U.S. Environment Not the Best for EVs

The enthusiasm is building — we’re just a few months from the U.S. launch of the first electric vehicles aimed at mainstream consumers. Nissan is touting the success of the registration program for its upcoming Leaf EV, boasting 13,000 orders for its vehicles.

It is hoped across the industry (and in Washington DC) that sales of EVs will revive the American auto industry. While Pike Research believes that sales of EVs will grow relatively quickly, EV sales would likely grow much higher if it weren’t for our relatively cheap gasoline.

China will be the global leader in EV sales, with more than a quarter million of EVs sold in 2015, according to our projections at Pike Research. Sales of EVs in Europe – even with fewer homes with convenient access to home charging – are expected to outpace the American market.

As shown in the table below, the cost of fuel in the U.S. is the lowest in the world thanks to lower taxes. While the average cost of electricity is also among the lowest in the world, the relative cost of fuel to electricity is the lowest in the world.

We calculated the annual savings of driving an EV instead of an equivalent passenger car and found that American drivers would save less than half as much (just over $800) by switching to an EV as drivers in Japan, France, Great Britain and Norway, who can save up to $2,000. This model even allows that in Europe, more fuel-efficient cars would be replaced (30 mpg was assumed for vehicles in the U.S., and 35 mpg diesel vehicles in Europe).

This simplistic model does not include the cost of the vehicle or any consumer tax incentives. Still it underscores how much can be saved by operating the vehicle. Smaller annual savings means a longer time to pay back the premium that EV buyers are likely to pay. While many of the early EV owners will be thinking more about the environment (and showing off to their neighbors) than about their wallets when buying, a shorter payback period would help to convince consumers who are more price-sensitive to purchase an EV.

In Europe, gasoline is more than 2.5 times the price in the U.S. thanks to higher taxes. In the EU, seventeen states also charge CO2-related taxes on passenger cars, according to the European Automobile Manufacturers Association.

Major efforts are underway in the U.S. to install charging equipment in metropolitan areas, and federal (up to $7,500) and state incentives will make EVs more affordable to prospective buyers. But raising the gas tax or adding a carbon tax would likely be the most direct route to increasing EV adoption here.

Article by John Gartner appearing courtesy Matter Network

Photo: saebaryo

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One comment on “U.S. Environment Not the Best for EVs


One shortcoming I can see in the model is that its using a national average for the price of electricity in the $US…which ranges from about 6c in Idaho up to 18c in CT and NY (Hawaii is a different story altogether).

And its precisely in places like NY and New England, where electricity prices are high, that higher-density cities and metropolitan areas lend themselves well to EV infrastructure and driving. You don’t have to worry about not finding a place to charge up…like you would if you’re living in the Midwest or the plains.

Now, gas prices in NY and CT are a bit higher than the $2.90 figure too – more like $3.30-$3.50. Still, that’s no where near enough to generate the same kind of savings as they see in Europe, but you could probably expect something more like $1,000 annually.

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