Remunerator News

Jan 21 2020

The Great Debate: Electric Vs Petrol

Tesla image source

It’s clear that the future of a big part the motoring public will be using electric power in some form.

With the concept of it being cheaper to run and better for the environment… great sign us up!

But how do electric cars compare to their petrol counterparts now?

By 2035, there will be an estimated 11 million electric cars bought every year worldwide. The days of Tesla having a stranglehold over the electric vehicle market are over. Australia now has a decent EV line-up to select from. Popular vehicles include the Hyundai Kona electric, Kia e-Niro, Audi e-Tron, Nissan Leaf, and the Mercedes EQC.

But are they 100% green as people are often led to believe? EV’s still have less obvious environmental impacts, in fact it is widely reported that electric vehicles take more energy to be produced compared to petrol and diesel cars.

Electric cars need to be light, calling for high-performing elements such as lithium found in the batteries. Unfortunately, at present, the rare materials mainly come from environmentally destructive means. As the name suggests too, rare materials are rare, therefore there are small quantities that are generally found in difficult places. The process at which these are mined out of the ground is incredibly unsustainable too. Particularly in the Jiangxi rare earth mine in China where many of the materials mined here are found in everything from phones to Teslas. At this mine, rare earth equal around 0.2% of what is taken out of the ground, the remaining 99.8%, now contaminated with toxic materials from the extracting process, is returned into the environment in unfriendly environmental ways. Further, the mining and extraction process of the rare materials often rely on rock-crushing equipment and coal-fired furnaces, which exhale astronomical amounts of carbon dioxide into the atmosphere. Now attention is on this, it is expected that these processes will improve.

Given where Australians source most of their electricity often electric cars are charged from coal generated electricity, that is 79%. So, there has been much debate about whether, given the electricity for your EV car most likely comes from a coal fired power station, is your EV any better than a traditional vehicle when looking at greenhouse gas emissions. Over time, as renewable sourced power increases, the balance will change accordingly.

We’re not saying don’t buy that Tesla or any other EV you have your eye on, or that there should be a stop in the manufacturing of EVs. We are saying that the value proposition is changing each year.

However, it is worth noting that when you look at the entire life cycle of an electric car against a regular petrol car, adding up all the environmental impacts, an EV is still significantly better.

 However, it is important for consumers to be reminded of the process by which it takes for a ‘zero-emission’ vehicle to be made.

So now onto the argument that an EV is cheaper to run then to its equivalent petrol car. We’ve looked at 2 vehicles, one EV against one petrol, over 3-years to determine how the costs compare. While Tesla’s are a luxury vehicle, due to them being the only pure EV on the market in 2016 there was little option in this area. Sourced from cars for sale on the CarSales website.

* Costs by 2019 = Car purchase + total fuel** + servicing

** Total Fuel costs are based on odometer readings

^ As per CarSales listing, car has 4-year maintenance plan

After 3 years, the Tesla Model S proves to be slightly cheaper to run compared to its competitor, the Mercedes-Benz C63 (based on the estimates of the two CarSales listings). Agreeing with what Tesla often promotes, that an EV is cheaper to run, looking at the electric cars servicing costs and electricity costs compared to petrol. However, there is an exception with insurance. EVs have higher insurance costs due to there being little historic data to work on regarding repairs costs.

In this situation, it would be up to the driver as to if they’d prefer driving a Model S or C 63 AMG. However, we aren’t all Elon Musk and can’t afford the $150k+ price tag that comes along with those options.

We’ve decided to compare the Hyundai Kona which has proven to be a popular SUV in both the petrol and electric variants. The Kona happens to be much more affordable and easily attained to the average Australian. The figures below are an estimate based on an average of 15,000km driven per year.

The first aspect that stands out is the price difference of $22,788.03 between the top of the line petrol model and entry level EV. For the price of the Kona electric you could afford two of the entry level petrol models! The running costs including fuel and servicing do prove to be cheaper for the EV, however due to its expensive price tag it will be years before the owner starts to see the savings the petrol driver experiences now.

There are serious concerns to the environment with climate change, but with the average Australian on $82,436/year, it becomes difficult to justify how one can afford to fork out an extra $22,788.03 (almost a quarter of their yearly earnings). Also remembering the EV driver is most likely charging their ‘clean’ car with ‘dirty’ electricity.

The big question, is it worth it?

Yes, if you have cash to spare and if your house is 100% powered through the solar panels on your roof.

No, if you’re the average Australian.

https://www.wired.com/2016/03/teslas-electric-cars-might-not-green-think/

https://www.whatcar.com/advice/owning/are-electric-cars-more-expensive-to-insure/n18043

CarSales Listings:

Mercedes-Benz C63 AMG S Auto

Tesla Model S 90D Auto AWD 2016