Examining total cost of ownership: electric vs internal combustion engine vehicles
The automotive industry is undergoing a profound transformation, with electric vehicles (EVs) no longer limited to early tech enthusiasts but capturing a broader audience. The surge in EV popularity is fuelled by the introduction of numerous new models and the growing affordability of electric driving. However, as governmental subsidies for EVs gradually decrease, a nuanced scenario emerges, challenging the total cost of ownership (TCO) of battery electric vehicles (BEVs).
In this white paper, we explore the differences in the total cost of ownership of electric vehicles vs internal combustion engine vehicles.
Decoding TCO: exploring cost elements
To compare the TCO for internal combustion engine (ICE) vehicles and EVs, a standardised set of services within an operational lease contract is crucial. These include funding, taxes, maintenance, tires, insurance, and the energy budget, considering either fuel or electricity costs.
Beyond cost elements, the analysis employs a standardised contract duration and mileage to determine costs. As the electric mobility landscape evolves, monitoring advancements in EV technology and charging infrastructure is essential for future TCO assessments.
An examination: BEVs vs. ICEs in 16 countries
Comparing representative ICE models and a basket of BEVs across 16 European countries ensures a fair evaluation. Local factors such as taxation, labour costs, fuel expenditures, and governmental incentives influence leasing costs. This comprehensive study aims to provide nuanced insights into the average leasing costs for ICEs versus BEVs. For a more comprehensive country by country breakdown download the Ayvens Mobility Guide.
TCO factors: examining BEV and ICE affordability
BEVs face higher depreciation and interest costs due to their higher purchase price, while ICE vehicles incur higher fuel expenses. The key challenge lies in the high initial purchase price of BEVs. OEMs' efforts to introduce budget-friendly models, coupled with cost-effective charging solutions, signal a practical transition to electric vehicles.
The TCO analysis underscores the economic viability of BEVs. On average, BEVs consistently outperform comparable ICE vehicles in terms of overall operating costs. The advantages become more pronounced with extended lease duration and increased mileage, driven by reduced road taxes, fuel expenses, and the ability to amortise higher initial investment values over time.
In conclusion, the evolving landscape of electric mobility presents a compelling case for the economic feasibility of BEVs. As technology advances and infrastructure improves, the shift towards electric vehicles is not only environmentally conscious but also increasingly economical for a growing number of consumers.
LeasePlan Emirates is part of Ayvens Group and and will rebrand to Ayvens in 2024.
