price of gasoline too high? buy an EV!

assessing the claim that EV's will save working people money or save the environment

high gas prices got you down? buy an EV and worry no more!

Greg Price @greg_price11

Sen. Debbie Stabenow (D-MI): “On the issue of gas prices, I drove my electric vehicle from Michigan to here last weekend and went by every gas station and it didn’t matter how high it was.”

this seems to be the frequent claim of many a politico of late. it left me wondering: is it true? so i ran some math to see.

spoiler alert: apart from some very rare cases, it’s not a money saver and as an eco choice, it’s vastly inferior to other options.

even leaving aside their limited availability, limited range, and the fact that of 10% of us bought one, it would completely, utterly crash the entire american power grid, the question of whether this is economically attractive does not appear to pencil out in the manner described.

the price of an EV is roughly double that of a similarly capable ICE (internal combustion engine) vehicle. if you’re looking for something at all reasonably ranged (and not one of the tiny “about town” toycar EV’s) you’re going to be paying $50-60k.

meanwhile, you can buy a honda accord for $26,500 and get similar/better features and reliability with well over twice the driving range between refueling. (most ev’s are around 200-225mi range, less if you drive faster. an accord exceeds 500mi HWY on a 14.8g tank)

the math here is not kind to the EV buyer.

for the sake of simplicity and to avoid comparing down payments, interest income, etc i presumed 100% financing. i gave EV benefit of the same rate despite a larger loan for which many would have more trouble qualifying.

for the sake of comp, i used avg current car loan rate for 60 mo, US national avg gas price, us national avg electricity price, and average insurance prices for EV vs honda. insurance turns out to be a meaningful bite as EV’s are ~25% more expensive to insure vs ICE at comparable MSRP’s, and obviously, the EV is quite a bit more expensive.

we can then assess monthly cost to own and operate by miles driven and from that, total cost to own and operate over a 5 year span.

as can be readily seen, the EV buyer is starting each month roughly $650 in the hole vs a honda buyer. this is not ground that can be made up in any sort of reasonable driving pattern.

(and obviously, this pricing is optimal for EV’s and could be much higher if you’re using public chargers, especially quick chargers)

(addendum/edit: the original was using an outdated price for electricity of $0.104 per kWh, now updated to current price of $0.147 per EIA. the old version slightly advantaged EV’s, but it was not material, roughly $10/mo at 1,200 miles)

a typical US driver logs 1,200 miles/month. to break even would require over 4,900 miles a month. very few drivers accumulate such mileage and worse from an EV perspective, those that do tend to log long drives that would require refueling that has limited sites and long wait and charge times. adding an extra hour or two of stop time to a long trip every 225 miles is a backbreaker logistically and the value of the time lost gets significant.

also, given the approximately 59k mi/year that rate involves, you’d likely need a full battery replacement before end of 5 year period as you only get so many charge/discharge cycles and that, as anyone can tell you, is NOT cheap.

the bottom line is this: over 5 years, with a typical 1,200 mi/mo use pattern, the EV driver will have spent over $30k more than the honda buyer. this is literally enough to buy a second honda and have money to spare.

so, like so many other sets of signaling and nudging, this plan simply does not pass even a rudimentary assessment of feasibility or accuracy.

even if the grid could support large numbers of EV’s and we have the ability to build the batteries etc, the TCO is vastly higher than an ICE even with gas costs this high. in fact, to reach break even for a typical driver, the price of gas would need to be about $20.25/gallon (while electricity remained flat).

this gap will start to close once you own the car free and clear, but not in any sort of timeframe that’s going to be any help to a working class car buyer for at least a decade and if we pile in market rate returns on capital not spent, it widens even further.

this is just not a solution to current problems.

(and, of course, if the price of gasoline were to drop back to $2.50, this gets dramatically less favorable to electric vehicles.)

EV’s are a wonderful form of virtue signaling for a certain kind of snob. it allows the flaunting of an expensive vehicle while claiming to have bought it not for flash but “because you care.”

it’s all the smug of a prius and all the ostentation of a BWM or even a porsche or ferrari depending on how far upmarket you go.

but claims that this is a good option to save money for “working americans getting to work” fall flat. it’s simply not true and amounts to either another flaunt or basic financial illiteracy.

and mistaking this for being a champion of the worker is not a good look.

but here’s where it gets interesting:

even the eco-cred of an EV is deeply suspect.

when one assesses overall costs and resource intensity the environmental case for EV’s completely evaporates as the things that go into mining, refining, fabricating, and disposing of batteries are quite nasty. this is reflected only in part in the cost because so many of them are offshored to places happy to trade eco damage for cash. this goes well beyond CO2 an into actual, serious environmental damage.

but even if we leave this out (a huge concession) EV’s still fail as eco-policy.

but what of the benefits?

EV’s are trumpeted as being reducers of CO2, but amusingly, it’s not even clear there is much case for CO2 reduction over lifespan and none whatsoever in terms of other available options.

let’s look:

estimates place the CO2 generation of manufacturing an EV at around 13 tonnes vs 10.5 for an ICE. recycling is 2.4 tonnes vs 1.8. so, in total, construction and disposal of an EV produces 3.1 additional tonnes of CO2 vs an ICE. (these are all approximate and arguable etc, but i think it’s pretty close and does not really matter much in the end if it’s twice this or zero)

there is A LOT of eco-marketing and dodgy math around EV’s, much of it led by the EPA and EU agencies. i have chosen to use this australian data because i think it’s more reliable and accurate and, with a 21% renewables rate in generation, it’s quite similar to the US (23%).

