My father has a VW Polo petrol since 2016. Being a retired man, he does not drive much. But he wants to get rid of the hassle of going to fuel stations to get the car refueled. Moreover, he also wants to contribute (carbon Footprint) by switching to an EV. Hence, he proposed to change the car from Petrol to an EV. Being an Ex Tata, theTata Nexon EV Max (2023)is his pick. So I thought to check the economics of driving electric vehicles (EVs).
People who are looking to change cars now are definitely considering the option of an Electric Vehicle (EV). This is more relevant to those buyers whose preference is a hatchback or a compact SUV. Currently, there arebudget EVs on offer by Tata and Mahindra. These cars are available at an on-road price ranging between Rs.12 to Rs.20 Lakhs.
Comparing the cost of purchase of EVs with their Petrol and Diesel Automatic variants, petrol and diesel cars are 30% cheaper. However, the cost of charging and maintenance of EVs is very low.
So, on one side we have EVs whose one-time purchase cost is about 30% higher. Then there are petrol and diesel cars whose cost of refueling is about 4 times higher than that of EVs.
The economics of driving electric vehicles (EVs) are influenced by various factors, and they can offer several financial advantages compared to traditional gasoline or diesel-powered vehicles. Here are some key economic considerations when it comes to EVs:
Lower Fuel Costs: EVs are generally cheaper to fuel compared to internal combustion engine (ICE) vehicles. Electricity is often less expensive than gasoline or diesel on a per-mile basis.
Maintenance Savings: EVs have fewer moving parts than ICE vehicles, resulting in lower maintenance costs. There is no need for oil changes, and brake wear is reduced due to regenerative braking systems.
Initial Cost: While the purchase price of some EVs can be higher than their ICE counterparts, this gap is narrowing as technology advances and economies of scale come into play.
Government Incentives: Many governments offer financial incentives to encourage EV adoption, such as tax credits, rebates, or reduced registration fees. These incentives can significantly reduce the upfront cost of an EV.
Depreciation: EVs often experience faster initial depreciation compared to ICE vehicles. However, their resale value can stabilize and even improve over time as the market matures and demand for used EVs increases.
Charging Costs: Home charging is convenient and cost-effective, but the availability and cost of public charging stations can vary by location. Understanding the charging infrastructure in your area is essential for cost management.
Battery Degradation: Over time, EV batteries can experience degradation, which reduces their capacity and range. Manufacturers typically provide warranties that cover battery performance for a certain number of years or miles.
Emissions and Sustainability: EVs produce zero tailpipe emissions, which can lead to environmental benefits and may result in long-term cost savings related to environmental regulations and carbon pricing.
Consider the TCO of an EV over its lifespan, factoring in purchase price, fuel or electricity costs, maintenance, incentives, and resale value. TCO analysis can help determine whether an EV is cost-effective for your specific circumstances.
Assess your daily driving habits, including commuting distances and travel frequency. EVs are well-suited for daily commuting and short to moderate-distance travel. Longer trips may require more planning due to charging infrastructure limitations.
Evaluate your budget, financing options, and the availability of loans or leases for EVs. Consider how an EV purchase fits into your overall financial plan.
Insurance rates for EVs can vary depending on factors like the make and model of the vehicle, your driving history, and location. Compare insurance quotes to find the best rates.
In summary, the economics of driving electric vehicles can be favorable due to lower operating costs, potential government incentives, and environmental benefits. However, the decision to switch to an EV should be based on your individual circumstances, including your budget, driving patterns, and access to charging infrastructure. Conducting a thorough cost analysis and considering the long-term benefits can help you make an informed decision about whether an EV is right for you.
There are two use cases of cars for us. The first is for office commuting and the second for long trips. I’m not considering the use case of cars as a taxi.
Office Commute: The car is mainly used for office commuting within the city. To travel longer distances, there is another car available. For such a use case, I’m assuming a budget EV with a range of 200 KM will be sufficient.
Long Trips: Here the car is also used for longer trips, say on weekends. For this type of use, I’m assuming a budget EV with a range of 350 KM will be necessary.
Our next step will be to select a budget EV that matches the above two requirements.
Primarily, we’ll consider only the budget EVs available in the market. We’ll pick only that EV whose Petrol/Diesel variants are also available. This way, we can make an apple-to-apple comparison.
