The EV Wedge: How Electric Vehicle Fuel Savings Vary By Country (and car)

by Lindsay Wilson in Travel

EV wedge

Have you ever heard of the EV Wedge?

No?  Me neither. Let’s try to define it then.

If you’d asked me to define the ‘Electric Vehicle Wedge’ a few years ago I would have chuckled a little, and suggested it was the small pile of cash you needed to afford one.  But due to falling EV prices and rising gasoline prices that snark is utterly outdated.

In almost all countries it is cheaper to power an electric vehicle than fuel a gasoline car.  The cost gap between these two fueling options is what I like to call the EV Wedge .  In some countries this wedge is so damn big that EV drivers can’t sit straight for all the cash in their wallet.

Comparing Gasoline and Electric Fuel Costs

This post provides a cheap and cheerful comparison of fuel costs for electric vehicles and gasoline cars.  To keep it simple I thought we’d look at the costs of fuel for driving 10,000 miles.  This is about 25% less than Americans drive each year, or 20% more than Europeans.

The graph below compares the fuel costs of driving 10,000 miles in a Nissan Leaf (electric) and Toyota Prius (gasoline hybrid).  I’ve shown this graph first so we can see how the fuel savings are calculated.  It also shows us that both the electricity price and gasoline price are relevant when estimating the fuel savings.

Electric vs gasoline fuel costs

The first thing to note is that the fuel cost of driving a Prius is greater than the Leaf in all 12 countries we collected data for.  The variation between both electricity and gasoline prices across countries is enormous.

In countries where gasoline is expensive, like Turkey and Norway, the fuel cost for driving a Prius 10,000 miles is pushing $2,000 whereas in Saudi it is just $120.  The fuel cost of driving the Leaf 10,000 miles varies greatly too. From as high as $980 in Germany down to $116 in Saudi.

The difference between the gasoline and electricity costs is what I call the EV Wedge.  By showing this graph first we can see that in places like Germany and Australia high electricity costs can eat into the wedge.  Where electricity prices are high savvy EV owners look to solar, or time of use pricing, to drive down their charging costs.

The EV Wedge: Nissan Leaf vs Toyota Prius

In each of the last three months of 2013 the most popular new car in Norway was either the Nissan Leaf or Tesla Model S.  There are loads of reasons behind this, including no purchasing tax, free tolls and access to bus lanes.  On top of this the EV Wedge is enormous!!

Here’s the data we looked at above but now purely looking at the fuels savings, the wedge that is.

EVwedgeprius

Over the course of driving 10,000 miles a Prius driver in Norway spends $1,544 more on fuel than a Leaf driver.  In Turkey that figure is $1,360, in the UK it’s $986, in the US it’s $410 and in Saudi it’s just $5.  Just add a zero and you’ve got the fuel savings for 100,000 miles assuming constant prices (the problem with any lifetime comparison).

All the figures assume the typical combined fuel economy for each car and the 2012 average prices for gasoline and electricity in each country. In cases where the electricity used to charge is cheaper than the household grid average this figure will be greater.  This is actually a really important point because typically a majority of EV owners use off-peak charging when available.

In the comparison above we’ve compared two compact hatchbacks.  But the 50 MPG Prius is actually pretty damn efficient for a gasoline car.  The EV Wedge only gets bigger when you start comparing less efficient petrol cars to electrics.

The EV Wedge: Nissan Leaf vs Toyota Camry

I know that the Toyota Camry is a bigger car than a Leaf but I find this a fun comparison.  It is basically America’s most popular electric car (the Leaf) against its most popular sedan (the Camry).  Unlike the Prius, the Camry only gets 28 MPG.  So the fuel savings from driving a Leaf are considerable.

EV Wedge Camry

When you compare the fuel costs of the Nissan Leaf to a less efficient petrol vehicle like the 28 MPG Camry they really start to stack up pretty quickly. Don’t get hung up on it being an American Camry, these figures hold for any 28 MPG car gasoline car.

In European countries where taxes on petrol are high the savings from going electric are considerable.  The fuel savings of driving a Leaf instead of a 28 MPG petrol car in the UK are $2,260 for each 10,000 miles.  Even in the US where gasoline is relatively cheap there is a $1,000 saving.

Finally, just for a laugh let’s run the numbers for some luxury cars.

The EV Wedge: Tesla Model S vs Mercedes

I know very little about luxury cars.  I’m not even sure if someone spending $100,000 on a car really cares much about fuel costs.  I’m guessing they love the Tesla because of the torque and the ride.  But then again I may be wrong.

You see the Tesla Model S has topped monthly sales in Norway twice recently.  Not just for electric cars, but for all cars. The tax exemption for buying is no doubt a big deal.  As is the ride.

But just check out these fuel savings for the Tesla Model S compared to the 19 MPG Mercedes 550S.

EVwedgetesla

Not only do Tesla Model S drivers enjoy the pleasure of driving the best car Consumer Reports have ever tested, but in Norway they’ll be able to buy the next one using fuel savings from their first.

Throw in some very modest rises in petrol price over the next decade and a Norwegian Tesla driver will save more than the purchase price by the time they’ve driven 150,000 miles.  Even for places like the UK, France and Germany the figures are pretty impressive.

When you consider that Tesla offers free supercharging in many places you start to see why they have waiting lists. With free electricity the US fuel savings versus the 19 MPG Mercedes jump to $2,000 per 10,000 miles.  In the UK, France and Germany they go above $4,000.  In Norway and Turkey it’s above $5,000.

