Publication Detail

Brief: Cost of Vehicle Ownership: Cost Parity Between Plug-in Electric Vehicles and Conventional Vehicles Is at Least a Decade Away



National Center for Sustainable Transportation

Suggested Citation:
Chakraborty, Debapriya, Koral Buch, Gil Tal (2021) Brief: Cost of Vehicle Ownership: Cost Parity Between Plug-in Electric Vehicles and Conventional Vehicles Is at Least a Decade Away. Institute of Transportation Studies, University of California, Davis, Brief UCD-ITS-RR-21-39

While plug-in electric vehicle (PEV) adoption has been rising over the past decade, with PEVs making-up about 7.8% of California’s new vehicle sales in 2019, the trend needs to quickly accelerate for the state to reach its goals of 100% zero-emission vehicle (ZEV) sales by 2035 and a zero-carbon economy by 2045. California has various incentive programs to encourage PEV adoption, but policymakers expect to phase these incentives out as PEVs reach cost parity with conventional internal combustion engine vehicles. Comparing the total cost of ownership—purchase price, operational costs, and resale value—of PEVs or other ZEVs with that of conventional vehicles can inform policy decisions about incentive programs and inform consumers’ purchase decisions, by accounting for PEVs’ higher purchase prices but lower fuel and maintenance costs.

Recent research has estimated that cost parity between PEVs and conventional vehicles will be achieved over the next decade. However, the timeline depends on each study’s assumptions about technology improvement and travel behavior. These studies often assign a single total cost of ownership to a specific vehicle model, ignoring the fact that costs can vary across households based on the type of vehicle adopted, travel behavior, access to charging and refueling facilities, gasoline and electricity prices, and other factors. Researchers at the University of California, Davis estimated PEVs’ total cost of ownership for the period of 2020–2030, their cost-competitiveness with conventional vehicles, and consequently the cost of electrification of California’s fleet of more than 30 million light-duty vehicles. The researchers analyzed six market segments, defined by household income and housing type, to account for the heterogeneity in total cost of ownership. The cost of electrification analysis also included fuel cell electric vehicles and was extended out to 2045 to align with California’s emission reduction goals. This policy brief summarizes findings from that research and provides policy implications.

Key words: Total cost of ownership, zero emission vehicles, teardown analysis, market segments