There has always been a well-founded assumption that there are TCO (Total Cost of Ownership) savings to be gained with Electric Vehicles (EVs), compared to ICE (Internal Combustion Engine) vehicles. However, the lingering question remains: do these savings outweigh the initial purchase cost of an EV, which is generally higher than that of an equivalent ICE vehicle?
Now, with the significant expansion of the global EV fleet and at least 3 years of real-world milage to draw data from, it's informative to dive into the research.
In 2021, the Nickel Institute conducted an extensive study on EVs from various manufacturers, including GM, Tesla, BMW, VW, Peugeot, Honda, Nissan, Kia, Toyota, Hyundai, and JAC. This research covered regions such as the USA (California, New York, and Florida), Europe (France, Germany, and the UK), and Asia (China, Japan, and South Korea).
Despite regional differences in purchase prices due to subsidies, taxes and incentives, the research showed that:
"Overwhelmingly the TCO is favourable for small and mid-sized electric vehicles throughout the world . . . it is clear that for most potential buyers throughout the world the economics of ownership favours that of EVs over ICE vehicles.”
Interestingly, the research didn’t paint as rosy a picture for luxury EV buyers where depreciation and the resulting residual value didn’t hold up compared to the ICE equivalent.
Depreciation due to the higher purchase price of EVs was highlighted as a disadvantage in research by Vincentric. However, their findings showed that 25 of the 27 EVs evaluated had lower maintenance costs than their ICE alternatives.
An Automotive Fleet article from February 2023, highlighted an important concern:
"EVs contain a significantly higher number of electronic control modules that have wiring, sensors, and connectors. How will these components fare in the real world of ice, mud, and salt on the road?"
For example, tyre costs for EVs are likely to be more than double those for ICE vehicles due to increased torque. Some fleets are replacing tires every 10,000 miles compared to 40,000 to 50,000 miles on an ICE vehicle.
And what about specialised tooling for fleets that run their own repair shops? That’s a Total Cost of Ownership (TCO) line item that will be relevant to only a few fleets, but still something to be considered.
A company renting out Teslas since 2018 reported that their EVs, now pushing 112,000 to 144,000 kms, haven’t experienced typical heavy-use issues common with ICE vehicles. However, tyre costs are 50% higher. This highlights the importance of maintaining tyre pressures for operational savings, whether you're driving EVs or ICE vehicles.
Another cost to be considered is downtime; with preventative maintenance checks for an EV fewer and subject to longer intervals between checks your EV is going to deliver more operational time.
Some people will fret about the potential cost of replacing EV batteries, which are the most expensive component in the vehicle. Relax, the average fail rate 1.5% in the first five years and 2.5% in the first ten years.
In our research we didn’t find anyone including installation of charging infrastructure in their calculations, but that is obviously an additional cost you will have to consider. Smartak has some good info on this here.
In closing, consider a US finding that estimates an EV’s yearly maintenance costs at almost 40% less than the equivalent ICE vehicle. That’s a fairly compelling argument, even with impending RUC costs.
NSW Government have developed a great resource where you can determine the total cost of ownership for any of your vehicles with its own calculator. For more detailed insights and assistance with your EV fleet, explore our resources and connect with one of our experts today.