Office Commute: For this type of commute, we can pick Tata Nexon EV Prime. This car can offer a range of about 250 km on a full charge. If the person wants to avail a more economical car, then the Tata Tiago EV is a more budget-friendly car with a range of 210 Km.
Long Trips: For this type of commute, we will pick the Tata Nexon EV Max. Its range on full charge is 350 km. Here I’m assuming that a long trip is about 150 km on one side.
These EVs will be compared with two similar cars running on traditional fuels, Tata Nexon Petrol AMT and Diesel AMT.
Please note that EVs inherently have an automatic transmission. Hence to have an even match of cars from the Petrol and Diesel segments, I’ve referred only to the automatic variants (AMT) for comparison purposes.
Using these costs as our basis, we will calculate the cost of owning the car for a five-year period. In these five years, only the cost of purchasing a new car is a one-time expense. All the other three costs are of recurring in nature.
I’ve assumed only a five-year period as ownership because I’m assuming that the battery health will be best during this period only. After five years, the charging speed and charge retention quality will substantially go down. Hence, the end of the fifth year is the time to change the car.
In this section, we’ll calculate the cost of driving a petrol and a diesel car. In this calculation, I’ve assumed the following:
Car Make and Model: Tata Nexon
Years for this the car is used for commuting: 5 Years
Kilometer run each year: 6,000 KM
Fuel Efficiency (Km/Ltr): 12 (petrol) and 13.5 (diesel)
Fuel Rate (Rs./Ltr): 110 (petrol) and 95 (diesel)
Service cost (Rs./year): 8000 (petrol) and 9500 (diesel)
Insurance (IDV): Average for 4 years 55% of the on-road cost
Insurance (Premium): 1.91% of IDV
With these as our assumption, the total cost of driving petrol and diesel cars is as below:
.
Car Brand
–
Tata Nexon
Tata Nexon
.
Transmission
–
Petrol-AMT
Diesel-AMT
.
Model
–
XZA Plus LUXS DT
XZA Plus LUXS DT
A
Fuel Cost / 5 Yrs
Rs.
2,75,000
2,11,111
B
Service Cost / 5 Yrs
Rs.
40,000
47,500
C
Avg. Insurance Cost / 5 Year
Rs.
65,467
73,661
D
On Road Cost
Rs.
15,58,000
17,53,000
.
Toatal Cost (A+B+C+D)
Rs.
19,38,467
20,85,272
Tata Nexon Petrol (AMT): The on-road cost of this car is about 15,58,000. Taking into consideration the kilometers run, fuel consumption, annual maintenance, and insurance cost, the total cost to run this vehicle for five (5) years, is about Rs.19,38,467.
Tata Nexon Diesel (AMT): The on-road cost of this car is about 17,53,000. It is 12.5% more expensive than the Petrol variant. Though the total cost of refueling the diesel car variant, in a 5-year period, is 23% less than petrol. But the car is also expensive in terms of servicing cost and insurance. Hence, the total cost to run this vehicle for five (5) years, is about Rs.20,85,272 (7.5% higher than its petrol variant).
An Electric Vehicle (EV) is a type of vehicle that is powered by electricity rather than internal combustion engines (ICEs) fueled by gasoline or diesel. EVs use electric motors and rechargeable batteries or other energy storage devices to propel the vehicle and provide power to accessories. They are known for their environmental benefits and energy efficiency. Here are some key points about electric vehicles:
Battery Electric Vehicles (BEVs): These vehicles are solely powered by electricity stored in high-capacity batteries. They have no internal combustion engine and produce zero tailpipe emissions.
Plug-in Hybrid Electric Vehicles (PHEVs): PHEVs combine an electric motor with a gasoline or diesel engine. They can be charged from an external source and operate on electricity for a limited range before the internal combustion engine takes over.
Hybrid Electric Vehicles (HEVs): HEVs have both an electric motor and an internal combustion engine, but they cannot be charged externally. The electric motor assists the engine to improve fuel efficiency.
Zero Emissions: BEVs produce no tailpipe emissions, contributing to reduced air pollution and greenhouse gas emissions.
Energy Efficiency: EVs are highly energy-efficient, with a significant portion of the energy from the electricity grid converted into vehicle movement.
