Comparing the cost of EVs Vs ICE Vehicles: an introduction
Picture yourself cruising through the bustling streets of Mumbai or winding through the scenic roads of Kerala, the hum of the engine barely audible as you glide along in your vehicle. But amidst the urban chaos or tranquil landscapes lies a critical decision looming for every Indian consumer—the choice between Electric Vehicles (EVs) and traditional internal combustion engine vehicles. In this article, we embark on a journey through data and analysis, comparing the long-term financial implications of EV charging against petrol consumption in the Indian context. Let's navigate through the numbers to uncover the economic landscape of this electrifying transformation.
When contemplating the decision between purchasing an EV or a petrol-powered vehicle, it's imperative to look beyond the initial investment and consider the extended financial benefits. While the upfront cost of EVs may appear daunting to some, a deeper examination reveals a compelling narrative of savings over time.
Total Cost of Ownership: Costs of EVs Vs. Petrol Cars
Calculating the Total Cost of Ownership (TCO) for Electric Vehicles (EVs) versus Petrol-Powered Vehicles in India involves considering various factors beyond the initial purchase price. TCO provides a comprehensive view of the costs associated with owning a vehicle over its lifetime, including acquisition costs, operating expenses, and potential resale value.
Let's break down the TCO in terms of various costs of EVs and ICE Vehicles in the Indian context.
Initial Purchase Price
EV: Historically, EVs have been more expensive upfront due to the cost of batteries. However, government incentives and subsidies can significantly reduce this cost. Some EVs may still be more expensive than their petrol counterparts, but the gap is narrowing. The recent news of Manufacturers like Tata and MG slashing the price of EVs owing to softening battery pack costs shows how purchase price for EVs and ICE (Internal Combustion Engine) Vehicles are going to be at parity in the near future. If you are looking for a comprehensive list of new EVs to be launched in India, you can find it here.
Petrol: Petrol cars generally have a lower initial purchase price compared to EVs.
Operating Costs
EV: Operating an EV is more cost-effective over time. Electricity prices in India are generally lower than petrol prices per unit of energy, resulting in lower refuelling costs. Additionally, EVs have fewer moving parts, reducing maintenance expenses (no oil changes, fewer brake replacements, etc.). Moreover, the maintenance costs associated with EVs in India are notably lower compared to petrol cars. With fewer moving parts and simplified mechanical systems, EVs require less frequent servicing and spare parts replacements, translating to reduced maintenance expenses in the long run.
Petrol: Petrol cars have higher fuel costs due to the price of petrol. Maintenance costs can also be higher over the vehicle's lifespan.
To understand the long-term financial implications, let's delve into the statistics. In India, the average cost of electricity for EV charging varies regionally but generally ranges between ₹5 to ₹8 per kilowatt-hour (kWh). In comparison, the price of petrol fluctuates around ₹100 to ₹120 per litre, depending on location and prevailing market conditions. This stark contrast in fuel prices forms the cornerstone of potential savings for EV owners over the vehicle's lifespan.
Charging Infrastructure
EV: While EV charging infrastructure is expanding in urban areas, it may require investment in home charging solutions (e.g., a charging station in your garage). Public charging infrastructure may still be developing in some regions, potentially causing inconvenience for long-distance travel. Till the time EV charging infrastructure becomes a wide-spread phenomenon, the charging infrastructure cost may add up to the cost of EV operations in India.
Petrol: Petrol refuelling infrastructure is well-established and widely available across India.
Resale Value
EV: EVs typically have better resale value compared to petrol cars because of the lower maintenance costs and the perception of being more environmentally friendly.
Petrol: Resale value for petrol cars can be lower due to higher operating costs and the perception of being less environmentally friendly.
Government Incentives and Subsidies
EV: Government incentives, such as reduced GST rates, income tax benefits, and state-specific incentives, can significantly reduce the upfront cost of EVs.
Petrol: There are no specific government incentives aimed at reducing the purchase price of petrol cars.
Environmental Benefits of EVs
EV: EVs produce zero tailpipe emissions, contributing to a cleaner environment and potentially reducing long-term societal costs associated with healthcare and environmental damage.
Petrol: Petrol cars emit pollutants, contributing to air pollution, which can lead to healthcare costs and environmental restoration expenses.
Battery Replacement
EV: Over the long term, EVs may require battery replacement, and since battery is a significant component of the cost of EVs, battery replace may be a significant expense. However, battery technology is improving, and some manufacturers offer warranties that cover the battery for several years.
Petrol: Petrol cars do not have the equivalent of a battery replacement cost.
Conclusion
As India steers towards a future dominated by electric mobility, the financial advantages of EV ownership are becoming increasingly evident. While, at the moment the initial purchase price of EVs may be higher than petrol cars, the lower operating costs, government incentives, potential resale value, and environmental benefits make EVs competitive in terms of TCO over the long term in India. As charging infrastructure continues to develop and battery technology improves, the TCO advantage of EVs is likely to become even more pronounced.