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Drive Clean and Save:

Electric Vehicles Are a Good Deal for California Consumers and the Environment

by Frontier Group and Environment California

Executive Summary

Electric vehicles (EVs) are clean, fun to drive, never require a stop at the gas station, and are a key part of California’s strategy for reducing greenhouse gas emissions from transportation, the state’s biggest source of climate-altering pollution. Fortunately, helped by strong state and federal incentives put into place over the past five years, electric vehicle adoption is growing rapidly: California now is home to almost half of the nation’s EVs, including fully battery electric vehicles, plug-in hybrids and fuel cell vehicles. For the purposes of this report, we compared the cost savings of battery electric vehicles to their gasoline-powered counterparts.

Today’s mass-market battery electric vehicles are also a good deal and will likely save money for consumers compared to similar gasoline-powered vehicles. Battery-powered EVs cost less to own than comparable gasoline-powered vehicles once the full life-cycle costs of car ownership and federal and state incentives for EV purchases are accounted for. Low-income buyers stand to gain the most from these savings, since Americans in the bottom 30 percent of the income scale spend nearly 30 percent of their annual income on transportation.

By fully implementing and expanding upon the state’s electric vehicle policies, California can speed the introduction of electric vehicles, bringing a future of 100 percent clean, electric vehicles within sight.

Replacing gasoline-powered vehicles with electric ones reduces global warming pollution.

  • When EVs are charged using renewable sources of energy, like solar panels or wind turbines, they are an almost entirely emission-free form of transportation.
  • A California Air Resources Board-commissioned study found that an EV produces about half of the lifecycle greenhouse gas pollution as a gasoline-powered vehicle, based on California’s 2012 energy mix. As the California electric grid gets cleaner by incorporating renewable energy sources, so too will driving electric vehicles.
  • A recent study from the Natural Resources Defense Council and the Electric Power Research Institute found that widespread vehicle electrification across the country could reduce greenhouse gas emissions by between 430 million metric tons and 550 million metric tons annually by 2050.

This analysis finds that electric vehicles are a cost-effective way for Californians to go green. Even if gas prices remain at or near today’s low levels, California consumers can expect to save money by buying a battery electric vehicle instead of a comparable gasoline-powered vehicle, once incentives and other savings, including reduced fuel costs, are taken into account. In this analysis, we compare ownership costs between car models for which both battery electric and gasoline-powered versions exist: the Chevy Spark and Spark EV; the Ford Focus and Focus EV; the Kia Soul and Soul EV; and the Volkswagen Golf and e-Golf. We find that:

  • The lifetime cost of ownership for each EV analyzed is cheaper than for its gasoline-powered counterpart, when taking into account fuel costs and incentives.
  • Compared to a similar gasoline-powered vehicle, the average EV in this analysis will save its owner more than $3,500 over its lifetime if gas prices fall to a low of $2.50 per gallon. If gas prices go back up to a more typical recent price of $3.50 per gallon, the average electric vehicle will save its owner nearly $9,000 over the vehicle’s lifetime.

Figure ES1. Lifetime Ownership Cost (Net Present Value) of Battery Electric Vehicles vs. Gasoline-Powered Vehicles, Including Incentives

These cost savings come on top of significant environmental benefits. The average electric vehicle in this study would emit 31 fewer metric tons of greenhouse gases over the vehicle’s lifetime than its gasoline-powered counterpart. If one million such EVs were used instead of their gasoline-powered counterparts, the greenhouse gas emissions averted would be equivalent to taking California’s two biggest fossil fuel-fired power plants offline.

Figure ES2. Life-Cycle Greenhouse Gas Emissions of Gasoline-Powered Vehicles vs. Electric Vehicles (EV Emissions Assume 2015 Western U.S. Electricity Mix)

Current state and federal incentives do more than make EVs affordable today – they are also critical tools to help the EV industry achieve the economies of scale and technological changes needed to reduce the cost of EVs over the long run in order to compete with the prices of gasoline-powered vehicles, which have long benefitted from government subsidies.

Despite EVs’ rising popularity, there is a long way to go: to meet California’s air quality and greenhouse gas goals, the state’s transportation sector needs to be largely converted to zero-emission vehicles, while today less than one percent of the vehicles on the road in California are electric. In order to achieve these goals, policy action by the state, air districts, municipalities and utilities will be necessary.

Specifically, state decision-makers should ensure that California meets the twin goals codified by the Charge Ahead California Initiative (De León, 2014) of deploying one million zero and near-zero emission vehicles by 2023, and ensuring that disadvantaged, low-income, and moderate-income communities benefit from the transition to zero tailpipe emissions. Decision-makers should also continue efforts to meet Governor Brown’s Executive Order for California to achieve 1.5 million zero-emission vehicles by 2025. Meeting all of California’s long-term climate goals will require encouraging widespread electric vehicle adoption in underserved markets, including in low- and moderate-income communities.

 

Download Drive Clean and Save June 2016.pdf