High Cost Per Mile of Electric Vehicles Hurts Sales In Key Markets

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2015 Nissan LEAF

Electric vehicles are not doing well in some key markets.  Is cost per mile one of the reasons?

A recent green vehicle symposium in Cambridge Massachusetts focused on electric vehicle adoption.  The moderator began by presenting data showing that that EVs are not keeping pace with the sales growth of the overall car industry.

To put it bluntly, the EV car experiment is only working in California.  Everywhere else, electric vehicles are not selling.

Despite the daily media hoopla, EVs are losing market share.  EVs represent a fraction of a single percent of new vehicle sales in most states.  This is a problem for automakers and EV advocates.  Despite the California Air Resources Board (CARB) mandating that automakers sell EVs, and despite important states adopting these mandates for their own vehicle fleets, shoppers are choosing other green vehicles much more often than they chose battery electrics.

One reason could be that the electric vehicles’ cost for “fuel” is not better than hybrids in states like Massachusetts, one of the seven Northeast states that have adopted CARBs guidelines.

nempa MIT 15

The most popular green car in any US market is the Toyota Prius.  The 50 MPG Prius outsells the entire battery electric car market by a huge margin.  The Prius hybrid also outsells every model car that has a plug (such as plug-in hybrids).

In a good month, about 10,000 electric and plug-in electric cars are sold in the entire US.  In June, Toyota sold 14,500 Prius hybrid models (excluding sales of its plug-in hybrid version).  The Prius is so similar to EVs like the Nissan Leaf, Kia Soul Electric, and BM i3 in terms of size, price and performance it at first seems crazy that people are not flocking to EVs the way they have to the Prius and other hybrids.  Obviously, range is the most common issue.  But there are other reasons EVs are not taking off.

The cost advantages of EVs are frequently exaggerated by EV advocates, and the target market is not gullible.  Environmentalists are good at math.  In Mass. on the day this is typed gasoline costs $2.65.  I’ve attached an image I took today half-way between Boston and Providence RI.  That means that the fuel cost for the Prius is 5.3 cents per mile.

Here in my area, Eversource is the electrical provider.  We are a deregulated market, so I shopped (hard) and found the best deal I could get for the generation part of the electrical bill.  My total cost was 19.8 cents per kWh this month.  The suckers paying full Eversource prices are shelling out about 26 cents per kWh.  The EPA says that the Nissan Leaf consumes 30 kWh per 100 miles traveled.  So the math works out to 5.94 cents per mile for “fuel.”

The upshot is the EV cannot match the cost per mile of the most direct gasoline-fueled competitor, the Prius.  Other gasoline-powered cars like the Ford C-Max hybrid and Honda Accord EV also have a lower cost per mile than EVs.

sunoco crop

At the MIT symposium, a panelist employed by Eversourse, which supports EV adoption and works with government agencies, spoke of the great cost advantages EVs hold over conventional cars.  His comparison vehicle?  The Hummer.  A giant SUV no longer in production.  If you think that these vehicles are cross-shopped, I have a hydrogen mine to sell you.  In other markets, like California, smart electrical meters at home can allow EV owners to get a lower cost of electricity for evening charging of their cars.  Not in Massachusetts.

I called my electricity provider (Eversourse) and was told “No smart meters are available.  We are moving away from them.”  I asked the Eversource representative at the MIT event if this was correct and received a roundabout answer equating to “no smart meters are available.”  Instead, EV owners are offered a $10 per month rebate on their electric bill.  An EV owner using her car 40 miles per day would pay about $71 in “fuel costs” per month.  The rebate makes that $61.  A Prius costs his owner $63.60.

In other articles, I have debunked the myth that EVs are lower in cost to maintain over the first five years of ownership by simply listing the work required in the owners manuals and reporting the costs for that work to be performed quoted by dealers.  EV advocates were horrified.  Yes, EVs should be cheaper to maintain, but look at the actual costs that automakers charge to maintain them and the price is similar to regular cars.  The BMW i3 became the cheapest EV to maintain when it launched because BMW includes maintenance for the first four years – just as it does on all of its gasoline and diesel powered vehicles.  Toyota offers two years maintenance at no cost.  What does Tesla Motors charge for the maintenance it recommends for its electric Model S during its first four years?  $1,900.

Buy an electric car and the federal government offers you a $7,500 tax deduction.  Assuming you don’t already pay the alternative minimum tax, but yet you make enough to deduct $7,500 from your tax bill, this is a very attractive offer.  Massachusetts also kicks in $2,500 in rebates.  This is pretty much all good, except that if you actually buy an affordable EV you now own a vehicle with the worst depreciation rate in all of the automotive kingdom.  Used EV buyers are smart enough to factor the new vehicle incentives when they calculate what to pay for your used electric car.

electric bill scan June 15 001

Nissan announced this week that it would offer “free charging” for two years at public charging stations for Leafs.  Owners receive a debit card to use.  Again, that is all good.  Except there are no chargers in my town.  I used Nissan’s locator and found that there are about a half-dozen charge spots in a radius of about five towns around me.  How does this help offset the real-world costs of an EV to a person in my town?

Lest you think I live in poverty in a tarpaper shack, I will let you in on a secret.  My town had two residents with Tesla Model S cars before the company had sold two in most states.  We are the target market.

Affordable electric vehicles are still struggling with ranges of about 100 miles.  This is a problem that many cite as the reason EVs don’t work in the minds of buyers.  For those that really want EVs to succeed, it may be worth doing a truthful review of what these cars cost to own and operate.  Nissan apparently did the math and decided to use free fuel as an equalizer.  Comparing EVs to Hummers hasn’t worked.  Maybe free fuel will.