Total Cost of Ownership Analysis of the Impact of Vehicle Usage on the Economic Viability of Electric Vehicles in India

Abstract

The road transport sector in India is on the cusp of a transition to battery electric vehicles (BEVs) from internal combustion engines (ICEs). Government of India (GoI) has announced several policy measures to push the adoption of electric vehicles (EVs). However, EVs involve a high capital cost but lower operating costs. Therefore, the economics of EVs vis-à-vis ICE vehicles depends on the extent of their daily use. The daily use, in turn, can vary significantly from context to context. In this paper, a model to compare the total cost of ownership (TCO) of an EV with different fuel variants (petrol, diesel, and compressed natural gas [CNG]) of their ICE counterparts is presented. It is found that, on an average, the TCO per km of electric two-wheelers (e-2Ws) and electric three-wheelers (e-3Ws) is less than their ICE counterparts at the typical average daily usage of the vehicles in Indian cities. In the case of hatchback and sedan cars, the TCO per km of electric cars (e-cars) is higher than their ICE counterparts. The TCO per km of electric bus (e-bus) is higher than diesel and CNG buses because of high initial purchase cost. Policymakers need to explore innovative business models and strategy for high vehicle utilization to improve the economic viability of EVs. Efficient planning of charging infrastructure and fast charging options will further help in accelerating the adoption of EVs in India.

A Comparative Evaluation of the Total Cost of Ownership between Electric Two-Wheelers and Motorized Two-Wheelers from an Indian Perspective

“…First, it is found that TCO assessments have been mainly focused on electric cars, and relatively less attention has been directed toward other personal modes of transport such as two-wheelers. Most importantly, the studies on E2W are rather limited in number ( 29 , 34 , 38 ). Although many conclusions can be drawn from those limited studies, the literature still lacks studies comparing the TCO of E2W against M2W alternatives according to different driving and policy-level scenarios.…”

“…Finally, the datasets were cross-checked with users and experts from the two-wheeler industry to validate the reliability of the sources and establish the relative accuracy of the database. Some previous research studies adopted a similar strategy for collecting data from online websites to develop TCO models ( 34 , 38 ). Following compilation of the database, assumptions were made to formulate and estimate the TCO associated with E2W and M2W, and detailed discussions on the process are presented in the following section.…”

“…In several research studies, interest rates have been incorporated into TCO models to estimate the future worth of money. In an earlier research study, Kumar and Chakrabarty ( 38 ) assumed a vehicle holding period of 10 years and an interest rate of 10% for estimating the TCO of all vehicle categories. Similarly, Wu et al ( 28 ) considered a vehicle holding period of six years and an interest rate of 4.1%, based on interest rate provisions with a residual maturity of six years offered by the Deutsche Bundesbank at the time of the study.…”

Sustainable transport: From high carbon to carbon neutral

“…However, studies have shown that from a total cost of ownership (TCO) model, EV solutions can be as economically viable as ICE vehicles (Wu-Inderbitzin-Bening,2015). Studies also show that fleet vehicles with high vehicle utilisation could switch to electric vehicles as an economic and strategic alternative to traditional fleet vehicles (Kumar-Chakrabarty 2020). Contributors such as a relatively cheap energy source, government incentives such as grants, and less maintenance due to fewer electromechanical parts, may be possible reasons for this solution (EDF, 2020).…”

Parameters Influencing on Electric Vehicle Range

“…Another advantage is the much lower cost of ownership of electric vehicles compared to vehicles with internal combustion engines. As shown by the results of TCO analyses presented in [19][20][21][22], the running costs of electric vehicles are much lower than those of internal combustion vehicles.…”