Do electric vehicles need subsidies? Ownership costs for conventional, hybrid, and electric vehicles in 14 U.S. cities

Hanna L. Breetz and Deborah Salon

Energy Policy, 2018, vol. 120, issue C, 238-249

Abstract: Battery electric vehicles (BEVs) are an important pathway for decarbonizing transportation and reducing petroleum dependence. Although one barrier to adoption is the higher purchase price, advocates suggest that fuel and maintenance savings can make BEVs economical over time. To assess this empirically, this paper analyzes the five-year Total Cost of Ownership (TCO) for conventional, hybrid, and electric vehicles in 14 U.S. cities from 2011 to 2015. Results show spatial variation due to differences in state and local policies, fuel prices, insurance and maintenance costs, depreciation rates, and vehicle miles traveled. Yet in nearly all cities, the BEV's higher purchase price and rapid depreciation outweighed its fuel savings. Extensive sensitivity analyses highlight the impact of key parameters and show that both federal and state incentives were necessary for BEVs to be cost competitive. Future BEV cost competitiveness may improve if innovation and scaling lead to significantly reduced BEV purchase prices, but our analysis suggests that it will be challenging for BEVs to achieve unsubsidized cost competitiveness except in the most optimistic scenarios.

Keywords: Total cost of ownership; Battery electric vehicles; Hybrid vehicles; Resale value; Fuel economy (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (57)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0301421518303422
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:120:y:2018:i:c:p:238-249

DOI: 10.1016/j.enpol.2018.05.038

Access Statistics for this article

Energy Policy is currently edited by N. France

More articles in Energy Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().