Lifetime Ownership Costs Lower For EVs Than ICE Vehicles: BloombergNEF

Electric vehicles in India have lower lifetime costs of ownership as compared to their Internal Combustion Engine (ICE) counterparts in most segments, as per a new study by BloombergNEF. The study mentions that this lower Total Cost of Ownership (TCO) will help increase the adoption of EVs, especially for low-speed two- and three-wheelers. 

The study also mentions that this lower TCO favours EVs which are used for urban deliveries, ride-hailing services and intra-city transportation. Vehicles used in these are driven extensively, so getting a lower cost of ownership helps reduce the daily running costs of these vehicles as well. 

However, EV adoption in India will still take a bit of effort. The study mentions that consumers are still concerned about the resale values of the EVs and since it has only recently started gaining traction, it becomes a bit difficult to gauge what the used car market will be like for EVs. Other hindrances consumers face in the adoption of EVs are the availability of charging infrastructure and the lack of affordable financing.

BloombergNEF’s latest study estimates that by 2027, EVs will become the most affordable option (in terms of TCO) in the small car segment in India. As of now, EVs are already cheaper in TCO in the lower end of the segment compared to ICE vehicles. In the ride-hailing segment, CNG-powered vehicles already have the lowest TCO and drivers (who are often also the owners of these vehicles) prefer CNG due to its lower upfront costs and better refuelling infrastructure. 

The study also states that electric buses and commercial vehicles have already started to achieve lower TCO than their diesel or CNG-powered counterparts. As per the study, if an electric bus covers 250 km in a single day, its TCO is 26 per cent lower than its diesel counterpart, and the benefit increases to up to 31 per cent if the e-bus covers around 300 km. In light-duty commercial areas, EVs have already become the most economical choice due to declining battery costs, modest driving range and the penalties for diesel-powered trucks in cities. Furthermore, BloombergNEF states that large electric trucks will only break even on TCO compared to diesel trucks after 2030. 

BloombergNEF also states that electric three-wheelers have already trumped their ICE counterparts in terms of costs of ownership. This has happened in the low-speed, entry-level segment. However, the adoption of high-speed three-wheeler EVs may take some time due to higher upfront prices and limited financing options. 

The running costs of EVs are also less than that of ICE vehicles. ICE SUVs have running costs of over ₹20 per km, while electric SUVs’ running costs are less than ₹20 per km. Similarly, the running costs of cars are almost ₹15 per km, but their electric counterparts have running costs of just over ₹10 per km. 

Lastly, the study outlines the fact the lower TCO of electric vehicles in mass market segments may not be enough to attract newer buyers. BloombergNEF’s study states better after-sales as well as charging infrastructure is required to convince more buyers to switch sides from ICE vehicles to EVs.