Reduced Operating Costs: EVs generally have lower operating costs compared to ICE vehicles due to lower fuel costs and reduced maintenance requirements.
Quiet Operation: EVs are quieter than traditional vehicles, reducing noise pollution in urban areas.
EVs are typically charged using electric vehicle charging stations, which can vary in speed and availability. Charging options include home charging, workplace charging, and public charging stations.
Range: The distance an EV can travel on a single charge depends on the vehicle’s battery capacity. Advances in battery technology are continually increasing the range of EVs.
Government Incentives: Many governments offer incentives to promote the adoption of electric vehicles, including tax credits, rebates, and reduced registration fees.
While EVs produce no tailpipe emissions, the environmental impact depends on the source of electricity generation. EVs are cleaner when charged using renewable energy sources.
Battery production and disposal also have environmental considerations, including resource extraction and recycling.
Market Growth: The adoption of EVs is growing globally, with many automakers investing in EV development and expanding their electric vehicle model offerings.
Cost Considerations: While the upfront cost of some EVs can be higher than that of traditional vehicles, lower operating costs and potential incentives can offset the initial investment.
Maintenance: EVs typically require less maintenance than ICE vehicles because they have fewer moving parts, no need for oil changes, and regenerative braking systems that reduce wear on brakes.
Electric vehicles play a crucial role in reducing the environmental impact of transportation and transitioning to a more sustainable and clean energy future. As technology continues to advance and charging infrastructure improves, the adoption of EVs is expected to increase, making them a significant part of the automotive landscape.
Let’s look at the economics of driving electric vehicles (EVs). For that, we’ll compare the cost of running EVs over petrol and diesel cars.
Tata Nexon EV (Price): The on-road cost of this car is about 18,20,000 (16.8% higher than the Petrol variant). However, the total cost of charging the batteries, in a 5-year period, is 85% less than the cost of refueling its petrol variant (Rs.41,182 vs. Rs.2,75,000). The car is also cheap in terms of servicing cost and insurance. Hence, the total cost to run this vehicle for five (5) years, is about Rs.19,91,563 (only 2.7% higher than petrol).
Tata Nexon Diesel (AMT): The on-road cost of this car is about 20,10,000 (29% higher than the Petrol variant). However, the total cost of charging the batteries, in a 5-year period, is 85.6% less than the cost of refueling its petrol variant (Rs.39,448 vs. Rs.2,75,000). The car is also cheap to service and get insured. But still, the total cost to run this vehicle for five (5) years, is about Rs.21,89,265 (13% higher than petrol).
So we can conclude that if the average run of the car is about 6000 Kilometers in a year, a petrol car is still more cost-effective. Though the Nexon EV (Prime) is proving only 2.7% costlier than Petrol.
So for people who want to use their cars only for office commuting, where the average commute per year is close to 6000 km a day, a Tata Nexon Petrol is best. But if you are okay with spending that 2.7 % extra in a 5-year period, Tata Nexon EV (Prime) is also a suitable option.
A better car for office commuting is Tata Tiago EV. The cost of running this car is a 5-year period, is 27.4% less than even Tata Nexon Petrol (AMT). What makes this car moe cost effective for everyday office commuting is its lower on-road cost. Though it must be kept in mind that Tata Tiago will only go about 210 Km on a full battery. Hence, it is only suitable for shorter rides withing the city.
For people who cannot compromise on long hauls with their Electric Cars (EVs), a more suitable option is the Tata Nexon EV (Max). Though the total cost of purchasing, running, maintaining, and insuring this car is higher (10% more) than the EV-Prime, still it is a better buy. The EV-Prime has only a 250 Km range compared to the 350 Km range of the EV-Max. For long trips on expressway types of roads, the range of 350 Km is more apt.
What happens if a person covers more than 6000 kilometers in a year? Will the situation remain the same? Petrol cars will still dominate the EVs and Diesel cars?
For people who use their cars for more than 7,000 km in a year, the Tata Nexon EV-Prime becomes a more economical car than its Petrol variant. Above 13,000 Km in a year, the Tata Nexon EV-Max has become the second most affordable car.
But if someone is not bent on using their EV car for long drives, the most economical car in this case becomes the Tata Tiago EV.