Curiously I actually think the graph above will eventually be more important for the Pickup Truck market than it is for luxury cars. You see those numbers aren’t far off what the sums might look like for a ‘Tesla Truck‘ vs a Ford F-Series.  And while we may be a few years away from batteries cheap enough to justify electric trucks their potential for fuel savings is just colossal when you consider a F-150 gets 19 MPG.

What to make of the EV Wedge?

To keep this post a bit of fun I avoided delving into lifetime cost comparisons and the fuzzy assumptions they involve.  Instead I’m just trying to point out something that should be clear by now.  Powering a car with electricity is cheaper than fueling it with gasoline (unless you live in Caracas).

Here are some basic takeaways:

  • Gas prices are key: the higher the gasoline price the bigger your potential savings are.  This makes electric cars attractive in Europe.
  • Electricity prices also matter: the potential benefits of going electric can be eroded by high electricity prices.  Germany and Australia are good examples.
  • Fuel economy matters too: the poorer the fuel economy of the car you are switching from the bigger your fuel savings will be.  You can see this in the more than doubling of the wedge between the Prius and the Camry.

Because of the varying differentials between gasoline and electricity prices the fuel savings from going electric vary massively from place to place.  But in general the economics for electric vehicles just keep getting better.

If you’re looking at buying an electric vehicle in a couple of years when prices drop some more there is something worth thinking about.  You see electric vehicles are a bit like solar was a few years ago.  There are currently some very attractive grants and tax breaks that take some pain out of the purchase price, and this means EVs look great from a lifetime cost perspective.

As battery prices keep falling and production scales increase there is a good chance electric cars will keep getting cheaper.  As prices go down and sales go up the current level of subsidy will make less and less sense for governments, just as it did for high feed-in tariffs with solar.  In fact in some places they already seem too attractive.

If I was in the market for an electric vehicle I’d be keeping a very close watch on my local EV grants, tax rebates or other incentives.

If I lived in Norway I’d be on a waiting list, because it would also cut a lot of carbon.

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    • OPatrick

      I’m not sure what benefit there is to looking at fuel costs without at least including replacement costs for batteries. On my electric scooter, direct fuel costs are about 1p per mile (I get just over 10 miles from 1kWh charge), but including the replacement costs of batteries this rises to between 5p and 10p per mile, depending on what level of range reduction I’m prepared to accept before the batteries need replacing. Over all this still puts my electric scooter on roughly equivalent lifetime cost per mile with the petrol equivalent – and that’s without any of the ‘attractive grants and tax breaks’!

      • Lindsay Wilson

        I’m just trying to highlight the savings, might do some full lifetime cost comparisons another time. The reason I didn’t add things like the vehicle price, subsidies and battery costs is that they are so different from country to country. Forecasting out gasoline prices also makes a mess

        • Sustainable Routes

          It would also be useful to factor in purchasing price, as EVs are currently significantly more expensive than similar fossil fueled cars. One way to show this would be the variation in payback period between countries, based on 10k miles per year. Look forward to your life cycle analysis.

      • Randy

        EVs cost less in maintenance than ICEV, even when battery replacement is included. People who buy new cars like the Leaf and Prius do NOT usually keep them until they need replaced either, they sell them in 3-10 years and buy a new one. Someone else then has to worry about the maintenance..

    • http://www.EcoReality.org/wiki/User:Jan_Steinman Jan Steinman

      At some point, governments are going to start looking to replace lost highway tax, which is typically collected at the gas pump, but not at the electric meter. Without the highway tax, road maintenance will suffer. So this is an “EV subsidy” that is unsustainable.

      Any thoughts on how this “wedge” would look if a proper amount of highway tax were allocated to EVs?

      • Lindsay Wilson

        That is going to be an interesting one down the line. In the expensive European countries tax makes up more than half the price at the pump, although that is far more than is used on roads. At the other end their is no road tax in pump prices. Needs to be balanced against proper pricing of carbon too. Interesting point, a much harder tax to implement than purely on gasoline

      • Randy

        Inflation has cut the gasoline tax by over half. Increased fuel efficiency and BEVs have very little impact in comparison.

        However, the health, military, environmental, and social costs of oil is FAR higher than the last gas tax revenues.. Oil gets a lot more indirect subsidies this way.

    • Pieter Siegers

      Thanks for this article Lindsay, I guess the idea is clear, time will tell how things like taxes and battery replacements costs work out in reality. The main idea is to know we’re heading towards cleaner cars and this will help us lower carbon emissions, which is simply necessary to continue living on this planet. Incentives are not such a good idea, it is better to let the polluters pay more and use this money to lower production costs by increasing production volume and by bettering battery specs.

      • Lindsay Wilson

        I don’t mind incentives in the early stages, but they can quickly become too expensive and counterproductive as the tech improves. As an economist I’d obviously prefer wide ranging carbon taxation but as you know its politically tough. I think revenue neutrality is preferable to sell carbon pricing, but you can make innovation arguments against that. I’m much more optimistic about EVs than I was a few years ago

        • Pieter Siegers

          Yeah me too! I work and live in Mexico and we really need to lower fossil fuel emissions around here, but it seems EVs are still very far away here!

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    • Robert

      One thing that your article doesn’t mention that I am sure applies to many is the range of your typical EV. I can get in my expensive gasoline powered car and drive from here (NS) to Montreal in about 13 hours. How many stops would I have to make to recharge (and how much time) on a similar 1100 km trip?

      • OPatrick

        For that journey your petrol car wold be better suited – although a train or bus would probably be better still as you could get on with something else while someone else does the driving. However, for most people 99% of their journeys are just as well suited to an electric vehicle as a petrol one. Range anxiety anxiety is a much bigger problem than range anxiety itself.

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