Using these data and estimates from a 2018 assessment, electric car upstream emissions (for a battery electric vehicle) in Australia can be estimated to be about 170g of CO₂ per km while upstream emissions

The above studies show that emissions during the use phase from a fossil-fuelled compact sedan car were about 251g of CO₂ per km. Therefore, the use phase emissions from such a car were about 81g of CO₂ per km higher than those from a grid-recharged EV in Australia,

so here we get our bogey. 81g of CO2 per km variance per mile driven.

to overtake the 3.1 tonne variance in construction and disposal, this sets a break even point on distance driven at:

3,100,000 grams/(81g/km) = 38,272 km driven = 23,781 miles, about 2 years of driving under normal use.

from this, many make a case that EV’s are “green.”

i think this is badly inaccurate.

obviously, this first requires acceptance of the idea that CO2 mitigation matters, itself a matter of debate, but for the sake of this discussion, let’s accept the premise and not mire down in that complex issue here.

over 20 years of 12k miles (19.3k km) a year , and EV will generate 65.6 tonnes of CO2.

and ICE will generate 97 tonnes.

subtract the 3.1 tonne variance in build and disposal and you get 28.3 tonnes of CO2 saved over 20 years.

carbon has a market price per tonne of CO2:

it varies from a high of 80.24 EUR ($85.85) per tonne in a mandated european market to $2.89 for voluntary tech based offsets.

if we use the california market price of $32.53/tonne:

$32.53/tonne X 28.3 tonnes = $920.60 worth of CO2 reduction over a 20 year span. $46 a year.

even at EU pricing, the value of the carbon reduction over 20 years is $2429.

recall that these EV’s cost ~$28,000 more to buy than a comparable ICE. that right there tells you how much more resource intensive they really are to build. that’s what price expresses.

it also shows you that as a means to reduce CO2, EV’s stink.

$28,000/28.3 tonnes implies a price per tonne of CO2 reduces of $989.40, well over 10X even the EU rates and over 30X the california rate. but these are not free rates, they are compliance rates.

free rates are lower still.

nature offsets (planting trees etc) are $10.79. buying an EV is over 90X that.

tech offsets (tech-based, non-AFOLU offset projects from the Verra registry that align with the CCPs) are $2.89.

so buying an EV to reduce carbon costs 342X the price of other available offsets. even if that tech cost is WAY off, there is simply no contest.

here’s the big takeaway:

prices are powerful magic.

left free to move, they account for resource use to generate various goods and services and allow accurate comparison of options.

and this is why so many politicians hate them and want to suppress, distort, or occlude them. it’s how you get people to do things that don’t make sense. (and if they did make sense, you would not need to force them to do it)

and it’s also why we should NEVER let politicians anywhere near prices.

of all the things in the world you need to be accurate to make good economic choices, none surpasses prices. they are the fundamental bedrock of everyhting.

if you look only at the benefit of one car vs another in lifecycle CO2 output, yes, an EV can look “green” (again, assuming you care about CO2)

but the minute you add in price and compare the price variance to the purported benefit, this whole argument falls flat because it ignores both costs and other options and the whole point of prices is to be able to compare alternative uses of capital and strategies to reach the same goal.

buying an EV costs $55,000.

buying a honda accord and enough carbon offsets to make it EV equivalent over 20 years is trivial. the net price to do so is about $300 (nature) or $82 (tech offsets). people spend more than that on avocado toast.

even in the massively rigged EU market it’s only $2430.

none of these exceed even 10% of the price variance between the 2 vehicles.

and where this gets even more interesting is that you can, for just a tiny bit more, offset your car’s emissions to zero and STILL save $25-28,000 buying an ICE.

in fact, if you spend the price of an EV buying a honda accord and nature offsets, you could get your car and offset to EV equivalent 93 other ICE cars like yours.

that seems clearly superior to just buying one EV.

looked at another way, you could zero the emissions of 27 other similar ICEs (so 28 total including yours) over their entire 20 year lifespan.

addendum: a reader commented that the US is less CO2 intensive in electricity production than austraila. i have some issues with the manner in which the US reports this, but to avoid the appearance of cherry picking, let’s add data using the US figures.

the US claims 379g/kWh from generation vs 527 in austraila, so if we take US on faith oz is 40% higher.

so take values per mile i used for EV and multiply by .72 for EV emissions

170 X .72 = 122g co2/km = 47 tonnes over 20 years for EV vs 97 for ICE less 3.1 tonne variance to build and dispose = 46.9 tonnes over 20 years vs 28.3 = 18.6 fewer tonnes = $200 to offset using nature credit rates.

this does not really move the needle in any meaningful way.

chart here: (note that offset to zero does not change as it is not dependent on EV CO2)

and this is how you know that pushing EV’s to reduce CO2 is a crony corporatist grift.

it is painfully, demonstrably obvious that if you want to reduce CO2, there are FAR better ways to do it; there are far better choices with far greater effect.

the market is screaming it at us.

we just need to listen.

the same money can have roughly 100X the impact.

but it does not line the pockets of car makers and factory owners and the green grift ESG brigades who thrive on subsidy and slanted playing fields sleight of handled into apparent attractiveness by ignoring alternatives.

all economics is trade offs.

every thing you buy has an opportunity cost in terms of other things you can no longer purchase with the same money or build with the same resources.

and the opportunity cost on CO2 reduction when buying an EV vs a honda looks to be about 2 orders of magnitude. you get 1% the benefit you could.

that’s bad return even by government standards.

it’s an outcome so awful that anyone pushing it is either lying for gain or completely economically illiterate about this market.

if they really wanted to reduce CO2 and not shower largess on cronies and contributors and signal wealth and faux virtue while driving around, no one would even consider an EV as a CO2 abatement mode.

it’s literally the equivalent of burning dollar bills instead of natural gas to heat your home: ostentatious, but ill advised.