Does it make economic sense to run an electric car?

After we mentioned regarding the launch of the Mahindra e2o there were many queries as to whether the electric car really makes economic sense. So we have tried to break up the costing and the approximate ROI. We are taking in to account the approximate on-road price and the mileage mentioned is the approximate mileage we feel is achievable in normal driving conditions. We have shown a rough estimate by comparing four cars – Mahindra e2o / Tata Nano LX Special Edition / Maruti ALTO 800 LXI and Chevrolet Spark LT

Particulars\Car Model Mahindra e2o Tata Nano LX Special Edition Maruti ALTO 800 LXI Chevrolet Spark LT
         
Approximate Price (INR) 600000 240000 350000 400000
Approximate Mileage 80/charge 20kmpl 16-18kmpl 15kmpl
Running Cost INR / kilometer 0.4 3.75 4.6 5

 

*For Mahindra e2o we do not have any actual user figures of the mileage. Their site claims 100kms per charge under ideal test conditions so we are considering 80kms per charge.

We shall now find the additional investment needed and approximately how many years it would take to recover the extra investment. We expect a car to run approximately 10000 kilometers per year for 10 years.

Particulars\Car Model Mahindra e2o Tata Nano LX Special Edition Maruti ALTO 800 LXI Chevrolet Spark LT
         
Investment saved
over Mahindra e2o
- 360000 250000 200000
Running Cost INR per year
@ 10000 kms per year
4000 37500 46000 50000
 Running cost over 10 years
(considering one runs a car for 10 years)
40000 375000 460000 500000
Interest you can earn on investment saved
at 7% per year
-  25200 17500  14000
Cost of Car + Running cost for 10 years 640000 615000 810000 900000
Interest earned for the 10 year period - 252000 175000 140000
Net Cost of Car + Running cost for 10 years 640000 363000 635000 760000

 

Hence, from all the above calculations we can conclude that overall if you plan to buy an Alto or Spark it would make some economic sense and an electric car could be considered. But if you are planning to buy the Nano then you should go ahead and buy the Nano as the additional price you pay for the electric car would not justify the additional investment.

Electric cars might do well in some countries where special tax breaks are provided as well as subsidy is provided for buying such cars. But in India as far as we are aware there are no such additional subsidies / benefits provided for buying such a car.

Also with electric cars, there is no clarity regarding the battery life and the cost of replacing the battery. When the REVA was launched, if we recall correctly the cost of replacing the battery was around INR 80000 and the battery warranty was approximately 40000 kms. Hence, the cost of battery worked out to INR 2 per kilometer in addition to charging costs.

Finally, in India most of the power is supplied by Coal powered power plants. Hence, there is no environmental benefit of running an electric car. Yes, if you install a solar plant to charge the batteries, then yes you save the environment, otherwise even that benefit is negated.

We would like our readers comment on our analysis, if we are wrong somewhere or what you feel regarding buying an electric car as against a regular petrol / cng / diesel powered car.

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