Opportunity costs between Electric Vehicles (EVs) and traditional Internal Combustion Engine (ICE) vehicles are generally minor in terms of total ownership expenses but can highlight differences in financial strategies for vehicle purchasing. Here’s a comparison based on available data:
Overview of Opportunity Costs
- Definition: Opportunity cost refers to the potential earnings missed when choosing to spend money on a vehicle instead of investing it elsewhere. This cost is not a direct expense but part of the total cost of ownership (TCO) calculation.
- Magnitude: In both EVs and ICE vehicles, opportunity costs are relatively small, accounting for about 1% of total ownership costs. For EVs analyzed by Vincentric, the average opportunity cost was slightly over $916, with significant variation among different models.
Comparison Between EVs and ICE Vehicles
- Lower Opportunity Costs for EVs: Vincentric’s study found that 24 out of 41 EVs analyzed had lower opportunity costs compared to their ICE counterparts. The Nissan LEAF had the lowest opportunity cost at $508. This suggests that, on average, EVs might offer better financial options when considering the total outlay of funds for vehicle purchase and maintenance.
- Total Cost of Ownership (TCO): While opportunity costs are small, the overall TCO for EVs tends to be lower than for ICE vehicles due to factors like lower fueling costs (electricity vs. gasoline), reduced maintenance, and sometimes lower taxes and fees. EVs are generally more efficient, operating at around 87% to 91% efficiency, which contributes to these cost savings.
Conclusion
Overall, while opportunity costs are a minor part of the financial equation for both EVs and ICE vehicles, EVs often present a more favorable financial profile due to lower total ownership costs and efficiency advantages. This makes EVs an attractive option for those seeking to reduce expenses over the lifecycle of their vehicle.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-do-opportunity-costs-compare-between-evs-and-traditional-ice-vehicles/
