Electric Vehicle - TCO Analysis Pt. 3

In the previous posts about the Total Cost of Ownership (TCO) for an electric vehicle I have detailed the various costs involved with the ownership of an electric vehicle. For the various costs I have described what they are about and given a rough idea on how to fit that to another situation at hand. In this final post on the TCO I will wrap things up with an example calculation, using some nice guesses and round figures to fill in the numbers. For the example I’ll base it on a Nissan Leaf in the Netherlands with an average yearly driving distance of 15.000 km.

The Nissan Leaf is advertised on the website of Nissan for 34.990 Euro, or 35.000 in our example. There are various subsidies involved here in the Netherlands, assumed is a 5000 Euro benefit, as is applicable for residents in Amsterdam. The example uses a 4 year period for depreciation, a period that is used a lot in lease-based contracts. Assuming you will want to drive your own vehicle for a longer period, feel free to adjust this to a longer period. The remaining value of the vehicle, at the end of this period is set at 4000 Euro. There is a lot of debate about what should be the value after depreciation, currently there are not a lot of electric vehicles that are of age to provide real scientific data for this.

Further more, there are costs for the car insurance, and a reservation for repairs. Among the repairs is also the reservation for (winter) tires.

The current value of 671.67 Euro per month is only the base cost, it does not involve the costs to actually drive the vehicle. To get an idea how much you would need to take into account to drive your electric vehicle, the following provides a nice rule of thumb and should be treated as an approximation.

The battery size is 24 kWh and one can drive 160 km when it is fully charged. This equals a distance of 6.67 km per kWh. Assuming a total distance of 15.000 km per year, a total of 2250 kWh is needed to cover this distance over the year. At the average Dutch electricity price of 0.22 Euro / kWh, this equals 495 Euro per year, or 41.25 per month.

This leads down to the estimated TCO, combining the fixed and variable costs, resulting in 712.92 Euro per month.

Electric Vehicle - TCO Analysis Pt. 1

When looking if an electric vehicle is the right type of car for you and your specific needs, one has to consider the total cost of ownership of the vehicle. The total cost of ownership, or TCO for short, represents all the costs associated with the ownership of a given vehicle. The obvious costs are the purchase price and the costs for the electricity. The less obvious costs are the depreciation costs, maintenance, road tax and potential subsidies.

The first cost you make on a vehicle: the purchase - Link

Purchase costs

Currently the purchase price of an electric vehicle is higher than a comparable counterpart with an ICE in it. The main reasons for this currently are, but are not limited to, the amount of electric vehicles being produced and the high costs involved with the production of batteries. If the number of produced electric vehicles would equal the amount of produced conventional cars more, prices of the electric vehicle will go down. Also, at the current state of technology, the battery is a costly item in the electric vehicle. When more companies are involved and more batteries will be produced, the prices for batteries are expected to go down as well. The price of an electric vehicle is the first item in the list for the TCO.

Filling up the tank, or the battery: more costs - Link

Fuel / Electricity costs

You can't go anywhere with a vehicle if you don't fill it up, for an electric vehicle this means charging it up by plugging it in. It makes sense to take the price of this charging and the price of the electricity used into account, especially when you want to make a fair comparison with for example a conventional car. The price you have to take into account strongly depends on the source that is used. If you plug it in in your garage and slow charge it from the wall socket, you pay the price the electricity company charges you. If you go to a fast charger, a bit higher rate may be applicable, unless the fast charge is offered as a service at for example a restaurant. Also, some people have the option to charge up their vehicle with the solar panels they have on their roof, making their electricity 'free'. Even though the electricity is considered 'free', there obviously are costs involved with installing and maintaining the solar panels.

Depreciation costs, where losing value is considered a cost - Link

Depreciation costs

Depreciation is the pehenomena in finance which leads to goods losing their value over time. If you purchase something new for 100 Euros and it will last for 10 years (economic life span), after 2 years it will have a depreciated value remaining of 80 Euros. For electric vehicles the depreciation value is still a matter of debate. For some the electric vehicle has an economic life span of 10 years or longer, for others the life span is assumed a lot shorter. The main reasoning supporting a shorter economic life span would be the expected life of the battery. Based on consumer experiences with mobile phones and laptops, batteries in general have an expected life span of 1 to 3 years. During this period the battery life of your phone or laptop changes noticeably. For the phone and laptop industry this leads to renewed sales and since those devices are relatively cheap, the system works. For electric vehicles, with a much bigger price tag (still), this would be rather inconvenient if the battery would only last 3 years and you would have to purchase a new vehicle again. If you want to take depreciation into account, carefully asses and decide on what you expect of the life span of the vehicle and the battery. In case of for example the Chevrolet Volt, you can also use their warranty for the battery as a starting point - 100.000 miles or 8 years, whichever comes first. For my sample TCO analysis I'll use the warranty/claim from GM of 100.000 miles or 8 years and expect no more from the battery.

In the next blog post I’ll continue with the TCO analysis and follow up with an example.

Hybrid Vehicle – The rise of the gas price

Everybody remembers the rise of the hybrid vehicle, it was a hot topic in the media especially when just before the big economic downturn the price for a barrel of oil peaked at around 140 US Dollar. Right after the economy went down the drain, so did the price for a barrel of oil, they exchanged hands for roughly 30 US Dollars per barrel. Currently the prices have gone up again and today the price for a barrel of Brent crude has reached the 100 US Dollar mark again, what’s next?  

Advertising the rise of the gas price near your - Link


Rising oil prices is what drives the sales of hybrid vehicles; with such an efficient drive train you get more bang for your buck. Or drive farther at least, there’s not so much bang as they are often a lot quieter than conventional internal combustion engine vehicles. The same goes for electric vehicles as often electricity is a lot cheaper than gas in the first place.


The current internal combustion engine powered vehicles have an average mileage of 25 MPG, while the well known hybrid vehicle the Prius has an average mileage of 50 MPG. Now these figures are simply averages and are highly dependant on for example how you drive, the traffic conditions and weather conditions. Currently the easiest way to improve the efficiency of the gas powered car is to convert it to a hybrid drive train. The main reason that hybrids score a lot better on their mileage than conventional cars is through their efficient drive train.


The Toyota Prius, arguably the best known hybrid vehicle in the world - Link


Generally speaking you can save half on your gas bill when going for a hybrid vehicle, something that should be very attractive to a lot of people with the oil prices rising again. If you want to check how much you spend on gas every day when driving to work for example, is to take the distance and combine it with the mileage. If you drive 25 miles to work (and 25 back to home at the end of the day obviously), the general internal combustion engine vehicle consumes about a gallon. The Prius would consume only half a gallon. At the end of the day, the Prius has consumed a gallon for both the trips while the conventional vehicle did two.


This efficiency quickly adds up to huge savings, savings which should allow for the higher initial investment for a hybrid vehicle. It is no secret that (currently) hybrid vehicles are (a bit) more expensive than conventional vehicles, so how do you determine if it is cost efficient to go and buy a hybrid vehicle? The assessment that is made for this is often referred to as the Total Cost of Ownership, or TCO. It lists the price to purchase the vehicles, the various taxes (including the benefits), maintenance and repair costs and the price for fuel over a period of time and shows for example when it is profitable to switch to a hybrid vehicle. In a following post I will detail more on TCO and the cost of driving with some examples.