Electric Car Costs

As the p.r. campaign for the Nissan Leaf starts to heat up, we're going to be hearing about cost comparisons between electric vehicles (EVs) and existing types.

Here in Seattle, electricity costs 9.14 cents per kilowatt hour (kWh). The Leaf will use 24 kWh to go 100 miles, which works out to a fuel cost of $2.20 for 100 miles, or 2.2 cents per mile. Gas is on the expensive side here, at $3 a gallon for regular. For a gas-fueled Japanese compact of Leaf's size, I'd estimate 30 miles per gallon, which is $10 for 100 miles or 10 cents a mile. The new diesels get 50 miles a gallon, and hybrids range from 40 mpg to 50 mpg, making their cost per mile 5 cents to 6 cents.

So, the Leaf kicks ass, right?

Not so fast. The Leaf's "gas tank" is a lithium-ion battery, and they wear out. Nissan says it will lease the batteries separately. It's reasonable to include those leasing charges in the fuel costs. Nissan hasn't said what the lease rate will be. In Seattle, the break-even point relative to a gas car would be $78 a month in typical use (12,000 miles a year), and $28 a month relative to a diesel.

Hybrids Use Batteries Too

Even though hybrid batteries aren't leased, their replacement cost is properly included in fuel costs. How much are those costs? Hard to say. A new one from the dealer costs $3,500 including installation, but no one knows how long they last. Toyota warranties the Prius battery for 8 years/100,000 miles, and the word seems to be that in normal use they last quite a bit longer.

There are a few ways to skin that cat. One would be to assume that a typical buyer of a new Prius would never have to replace a battery, and therefore the Leaf's battery leasing break-even point relative to a hybrid would be the same $28/month relative to a diesel. Some other hybrids get closer to 40 mpg, so the Leaf battery lease break-even points relative to them would be $50 or $55 a month. Another method would be to add a penny or two a mile to hybrid fuel costs (and therefore $10 or $20 a month to Leaf break-even battery leasing rates relative to hybrids) to reflect the reduced value of a used hybrid emanating from the buyer's realization that he will be on the hook to swap out the battery.

In the real world, the battery cost issue doesn't look like much of a problem for the hybrids. All of this might be cause for Nissan to forget about battery leasing and grant the same warranty that Toyota does. In that case, there'd be no leasing charge to add onto fuel costs and the fuel cost comparisons would look great. Could it be that the leasing idea is just a security blanket for customers worried about battery life? If so, then Nissan's leasing fee should be nominal, no more than $5 or $10 a month.

The alternative might lie in the nature of a true EV's battery versus a hybrid's battery. As the sole power source, an EV's battery is larger, heavier, and more expensive than a hybrid's. What about its longevity? The gas engine in a hybrid could mask battery run-down in a way that would be impossible in a true EV.  Nissan will have a pretty good idea along those lines, so to the extent that battery leasing charges are more than nominal, the message will be that EV batteries won't last very long.

Other Gas/Diesel Costs

Anyone who thinks that the price of gas at the pump reflects its full cost is either blind, crazy, or Dick Cheney. Some time ago, I calculated the cost of the wars in Iraq and Afghanistan at 60 cents a gallon, or 2 cents a mile for gas cars and 1 cent for diesels. You'd probably have to double that cost in real life, to reflect opportunity costs, i.e., the benefits lost by not deploying the same resources in the productive economy.

So, we ought to raise the cost of gas to 14 cents a mile and diesel to 7 cents a mile. Which does not include the cost of the tears from the families of the dead in those wars, the agony of the wounded, the stress of division at home, or the irritation of having to learn about why Sunnis and Shiites hate each other and the Pashtuns hate us.

Then there is pollution, both smog that aggravates heart disease and asthma, and carbon dioxide that causes global warming. Gas and diesel are culprits, but so are the coal-fired power plants that will make electric cars go. My strong gut feeling is that internal combustion engines, in the aggregate, are worse for the environment than coal fired plants, but I don't know the numbers.

Of course, if we had good leadership, a reasonably clean government, and clear vision, we'd erect windmills to provide the fuel for EVs. But that is almost certainly an impossible dream, given the sorry state that we're in. Alas, for the foreseeable future, just about everyone outside of hydro-powered Seattle is going to have to assume that EVs will add to pollution generated by coal-fired power plants, and waste from nuclear plants.

The Bottom Line

Nissan has said that the cost of battery leases will not bring fuel costs for its Leaf above that of gas-powered cars. Nevertheless, I expect that the first Leaf will not be a value proposition. It'll cost more than a conventional car, and I expect that fully-loaded fuel costs will be higher than a diesel and close to those of a gas-powered model, if not higher.

But that's not unusual for the first version of a new technology. Over time, I expect the comparison to move inexorably in favor EVs, as gasoline gets more expensive and volume production of EVs and components brings costs down. EV mechanics are radically simpler than gas and diesel vehicles, and hybrid batteries are already getting cheaper. Alternative forms of electricity storage -- larger-scale capacitors -- are on the drawing boards, and they'll be cheaper and offer much better range.

You can expect the oil companies to mount a stealth p.r. blitz against EVs soon. All kinds of numbers will be thrown around. Whopping lies will be told, and the stenographers of the media will be all too happy to pass 'em along under the guise of "reporting" on the "controversy behind the numbers." But from what I now know, I'll be in the EV camp.

Addendum: "Miles Per Gallon"

EVs face an issue when making fuel economy comparisons with conventional vehicles. Because a true EV doesn't use any gas, any "miles per gallon" figure is theoretical, based solely on comparing the costs of electricity and gasoline. And then there is the battery cost issue; should that be included in an "mpg" figure, or not?

At 2.2 cents a mile for electricity, and gas at $3 a gallon, and without battery leasing or replacement included, the Nissan Leaf gets "136 mpg." If gas goes to $4 a gallon and electricity stays the same, then the Leaf gets "181 mpg." In the summer of 2007, I paid $5 a gallon for regular at a station near L.A. That year, the Leaf would have gotten "227 mpg." All without using a drop of gasoline.

The point: Beware of "MPG" claims for pure EVs. Think "fuel cost per mile" instead.