As you consider transitioning your fleet to electric vehicles (EVs)? If so, it's essential to calculate the total cost of ownership (TCO). TCO considers fuel costs, fuel efficiency, infrastructure costs, maintenance costs, sales tax, tax credits, and purchase incentives. Understanding TCO is vital to the success of your business, and determining TCO considers if EVs are a cost-effective replacement.
How to Calculate Total Cost of Ownership for EVs
The best way to calculate TCO is to consider two scenarios and make comparisons. In this example, compare replacing the vehicle with an EV to swapping it with a diesel- or gas-powered vehicle. If the EVs TCO is lower than that of a non-EV, it makes sense for the operation. This calculation involves a side-by-side comparison of:
- Vehicle acquisition costs (will it be a purchase or a lease?).
- Maintenance costs.
- Fuel & electricity costs.
- EV incentives.
- Tolls for non-EVs or low emission zone charges.
- Vehicle registration & taxes.
Additional factors to consider include if EV passenger cars (not including Tesla) hold their value. Overall, EVs expect around a 40 percent residual value decrease on the new EV after three years and near 30 percent by year four.
Infrastructure costs also remain a consideration. Fleets can pay up to $250,000 for infrastructure, making it crucial to consider when looking at TCO.
Fortunately, the electric vehicle sustainability assessment (EVSA) and TCO give fleet managers a clear picture of operational costs if they add EVs. Upfront costs tend to be higher for EVs. However, once fleets examine an EV's total costs over its lifetime, EVs usually cost less.
By calculating TCO, you set up your company for success. Knowing TCO ensures you understand the underlying financial aspects that go into implementing EVs across fleet operations.