Electric vs Gasoline – Which is more cost effective?

Last summer gas prices spiked and the media was awash in stories about the electric car, whether from major automakers or startups. Just a few months later, gasoline is at $1.50 and SUV sales have begun to rise again. Environmental and foreign policy benefits notwithstanding, electric vehicles are perceived to be more expensive than gasoline vehicles. At what gasoline price are electric vehicles more cost effective?

In Theory, Electric Vehicles are More Efficient

Electric motors are very efficient, converting over 90% of electrical power supplied into motion, while gasoline engines manage only 20% efficiency. On a full life cycle basis including power plants and oil wells, electric vehicles manage about 34% efficiency versus only 14% for gasoline vehicles [1]. In theory electric vehicles are much more efficient.

But how does it work in practice? Let’s take a look at two real-world examples, the Tesla electric sports car, and the Hymotion plugin-hybrid modification for the Toyota Prius.

Hymotion Toyota Prius and Tesla Examples

Hymotion is now selling a plugin hybrid modification for the Toyota Prius which enables it to travel roughly 40 miles with minimal gasoline usage. Hymotion states that independent testers have verified the Hymotion-modified Prius capable of receiving a 150mpg EPA city rating.

The Hymotion modification uses 5 Kwh of electricity, worth about 50 cents, to help power it through a 40 mile trip, while using the gas engine about 20% of the time. At $1.50 a gallon the total fuel cost for a 40 mile trip is about 30 cents, resulting in a total trip cost of 80 cents. The average American vehicle gets 20 mpg, so it would use 2 gallons for the trip, or $3.

Tesla provides a good life cycle energy usage comparison between its electric sports car and other automobiles on its website. The Tesla uses 177 watt-hours of energy per mile traveled, which costs 1.7 cents on average. Based on Tesla’s numbers, a 40 mile trip would cost 68 cents in a Tesla versus $3 for gasoline in a typical vehicle.

Even at $1.50 gas or $1 gas, electric and plugin-hybrid vehicles are significantly cheaper to operate than gasoline vehicles. But electric and hybrid vehicles are significantly more expensive than comparable gasoline vehicles today, which motivates the primary question:

At What Gasoline Price are Hybrid or Electric Vehicles Competitive?

For the Hymotion-modified Toyota Prius, the breakeven price of gas is around $3 a gallon. The Hymotion modification for the Toyota Prius costs $10,000, and the Prius itself costs roughly $5000 more than a similar non-hybrid vehicle. At $3 a gallon, a driver that drives 12,000 miles per year would save about $1500 per year, just recouping his initial investment over a 10 year timeframe.

Batteries represent the primary factor in the additional cost of hybrid vehicles, and battery price-performance is improving at a rate of about 8% per year. At this rate, the breakeven price will probably be $2 a gallon in 2013.

Plugin hybrids and electric vehicles provide one additional savings: time. The average driver fills up almost every week, losing a total of 8 hours a year. For busy professionals, 8 hours of time could be worth $500 to $1000 or more, making plugin-hybrids the cost-effective choice today!


[1] Electrical energy is created by burning fossil fuels in a power plant at 40% efficiency, followed by transmitting it to your house at 93% efficiency, and using it in an electric vehicle at 92% efficiency, providing a total efficiency of around 34% for an electric vehicle. Crude oil refineries operate at 75% efficiency, and gasoline distribution might cause another 6% energy loss. Since internal combustion engines are only 20% efficient, total efficiency would be around 14%. Assuming that the natural gas and oil to power our vehicles comes from the same well, we can directly compare these efficiencies, and thus conclude that electric vehicles are significantly more efficient.

26 thoughts on “Electric vs Gasoline – Which is more cost effective?

  1. How much does it cost to charge that electric beast 3 and a quarter times when it gets 100 miles to a charge. A full tank of gas (12.6 gallons), gets 26/36 miles City/Highway to a gallon is out of gas after 322.4 miles and only cost $50.40 Dollars at $4.00 Dollars a gallon?

    1. David, the answer may surprise you – it costs me only $6 to charge my Tesla three times – and that 6 bucks provides 420 miles of range. I pay only 5 cents per kWh to charge overnight, which is cheaper than most folks can get (that rate is available to anyone in Georgia though, and many localities have similar off-peak plans now), and so the effective MPG of my Tesla is 240 if premium gasoline costs $4/gallon.

  2. doing research in this area, I am asking for a list of references so I can pull almost the same data from it. Where did you get your information Please send me the link at whfmanager on hotmail. thanks

  3. Automotive executives and engineers are so removed from the lives of the average working class familty that they do not understand the fact that most Americans cannot afford a car just to run to work in every day or that a lot of people have more than a 40 mile commute. They need a car that will take them to work, and take the family on a vacation to Florida and back. The will not buy an electric car simply because it cannot handle all their transportation needs. It sounds good and it appeals to a certain number of people, but just like wind and solar power, they just are not practical. A large number of homes could not handle the additional power loads, they are probably already maxed out. But most of all, I doubt the national grid could handle the load of milions of electric cars.

    1. Societies that don’t change with the times will become extinct. It has happened numerous times. Having millions of people commuting more than 40 miles to work in their own vehicles with an efficiency of 20% (80 % of the value of the gallon of gas being wasted as friction and heat) is not sustanable. Hybrids are more efficient, but non hybrids have 0% efficiency when idling in traffic.
      Quick replace battery packs seem like the sensible way to go, as stated above. They can be charged at off peak times and used as buffers for the grid’s needs. replacement is the same time as a gas fillup.

