Are Electric Vehicles Ready for Prime Time?
With the success of Tesla and the current trend to have every major car manufacturer offer an electric vehicle, it is becoming more important than ever to explain in simple language the essentials of the major fuel consumption difference between internal combustion engines and electrically driven vehicles.
There is some truth in the popular belief that electric cars are overall more environmentally friendly than those using internal combustion engines. The advantage would be even more enhanced through the production of cleaner electricity, from natural gas, solar, wind, or even nuclear power. Higher taxes at the gasoline pump would be a separate advantage.
It is crucial, however, to understand clearly the factors that can diminish and even eliminate the perceived advantage of an electric vehicle, namely how the electricity is currently generated and the vehicle's retail cost.
Here are some facts not clearly understood by many consumers. A zero emissions electric powered engine does not exist, yet. It is true that the driver of a Tesla (Tesla, Inc.), Nissan Leaf (Nissan Motor Co.), Chevrolet Volt (General Motors Corp.), or any of the other electric vehicles does not emit directly any carbon dioxide (CO2) while operating the vehicle. But the electricity does not get generated from thin air.
If it is being produced by a coal-fired power plant or any other fossil fuel, then the electric power used to charge the batteries of electric vehicles would not result in any significant decrease of carbon emissions. Many studies have shown that in several cases carbon emissions would actually increase.
Data from the U.S. Energy Information Administration (USEIA) shows that the production in the United States of an average kilowatt (kWh) of electricity generates about 1.2 pounds of carbon dioxide. In some localities the emissions are greater, and in others smaller, because different regions produce their electricity from different fuel sources.
An average kilowatt stored in a battery drives an electric car about three miles. For example, the Chevy Volt has a battery capacity of 18.4 kilowatts and a range of 53 miles, while the Tesla has a battery capacity of 85 kilowatts and a range of 265 miles.
So how does this compare to an internal combustion engine? Every gallon of gasoline produces about 20 pounds of CO2 when fully combusted, even though the gallon weighs less than seven pounds. This is explained by the weight of the oxygen needed for the combustion. (The USEIA calculates that a gallon of gasoline free from ethanol produces 19.64 pounds of CO2.)
Based on the USEIA data above, it is clear that an electric car will travel one mile and emit 0.4 pounds of carbon dioxide (1.2pounds/3 miles), while a car with an internal combustion engine that averages 20 miles per gallon will emit about one pound per mile (20 pounds/20 miles). Assuming each vehicle is a typical car driven 10,000 miles per year, then the electric car would produce 6000 pounds less (i.e., 2.7 metric tons less) of carbon emissions, compared to a 20-mpg internal combustion engine car.
The market value of this 2.7 metric tons is under $100 per year. Note, though, that as the miles-per-gallon number increases in a car using an internal combustion engine, it approaches the emission cleanliness of an electric car. An internal combustion-powered vehicle that has a fuel efficiency of 50 miles per gallon will emit the same amount of carbon dioxide per mile as the average electric car using a typical U.S.-produced kilowatt of electricity.
Financial Comparisons
Unfortunately, some individuals are not that much interested in the environmental advantages of electric cars; they are simply financially pragmatic and would be interested in purchasing an electric vehicle provided the initial price premium can be reasonably expected to result in sufficient fuel saving. Again, the facts show, unfortunately, that the electric car premiums are not justified on a cash-flow basis.
Let us look at the scientific figures. The retail price of kilowatts differs substantially from one region of the country to another. In some places, one kilowatt retails for up to $0.26 (e.g., in New York City and neighboring Westchester County, including taxes and surcharges), while in other regions it is under $0.10 (e.g., $.07 in Oklahoma, $.075 in Texas, and $.08 in Virginia) . Charging an electric car in the state of New York is clearly much more expensive than doing so in the state of Oklahoma.
What does this imply? It implies that electric vehicles will probably need a much longer period of time to recapture the initial premium charged by the manufacturers. Based on the above, it is clear that fuel cost for an electric car could be as high as nine cents per mile in some cases and possibly as low as three to four cents per mile in others.
How does this compare to an automobile powered by an internal combustion engine? Assuming an average price of $2.40 for a gallon of unleaded regular and the CAFÉ (corporate average fuel economy as set by the EPA) standard of 35.5 miles per gallon, the average cost of gasoline per mile would be under 7 cents, which is less expensive than the cost of electricity to charge an electric vehicle in areas like New York.
But since not many cars get a 35.5 miles per gallon efficiency, let us assume that an average automobile efficiency of 20 miles per gallon. In this case, the fuel cost per mile would be 12 cents. Such a cost will be only 3 cents per mile more expensive than fueling an electric car in an area like New York City, but 8 cents more expensive than fueling one in such areas as Texas.
So the question is: are the potential fuel savings of an electric vehicle large enough to rationalize the initial $10,000 premium charged by the manufacturer? (General Motors’ manufacturer’s suggested retail price for the Chevrolet Cruze is about $10,000 less than that for the Chevrolet Volt). Unfortunately, the above simple calculations make it clear that no rational person would be willing to pay a premium of about $10,000 in order to actualize savings of about $300-800 per annum.
Conclusion
The electronic vehicle fad is not about to make major inroads into the car market. The vehicles are not zero-emission and their advantages over internal combustion engine cars are limited by both science and tax policy. The average consumer will not pay a premium for a vehicle whose fuel presently results in almost the same volume of carbon emissions as an internal combustion-powered vehicle and whose fuel cost savings cannot justify the high premium being charged by the manufacturers.
This does not mean that there will not be a market for electric vehicles. It only suggests that a mass market for them is highly unlikely under the current conditions. Luxury brands such as Tesla, Mercedes Benz, and BMW would have no problem catering to a niche of conspicuous consumers who are not bothered by high prices and who enjoy a perceived scarcity and quality.
But a mass market of electric vehicles will not develop unless such automobiles consume fuel whose total direct and indirect emissions are less than internal combustion engine vehicles and whose projected annual savings in fuel cost justify the initial price premium. That can be accomplished either through higher gasoline prices or much lower initial price premiums, or a combination of both. This is why I do not think that GM’s Chevrolet Bolt will be a big success in its current format.
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