Comments due on or before Nov. 19, 2016
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 what is the major fuel consumption difference between an internal combustion engine (ICE) and an electrically driven vehicle (EV). There is some truth in the popular belief that EV is overall more environmentally friendly than ICE but what is crucial is to understand clearly that there are some factors that can diminish and even eliminate the perceived advantage of an EV, namely how the electricity was generated and its retail cost. On the other hand the advantage of an EV can be enhanced through producing cleaner electricity ; from natural gas, solar, wind or even nuclear; and through higher prices for gasoline at the pump due to higher taxes.
The following are some facts that are 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 (TSLA), Nissan Leaf (NSANY), Chevrolet Volt (GM) or any of the other EV vehicles does not emit directly any CO2 while operating the EV vehicle. But the electricity does not get generated from thin air. If the electricity is being produced by a coal fired power plant or any other fossil fuel then the electric power used to charge the batteries of EV vehicles would not result in any significant decrease of CO2 emissions. Many studies have actually shown that in many cases CO2 emissions would actually increase.
In the US the production of an average KWH of electricity generates about 1.2 pounds of CO2 (as per data from US Energy Information Administration). In some localities the emissions are greater and in others smaller than that since different regions produce electricity from different fuel sources. Furthermore an average KWH stored in a battery drives an EV about 3 miles. EX. VOLT has a battery whose capacity is 18.4 KWH and a range of 53 miles while the 85 KWH in a Tesla has 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 although the gallon weighs less than 7 pounds. That is explained by the weight of the oxygen that is needed for the combustion.(USEIA calculates that a gallon of gasoline free from ethanol produces 19.64 pounds of CO2)
Based on the above it is clear that an EV vehicle will travel 1 mile and emit 0.4 pounds of CO2 (1.2pounds/3 miles) while an ICE vehicle that averages 20 mpg emits about 1 pound per mile (20 ponds/20 miles). If a typical vehicle is to be operated for 10,000 miles a year then an EV vehicle would produce 6000 less pounds pf CO2 compared to a 20mpg ICE car. The market value of this 2.7 metric tons of CO2 is under $100 per year. Note though, that as the mpg increases in an ICE vehicle then it approaches the emission cleanliness of an EV. Actually an ICE powered vehicle that has a fuel efficiency of 50 mpg will emit the same amount of CO2 per mile as the average EV vehicle using a typical US produced KWH of electricity.
Unfortunately some individuals are not that much interested in the environmental advantages of EV over Ice but are more financially pragmatic, they would be interested in an EV purchase provided that the initial price premium can be reasonably expected to result in sufficient fuel saving. Again the facts show, unfortunately, that the EV premiums are not justified on a cash flow basis. Let us look at the scientific figures:
Retail price of KWH differs substantially from one region of the country to another. In some cases a KWH retails for up to $0.26 cents (NYC and Westchester including taxes and surcharges) while in other regions it is under $0.1 (Oklahoma 0.0706; Texas 0.076; Virginia 0.081).Clearly, charging an EV in the state of NY is much more expensive than the state of Oklahoma. This implies that EV’s 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 EV could be as high as 9 cents per mile and possibly as low as 3.5-4 cents a mile in some cases. How does this compare to an ICE powered automobile? Assume an average price of $2.4 for a gallon of unleaded regular and the CAFÉ standard of 35.5 mpg (Corporate Average Fuel Economy as set by the EPA) then the average cost of gasoline per mile would be under 7 cents which is less expensive than the cost of electricity to charge an EV in areas like NY. But since not many cars get the 35.5 mpg efficiency let us assume that the average automobile achieves an efficiency of 20 mpg. In this case the fuel cost per mile would be 12 cents. Such a cost will be only 3 cent per mile more expensive than the fuel cost for an EV in an area similar to that of NYC but it could be 8 cents more expensive than fueling an EV in such areas as Texas. So are the potential fuel savings of an EV vehicle large enough to rationalize the initial $10,000 premium for an EV charged by the manufacturer? (General Motors’ MSRP for the Chevrolet Cruze is about $10,000 less than that for a 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.
The EV fad is not about to make major inroads into the car market. Its vehicles are not zero emissions and their advantages over ICE are limited by science as well as tax policy.The average consumer will not pay a premium for a vehicle whose fuel results in almost the same volume of CO2 emissions as an ICE 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 EV vehicles. It only suggests that a mass market for EVs is highly unlikely under the current conditions. Luxury brands such as Tesla, Mercedes Benz and BMW would have no problem catering to a small niche of conspicuous consumers that are driven by high prices, scarcity and perceived quality. A mass market of EV vehicles will not develop unless such automobiles consume fuel whose total direct and indirect emissions are less than ICE 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 premium or a combination of both. This is why I do not think that the BOLT by the Chevrolet division of General Motors (GM) will be a big success in its current format.