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tags Batteries climate change electric car electric cars electric vehicles environment EV Oil oil prices plug-in vehicles total cost of ownership

EV report neglects total cost and environmental savings

The Lux Research report published this month paints a less-than-rosy picture for the rate of adoption for electric cars.  The Wall Street Journal’s Keith Johnson gives a comprehensive overview of the study in his October 7th story, “Speed Bump:  Don’t Bank on Electric-Car Revolution, Lux Says.”

The Lux report claims a much slower growth rate for plug-in vehicles over the next decade than industry expectations, with an estimated 3-8% market share of global new-car sales by 2020.  The study cites the leveling off of oil prices and a slow decline of battery prices to keep the cost of electric cars high.

We think the study neglects two very important influencers that will factor into people’s purchasing decisions: 1) lower total cost of ownership and 2) people’s desire to do right by the environment.

Total Cost of Ownership Factor

While the cost of electric car batteries may be high right now, commercialization of battery systems and increased production will bring the per kilowatt hour price down, which in turn will lower the cost of electric cars.  Even the Lux report estimates that battery prices could go down by 30-40% by 2020, which could lead to significant reductions in EV price points.  Beyond the battery, driving an electric car over a gas car would save people thousands of dollars in operating and maintenance costs each year.  Below is a comparison of potential savings between a gas car and the CODA electric car:

Assumptions:

  • Price per gallon – $3
  • Annual miles driven – 15,000
  • Conventional mileage – 21 mpg
  • Watt-hours per mile of battery – 300
  • Mileage per kilowatt hour – 4 miles
  • Electricity cost per kilowatt hour – $0.07
  Gas Car CODA Electric Car
Annual fuel/charging costs $2,143 $263
Maintenance costs per year (oil & other) $250 $50
Total annual costs $2,343 $313
Cost per mile $0.16 $0.02
Annual operating savings $0 $2,080

Environmental Factor

The Lux report completely ignores consumer’s increasing desire for products that help them reduce their carbon footprint.  In 2007, the Alliance for Climate Change and Roper Reports found that only 28% of Americans are environmentally uninterested.  Of those that are interested in protecting the environment, 13% can be categorized as “selfless greens” – meaning, they are willing to change their behaviors and sacrifice for the environment.  That’s about 40 million Americans who probably dislike “big oil” and would actively try to change their lifestyle to protect the environment.

Saving money and the environment?  We think the Lux report underestimates how much demand there will be for electric cars once Americans understand the economics and environmental rewards.

This entry was posted on Thursday, October 29th, 2009 at 8:31 pm and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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Comments

  1. posted by Al Hannas November 17, 2009 at 1:29 pm

    What will your stock market call letters be? Any estimate of an IPO date? Not only have I signed on the waiting list, I look forward to being an invester (albeit) a small one) as well.

  2. posted by CODA Auto December 1, 2009 at 10:39 am

    Al, we don’t have an estimated IPO date as of yet.

  3. posted by Jim Stack December 4, 2009 at 2:44 pm

    This is great news. You even have a battery warrenty for 8 years. Once gas jumps to $8-10 a gallon like it is in Europe you won’t be able to keep up with orders. Until then many of us forward looking people will keep you humming.

    Keep the news coming. I can’t wait to see one in person.

  4. posted by Ben Backes March 19, 2010 at 6:46 am

    Can you comment on how you determined the annual maintenance costs you’ve quoted?

  5. posted by Jeremy G March 26, 2010 at 12:10 pm

    I have to agree that this report completely understates the demand for EVs; witness 1 Billion, with a ‘B’, people around the world preparing to turn off their lights on Earth Day. As people clue into the great torque (fantastic in city driving), low cost of ownership, potential for efficient home charging with photovoltaics, etc, there will be a groundswell of buyers for EVs. Where I live, on the West Coast, the drivetrains on my cars wear out LONG in advance of the chassis and interior. Yes, batteries will wear out, but electric motors last a very long time, and by the time I’m ready to swap the first set out, a new set of comparable batteries (in terms of energy storage) will be comparable less to change out compared to the cost of replacing a gas engine, but with MUCH less labor involved. Remember, there will be residual (material) value in a battery pack that’s past its prime, and plenty of uses for them aside from automotive power before they go back for recycling.

    By the way, I believe that your cost comparison is very, very conservative. I’ll admit first off, I drive a lot more than most people, but the 99.9% of my trips are within the daily range of a CODA. In my last job, I drove a Ford Van about 80-100 miles a day. This required (in Canada) about $160 a fill-up for 300 miles a tank during the last gas price spike. My own personal car, fueled in the US, was sucking back 60 or 70 dollars per 300 mile tankful, at least once a week; now it’s back down under $50 a tank, for the time being. At my local utility’s’ rates (90% hydroelectric generation, by the way), it’s only a couple of cents a mile for electricity. There’s a monstrous savings to be had there. Even at today’s prices, and if all the fuel were purchased in the US, we’re looking at well over $7000.00 a year in fuel, which would cost well under a thousand dollars in electricity. I wonder if that would be worth paying an up-front premium, for vehicles that ought to be on the road for at least 20 years? Hmmmm… If I saved six thousand dollars a year over 10 years just to pick a round number, (just in fuel, toss the maintence difference for a moment) would that be a good thing? I don’t know, I’m not very good at math. Maybe the guy who wrote the Lux report can help me out with this complex quandry. Maybe I can ask a friend who’s a commercial fleet manager if she can help me out with this one.

    But money aside, what if I ever want to drive 500 miles in one day and my girlfriend’s gas car won’t start and the rental car place is out of rental cars and the trains aren’t running and the planes are grounded and the busses are full? Huh? Answer me that!! Ok, that’s called Thanksgiving, and I’ll just have to come back to work a day or two late, just like every year.

    OK, enough of being glib…

    I don’t think I’ve ever owned a gas car where my drivetrain maintenance has been as low as $250 a year unless I was trying to drive it into the ground. Belts, hoses, radiators, oil pumps, fuel pumps, oxygen sensors, valve adjustments, water pumps, distributor caps, rotors, transmission fluid flushes, clutches, exhaust pipes and mufflers are all needed now and then. I mentally count on somewhere around a thousand a year before tires, brakes, oil changes and miscellaneous, like light bulbs and power window switches, which are going to wear out with mileage regardless of the car’s power source. We’ll still have to deal with suspension and steering component repairs, but hey, it’s a car, not a magic carpet.

    I am not suggesting that electric cars will never roast any of their electronics, but let’s face it – most microwave ovens and stereo amplifiers don’t require a whole lot of fussing with to keep them working for 20 or 30 years.

    For us high-mileage, short-middle distance drivers who have friends kind enough to help us out with math problems, we’re chewing our freakin’ fingernails off here, waiting for a reasonably affordable electric car that doesn’t look like a cartoon character. Those of us who give a hoot and don’t want to pollute, would also like a rooftop charging system (solar & wind up here in the PNW, please) so that we don’t have to burn coal to run our cars.

 
 

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