It is an important claim that needs verification.

The motor industry services lead at Pitcher Partners Sydney, Steve Bragg, commenting on recent research released to GoAutoNews Premium: “It is no secret that electric cars have a higher drive-away price compared to traditional ICE vehicles, but the big question in buyers’ minds is whether the lower running costs would really offset the initial premium on the purchase price of the EV equivalent?”

“Firstly, we are completely behind zero and low emission vehicle uptake and see it as a critical part of Australia’s plan to reach ‘net-zero’ by 2050. 

Steve Bragg

But a test of these claims by Pitcher Partners Sydney motor industry team spear-headed by Aidan Cousin shows that, when all is considered, ICE vehicles in the current market are far better on the pocket than EVs.

In fact the payback period is so far into the future that in some cases it will not be until the sixth owner gets behind the wheel that the cost savings for EVs kicks in – assuming the car is still running by then.

For example, the analysis shows that the BMW iX3 Standard variant will take 24 years to reach break even of the marginal savings that flow from EVs Vs the equivalent ICE versions.

The best was the Volvo XC40 Twin EV which would take seven years and three months to break even on the savings. 

Others included:

• LDV eT60 – 20 years and two months
• Mercedes EQC 400 4matic – 18 years and six months
• Hyundai Kona Elite Extended Range – 15 years and four months
• MG ZS  EV Excite -12 years eight months

Volvo XC40 Twin EV

Mr Bragg said that electric Vehicles (EV) “are the legislated answer for the automotive industry emissions reductions; replacing the traditional ICE vehicle”. 

“We are not convinced that the current Lithium-ion battery technology will be the ultimate technology used in 30 years, but it is the main alternative that has commercial viability currently. 

Regardless, he said, there are two main issues with EV’s: price discrepancy and actual VS perceived environmentally friendliness. 

The Pitcher Partners team chose six of the most common EVs where its team could see a similar petrol variant that has the closest number and type of features.

The chosen vehicles for this analysis were:

1. Hyundai Kona: Elite Extended Range VS Elite
2. Volvo XC40: Twin EV VS XC40 Ultimate B4 Bright
3. BMW X3: Standard Variant VS X3 iDrive 30i
4. MG ZS: ZS Excite MY22 VS ZS Excite ICE
5. LDV T60: eT60 VS T60 MAX UTE
6. Mercedes GLC: EQC400 4Matic VS GLC 300 4Matic

“Our aim is to determine whether the overall savings in running costs and service will outweigh the higher insurance cost, and the premium in EV purchase price, Mr Bragg said.

To make the analysis as broad to the Australian market as possible The Pitcher Partners motor industry team looked at the following costs:

1. Driveaway price

Pitcher Partners started from the purchase price of the individual vehicles based on a purchase in Sydney NSW 2000. The EVs have, on average, a whopping 64 per cent premium in price compared to their petrol comparison. Brands have already calculated all government rebates when providing pricing for the electric vehicles.

2. Running costs

We calculated the recharge cost per year based on an average 12,600 kms per annum (average KMs per ABS 2018 Study. 2018 was used as the most recent study year without the impact of COVID), and we compared it against the petrol cost of running the same distance.

3. Service costs

Service costs were split into two parts. The first five years, the cost of service for the ICE vehicle has been increased by an extra 50 per cent to account for costs related to additional parts, oil and grease. Thereafter, and into perpetuity, ICE service costs have been increased 50 per cent, while EV has remained the same.

Any servicing plan offers like the current Volvo XC40 free service for 5 years/100kms have not been included given their potential temporary nature. 

4. Insurance – based on an ‘average’ driver

Insurance calculated based on a comprehensive policy, 10,000-15,000 kms driven per year, by a 35 year-old-female, no accident history, no finance, Sydney driver, market value, 3-4 days usage, no extras (windscreen/hire car), annual payment and  $1,095 excess and using GIO as insurer.

5. Registration and  CTP

Registration was excluded due to state-based policies that both EV’s and  ICE vehicles can participate in. A summary of EV state-based registration incentives at the time of writing are below:

6. Other considerations

Pitcher Partners has excluded some other costs such as:

• Cost of replacement EV batteries (Battery warranties are on average 8 years and expected replacement of batteries is estimated at every 10-20 years).
• Financing and  novated leasing will change the calculations. However, for simplicity, the above assumes a cash purchase.
• Cost of charging infrastructure for personal use (solar panels, wall chargers, home batteries, etc.) have been excluded for simplicity.

The analysis showed that overall, ICE vehicles are cheaper in the long run due to the significant purchase price disparity between ICE and  EV’s. 

“The best performing EV’s in terms of a breakeven point are those brands that have the smallest upfront purchase price disparity,” it said. 

“The Volvo variants are the closest to price parity, and therefore have the lowest breakeven point in years at seven years three months. Comparatively, the average age of an Australian passenger vehicle is 10 years five months per ABS Motor Vehicle Census 2021.

“No other vehicle has a breakeven point less than the current Australian average age of a vehicle.

“Recently purchase price disparity has been reducing as brands reduce prices to respond to market forces and government legislations. The effect on this to EV adoption, brand profitability and distribution method is yet to be seen but is a positive for end user consumers.

Mr Bragg said: “The message is clear, once EVs are priced competitively with their ICE equivalents the uptake will increase significantly.

Footnote: A calculator for the costs used in the analysis can be provided upon request.

By John Mellor