell the car and get 20,000rmb (about US $3,200) residual value.

So difference between a gasoline and an electric taxi in Shanghai would be 400,000rmb (about US $64,400), or 80,000rmb per year (about US $12,800). It takes less than two years of these cost savings to completely pay for the taxi purchase price. Also 140 tons of CO2 could be saved per five year period per car…

If you extend this math to all the 68,500 taxis in Shanghai you could save 10 million tons of CO2, reduce the imports of crude and save 27.5 billion rmb (about US $4.4 billion). And this is just for Shanghai, home to 2.5% of the Chinese population…

Based purely on fuel cost savings this class of people (taxi drivers in China), whose daily vehicle miles traveled are way above what most of us do, could theoretically have enough cost savings to pay for their car within two years.

For a more practical example most of us can relate to, let’s see how the purchase of a 2015 Nissan Leaf works out.

Add this up ($7500 $2500 $3500 $500) and we have about $14,000 in savings over five years, in California, most of which is the federal tax credit. That’s enough to reduce the effective cost of the Leaf SV to about $18,000. Looking at the Nissan Versa Note — the closest comparison to the Leaf — it’s the Versa Note SL trim level that most closely matches the Leaf SV. That car has a base $18,660 MSRP.

Without trying too hard, the tax credits, California state rebate, and fuel cost savings, are enough to make up for the EV Price Premium between a 2015 Leaf SV and Versa Note SL.

But, wait, we’re just getting started.

While not all states have tax credits or rebates on top of the Federal tax credit, some do, and in some cases they’re even more generous than California’s rebate. You may be lucky enough that your state is more generous with the incentives. However, we shouldn’t be dependent on the tax credits. Depending on the political winds over the next couple years, the government incentives may either expire or be repealed.

The fuel cost saving is the key to grabbing enough savings to pay for the car, as our Chinese taxi driver example shows. The fuel cost savings we show is calculated from the EPA estimated fuel cost of the electric and gasoline versions of the Ford Focus. The EPA’s calculation is based on 15,000 miles a year driving, and $3.70 per gallon for gasoline. Both of those are national averages, what’s important to calculate is YOUR circumstances.

Some variables that can be adjusted in calculating the fuel cost savings benefit:

• The gasoline MPG you’re comparing against
• The number of miles you actually drive
• Using time-of-use metering for cheap electricity
• Installing solar panels for cheap electricity, and gaining 100% certainty your electricity is 100% clean

Fuel cost savings are calculated by subtracting electricity cost from gasoline cost. What we’re looking for is to widen that gap to save the most money possible.

Gasoline MPG — At $3.70 per gallon, a 36 MPG car costs $0.10 per mile for gasoline, but a 20 MPG Ford F150 costs $0.19 per mile. The F150’s EPA estimated yearly fuel costs (15,000 miles, etc) is $2,100. Switching from an F150 to a Nissan Leaf saves you $1,500 per year in fuel costs, or more than twice the average shown above. Over five years that’s $7,500 total in fuel cost savings, and ($7500 $2500 $7500 $500) the total savings is over $18,000.

Total miles driven — Another lesson to take from the Chinese taxi driver is:- The more you drive the more you save. If you’re saving 7 cents a mile on fuel costs, driving 457,000 miles gives you $32,000 in fuel cost savings. The mid-range Leaf MSRP is about $32,000. The formula is:

# miles required = vehicle MSRP / savings per mile

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