Are battery electric vehicles cost competitive?

The adoption of battery electric vehicles (BEVs) in Germany has seen uneven growth, primarily due to factors such as the total cost of ownership, access to charging infrastructure, and levels of awareness. To ensure that a wide range of consumers can transition from internal combustion engine vehicles (ICEVs) to zero-emission models, it is crucial to address the cost barrier associated with BEVs. Expanding BEV access can lead to lower road transportation emissions, reduced localized air pollution, and continued mobility for those dependent on vehicles.

Published

October 2023

Industry

Electric Vehicles

Author

The ICCT

This report focuses on analyzing the total cost of ownership for new BEVs in Germany, particularly in the context of passenger cars, over a four-year ownership period. Two sets of comparable compact and mini car models were selected for analysis, including the Volkswagen ID.3 Pro (BEV) and the VW Golf VIII Style 2 (ICEV gasoline), as well as the Dacia Spring Extreme Electric 65 (BEV) and the Toyota Aygo X 1.0 (ICEV gasoline). The analysis covers costs such as the base price, value-added tax (VAT), fueling and charging, maintenance, insurance, ownership taxes, and relevant incentives. It focuses on individual consumers and does not consider used vehicles.

A bar chart showing the four-year total cost of ownership for compact and mini car segments from 2023 to 2026 in Germany. It includes Volkswagen ID.3 Pro, Volkswagen Golf Style 2, Dacia Spring Extreme Electric 65, and Toyota Aygo X. The total prices are differentiated by various cost categories such as purchase, fuel/electricity, insurance, tax, and maintenance. — Source: Are battery electric vehicles cost competitive? | The ICCT

Key findings

1.Cost Comparison:

In the compact car segment (C), BEVs are more cost-effective than comparable ICE gasoline models, with BEVs saving over €5,100 across four years. The total cost for the BEV in this segment is approximately €49,900 without the one-time purchase incentive.

In the mini car segment (A), without the one-time purchase incentive, BEVs are around €6,000 more expensive than comparable ICE gasoline models, totaling over €34,00

2. Role of Purchase Incentives:

The current one-time purchase incentive significantly reduces the cost of purchasing BEV models in both segments. It makes the BEV model slightly cheaper than the ICEV model in the mini car segment.

In the A-segment, the incentive lowers the cost from €34,000 to €26,900, making it around €1,100 cheaper than the ICE gasoline model.

In the C-segment, where BEVs were already cheaper, the incentive further reduces the cost to nearly €42,700, making it €12,300 cheaper.

3. Leasing Costs:

Leasing costs over a four-year period are cheaper for the selected BEV models in the compact segment, but not in the mini car segment without incentives.

Leasing an A-segment BEV model is about 15% cheaper than the ICEV, at approximately €16,600.

The one-time purchase incentive also plays a role in making leasing the BEV models more cost-effective compared to ICEVs.

Bar chart showing the four-year total cost of ownership for leasing compact and mini segment vehicles in Germany, comparing Volkswagen ID.3 Pro, Volkswagen Golf, Dacia Spring, and Toyota Aygo. Costs include leasing rates, fuel/electricity, insurance, maintenance, and other. — Source: Are battery electric vehicles cost competitive? | The ICCT

4. Vehicle Ownership Tax and GHG Quota:

Vehicle ownership tax and the greenhouse gas (GHG) quota have a marginal effect on total vehicle costs.

They account for a small percentage of the total costs for both purchasing and leasing BEV and ICEV models.

5. Charging Costs:

In various charging scenarios, BEVs are consistently cheaper to charge than fueling comparable ICE gasoline models.

The total costs over four years increase with greater reliance on public charging.

Regardless of charging strategies, BEVs have lower charging costs compared to ICEVs in the same segment.

6. Impact on Different Income Groups:

For individuals in the lowest income bracket, the annual cost of owning a C-segment BEV represents an unrealistically high share of household net income, around 87% when including the one-time purchase incentive.

In contrast, for the highest income bracket, the annual cost represents 6% of net income.

Even the cheaper A-segment BEV costs around 47% of the yearly household net income for the lowest income bracket when including the incentive.

Source: Are battery electric vehicles cost competitive? | The ICCT

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