    2. Where are you getting the 40 Mile figure from? In about a year, 300mile per charge 7-seater will be available to the masses


      and this is definitely just the start. It’s just much less waste, and we can always find better and better ways to generate electricity, put in more charging stations etc

  4. What we are missing here is the opportunity to reconsider our transportation energy use in a synergistic way. Were we to consider a utility that owned, tested, recycled and distributed batteries for these cars, here is what would happen:
    First, there would be no charge-time range limit. Just pull into a service station and swap out the empty batteries for charged ones, paying for the electricity.
    Second, the condition and lifetime of the batteries would not be the responsibility of the car owner, any more than the quality of gasoline is now.
    Third, the enormous pool of batteries that are charging / not installed could be used in the grid to smooth non-constant power sources like wind and solar.
    Fourth, the demand for transportation charging (a huge number!) would be spread out over 24 hours, effectively lowering the peak generating capacity of the grid, hence more efficient power plants.
    And fifth- as technology changed, more efficient generation and better batteries could be incorporated into the existing system, as long as the batteries are the same shape… just like the ‘D” cells in your flashlight went from carbon-zinc to alkaline to nicads to lithiums, without having to buy a new flashlight.
    I believe this approach answers ALL the concerns from this discussion. Existing business model, existing approach- all we have to do is apply it to cars.

    1. Have you been to a service station lately? They’re completely automated. A return to “full-service” with technicians swapping-out batteries 24/7 would eat-up any potential gains in labor costs.

  5. Efficiencies of modern ‘high efficiency’ diesels are higher than 40%, 20% is for a large petrol car.

    As praveenghanta said lithium batteries have very good charge/discharge rates, howver testes have shown that due to operation and charging times used it is about 70-80%.

    Also in the UK the grid genertaed elctricty is on average about 35% efficient.

    This would put electrical cars at around 20% and diesel 28%

    In the UK its coming generally accepted that elctric cars are suitable becuse:
    a) Most are charge at night when there is excessive elctrical load on the grid
    b)In the UK over 80% of the fuel cost is tax where is electricity has only ~5% added to it. making electrical cars more economical, due to taxes not efficiency
    c) Local Emissions, to reduce mainly NOx levels in cities, the main reason they have preference, not climate saving.

    The argumant for grid electricity to have more and more reneables. If th UK maximised its wind power, it still would be enough to cover the increased elctrical load if everyone switched to electric cars.

    I am certainly not against electric cars and they will be the main transportation in the next decade, but thie main use is fuel security more than anything else. In terms of electricity generation we are looking at some form of nuclear, and the quicker we accept that the better

  6. So how cost effective are the batteries when you have to replace them? How many $’s are saved over a five year and ten year period compared to a combustion engine? Get real here and talk about the bottom line and that line is money.

  7. Pablo states: “None of this analysis takes into account the environmental cost of either option. Electricity in power plants can be generated by renewable means (sunlight, wind, rain, tides, and geothermal heat). That makes the environmental cost of the electric car much lower.”

    Market cost per kWh of baseload generation – coal, hydro, nuke – is still around 3 to 4 cents. But the cost of so-called renewables – wind, solar, tidal – is closer to 20 cents per kWh sans the massive subsidies. So the conundrum is that in order to achieve REAL environmental benefits of plug-in vehicles, the cost of “green” electricity to power those vehicles takes them right off the charts in the overall cost comparison.

    As the old adage says “you can’t have your cake and eat it too”.

    1. d,

      Even using pure coal baseload electricity production, an efficient plugin hybrid will generate lower emissions than the average automobile today. And we must remember that baseload in the US includes a good chunk of nuclear, hydro, and some natural gas as well – and all of these pollute significantly less than automobile internal combustion engines. So even if we don’t switch power sources, there are emissions gains to be had.

  8. None of this analysis takes into account the environmental cost of either option.
    Electricity in power plants can be generated by renewable means (sunlight, wind, rain, tides, and geothermal heat). That makes the environmental cost of the electric car much lower. But, then again, what is the environmental cost of batteries? Can anybody point us to such study?

  9. http://www.greencarcongress.com/2008/02/nissan-tests-ne.html

    Batteries have apparently come a long way since Lead-Acid was state of the art. Nissan is claiming that they’ve achieved charge-discharge efficiency over 95%.

    Hopefully the technology will continue to improve now that a lot of focus has been put on it!

    On the internal combustion side, it looks like automakers are working to raise engine and transmission efficiency there too – it’s great to see competition between the various forms of technology.

  10. Will,

    You include two terms I hadn’t accounted for – battery charging and discharging. Assuming your numbers for these are correct, they do lower the overall efficiency quite a bit. And yet it’s still significantly higher than an internal combustion engine!

    I think I was also too generous for the total efficiency of regular automobiles. The refinery efficiency of 75% that I found is definitely overstated, as this was an example from one of ExxonMobil’s most efficient refineries, and referred only to power generation at the plant, and didn’t include the energy loss in the fuel refining process.

    The proof is in the pudding – the per mile costs to drive plugin hybrids is far lower than to drive a regular automobile, but the capital cost of a plugin hybrid outweighs that at current gasoline prices. Batteries will have to get cheaper, and gasoline will have to go back to at least $2.50, to make it a cost effective proposition.

  11. Battery powered Vehicle
    End performance 100 reqd input
    engine conversion 90% 111
    battery discharging 85% 131
    battery charging 65% 201
    electricity transmission93% 216
    power generation 40% 541

    overall efficiency 18%

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