Intro
Electric vehicles (EV) are cheaper to fuel (I’m writing in 2023) than internal combustion engine (ICE) vehicles.
In this exercise, a student will learn to compute the breakeven time to own the EV to recoup the higher purchase cost.
Note that this exercise is an analogy to businesses where the operating profit (variable) recoups the fixed costs to generate an IRR.
Setting up the problem
You can use the following inputs or vary the difficulty by asking the student to find reasonable values to the variables.
Inputs
Vehicle Costs
ICE = $40,000
EV = $55,000
Fuel Costs
Gasoline = $6 /gallon
Electricity = $.25 /kWH
Fuel Efficiency
ICE = 20 MPG
EV = 4 MPkWH
Fuel Demand
Miles driven per year = 12,000
Questions
- How many gallons are needed per year for the ICE?
- How many kWH are needed per year for the EV?
- Annual fuel cost per vehicle?
- How many years do you need to own the EV to breakeven or recover initial cost difference?
- Graph cost per mile
- Graph total cost vs miles driven
- What year does the second chart touch $15,000?
