There has always been a well-founded assumption that there are Total Cost of Ownership (TCO) 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?

What is Total Cost of Ownership for EVs?

Total Cost of Ownership refers to all the costs associated with owning and operating a vehicle over its lifetime, including:

• Purchase price
• Fuel or charging costs
• Maintenance and repairs
• Insurance
• Depreciation
• Downtime and operational impacts

For fleet managers, understanding EV TCO is essential for budgeting, long-term planning, and justifying the switch to electric.

Real-World EV TCO Data

Thanks to the growing adoption of EVs worldwide, we now have more reliable data than ever. A 2021 study by the Nickel Institute examined EVs from manufacturers such as Tesla, BMW, Hyundai, Nissan, and Toyota, across regions including the US, Europe, and Asia.

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.

EV Depreciation and Maintenance Costs

A common concern is the depreciation rate of EVs, especially since they usually cost more upfront. According to research by Vincentric, this is a valid consideration - but one largely offset by lower maintenance costs.

In fact, 25 out of 27 EVs studied had significantly lower maintenance expenses than their ICE equivalents. Why? EVs have fewer moving parts and don’t require oil changes, exhaust repairs, or transmission servicing.

However, maintenance costs aren’t non-existent. An article in Automotive Fleet (Feb 2023) highlighted that EVs have:

• More electronic modules (wiring, sensors, connectors), which are sensitive to harsh driving conditions.
• Tyre wear that is often 2x greater than ICE vehicles, due to higher torque and weight. Some fleets are replacing tyres every 10,000 miles, compared to 40,000–50,000 miles for ICE vehicles.

If your organisation runs in-house service workshops, you’ll also need to factor in specialised tooling and training for EV maintenance - something that may only impact larger or more self-sufficient fleets.

Long-Term Use Insights: EVs in the Real World

Real-world fleet experience is invaluable when assessing EV lifetime cost. One company, which has operated a Tesla rental fleet since 2018, reports:

• EVs have reached 112,000 to 144,000 km with minimal mechanical issues.
• Tyre costs are around 50% higher, reinforcing the need for proper tyre pressure maintenance.

One often-overlooked benefit? Reduced downtime. Preventative maintenance for EVs is typically required less often, giving you more operational hours over the vehicle’s lifespan.

And while some worry about battery replacement costs, the data is reassuring:

• Battery failure rate is just 1.5% in the first 5 years
• Only 2.5% after 10 years

Additional Costs: Charging Infrastructure

One element often excluded from TCO calculations is the cost of EV charging infrastructure—yet it can be a significant investment. Whether you’re installing Level 2 chargers in a depot or planning for scalable charging across multiple locations, these costs should be evaluated alongside vehicle acquisition.

Smartrak offers tools and expert guidance to help fleets optimise EV charging infrastructure - see more here.

The Bottom Line: Are EVs Cheaper to Own than ICE Vehicles?

For most fleets, especially those operating small-to-mid-sized EVs, the answer is yes. One US study estimates that EV maintenance costs are 40% lower than for ICE vehicles. When combined with fuel savings and reduced downtime, EVs can deliver significant long-term savings.

Even with the introduction of Road User Charges (RUCs) and other emerging costs, the TCO advantage of EVs remains compelling - particularly for organisations focused on sustainability and cost efficiency.

Calculate Your Fleet's EV TCO

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.