Are Electric Vehicles Worth the Investment?
MarketScale podcast
https://marketscale.com/industries/transportation/are-electric-vehicles-worth-the-investment/
EV Economics
So, what does this EV energy transformation mean to consumers? Let’s look at a few key factors in evaluating EVs: economics, driving range, charging time and charging network. For one, it is the understanding of EV economics such as the difference between MPG to miles per kilowatt hour (kWh). Essentially, how far can you drive with a gallon of gas to kWh of energy. According the EPA, the average vehicle fuel efficiency in 2020 was 25.7 MPG. The U.S. Department of Transportation’s Federal Highway Administration states the average person drives around 13,500 milesevery year suggesting an annual fuel cost of over $2,300 at $4.50 per gallon.
The average EV range is approximately 3.5 miles per kWh. One way to assess the economics between MPG and kWh efficiency is to compare the driving costs of traveling 100 miles. With the average fuel cost of $4.50 in the US and 25.7 MPG equates to $17.50. With an EV achieving 3.5 miles per kWh, the 100-mile traveling cost will depend on whether the EV was charged at home or on a charging network station. According to the Energy Information Administration, the average at home cost is roughly $0.14 per kWh. So, the 100-mile EV travel cost equates to $3.91.
However, if the EV requires charging on a public charging network, the cost is significantly higher. The average kWh cost on public charging networks is approximately $0.42 per kWh ranging from $0.25 from Tesla to $0.33-to-$0.60 on other charging networks. At $0.42 per kWh, the 100-miles travel would cost $12.00 in an EV which is still a 30% savings over conventional vehicles.
Figure 1: 100-Mile Driving Costs
Source: EPA, EIA, Green Econometrics