Consumer- and society-oriented cost of ownership of electric and conventional cars in Italy

Romeo Danielis (), Marco Giansoldati and Mariangela Scorrano

No 19_3, Working Papers from SIET Società Italiana di Economia dei Trasporti e della Logistica

Abstract: The paper presents a total cost of ownership (TCO) model, implemented with data on Italian cars with different propulsion systems. The model is applied to three case studies: a) a comparison between the best-selling (battery electric vehicles (BEVs) and internal combustion engine vehicles (ICEVs); b) a pairwise comparison between comparable BEVs and ICEVs of the same brand; c) the impact of urban parking and access policies favoring the BEVs. We find that in Italy the purchasing cost of the BEVs is about 15,000 euro higher than the 10 best-selling ICEVs. Such a gap is not compensated by the lower variable costs unless a very high annual distance (20,579 km per year for 10 years) is driven, which is much above the current Italian average. Such a finding helps explaining the low BEVs’ market share in Italy. The difference between the consumer-oriented TCO and the society-oriented TCO, which represents the amount of the subsidy economically justifiable on the basis of the social costs, varies between €315 and €581. If the social costs are internalized, the overall (consumer-oriented and society-oriented) TCO would be still lower for the ICEVs than the BEVs. The pairwise comparison suggests that at least a 4,000- 6,000 euro subsidy would be needed to balance the BEVs’ unfavorable TCO. Finally, we find that parking and access fees favoring BEVs at the urban level could have a significant impact on reducing the distance driven needed to reach the consumer-oriented TCO break-even point.

Date: 2019
New Economics Papers: this item is included in nep-ene, nep-reg and nep-tre
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