**Life cycle cost summary:** Battery EVs cost more t
han fuel cell EVs, but fuel costs are less for battery EVs. Fuel savings with battery EVs can offset the higher vehicle costs for BEVs with less than 150 miles range, but **for BEVs with more than 150 miles range, fuel cell EVs with 350 miles range will have lower life cycle costs** (fuel, vehicle, insurance, maintenance, etc.)

**Vehicle cost. **A long-range, full-function battery electric vehicle is projected to cost more than a fuel cell electric vehicle in mass production, based on detailed analysis by MIT. For example, a BEV with 250 miles range is projected to cost approximately $11,100 more than a fuel cell EV with 350 miles range.

As shown in this graph, the incremental cost of the BEV over a FCEV varies from zero at 100 miles BEV range to over $20,000 for a BEV range greater than 320 miles, based on MIT mass production cost projections. ===>

**Annual BEV fuel savings**. But the electricity to power a BEV with 250 miles range is projected to cost less than the hydrogen to power a FCEV with 350 miles range. As shown in this chart, annual fuel savings for a BEV owner could vary between $100 to almost $500 per year, depending on the cost of electricity for charging batteries and the cost of natural gas used to make hydrogen. If we assume natural gas costs $6/MBTU (Industrial Natural gas averaged $4.542//MBTU in 2011, and the EIA’s 2012 Annual Energy Outlook is projecting industrial natural gas prices below $6/MBTU through 2023) and electricity costs 6 cents/kWh (red circle on this graph), then the BEV owner would save just under $300 per year on fuel costs compared to the owner of a FCEV.===>

If we assume 10 cents/kWh for electricity, which the Electrification Coalition uses as an average cost for PHEVs and BEVs, then the annual savings drops to $100.

**Simple payback period.** One measure of life cycle costs is the length of time it takes for fuel savings to pay off the higher capital cost of the BEV. In this example, it **would take 43 years for the owner of the BEV to pay off** the $11,100 extra cost of a BEV with 250 miles range with electricity at 6 cents/kWh and 31 years for electricity at 4 cents/kWh, both assuming that natural gas costs less than $6/MBTU, which the EIA is projecting through 2023. The payback period would be **66 years** with electricity at 10 cents/kWh as suggested by the Electrification Coalition.

The payback period will be reduced for BEVs with less range. Shorter-range BEVs have smaller, lighter batteries that require less power to accelerate and cost much less. Payback period will also depend on the price of electricity, as shown on this graph.====>

This graph dramatically shows the impact of building BEVs with longer range. Once the range gets above 150 to 175 miles, then the payback period exceeds 15 years unless electricity can be purchased at less than 4 cents/kWh. At 250 miles range, the payback period exceeds 25 years, even if electricity is 4 cents/kWh.

**Net present value.** Another metric for evaluating the tradeoff between high initial BEV incremental cost vs. the annual fuel savings is to calculate the net present value (NPV) of the BEV owner’s incremental cash flow to purchase a BEV compared to purchasing and operating a FCEV.

The graph on the right shows the 15-year net present value (NPV) of purchasing a set of BEVs compared to purchasing a FCEV with 350 miles range.

The NPV is plotted versus the discount rate, which is a measure of how the BEV owner treats future fuel savings compared to the current extra cost of buying a BEV over a FCEV. Most consumers value immediate costs highly, but “discount” future savings.

For example, the upper curve on this graph shows the NPV of purchasing a BEV with 100 miles range. In this case the purchase cost of the BEV-100 is the same as the FCEV-350 cost...approximately $3,600 more than a regular gasoline car in both cases. The BEV owner will pay just over $5,000 less in fuel costs over 15 years. The NPV of these fuel savings decreases as the discount rate increases.

For a BEV with 150 miles range, the NPV for the BEV owner is still positive for low discount rates, but the NPV goes to zero with a 10% discount rate (the red circle on this graph).

For BEVs with ranges of 175 miles or more, the NPV is always negative for any discount rate. This shows once again that **BEVs with more than 150 to 200 miles range are not cost effective compared to FCEVs, even taking into account the fuel savings over time **with zero discount rate.

**Fuel cost per mile for other vehicles.** The cost of fuel for any alternative vehicle will depend on many factors such as the cost of the original fuel source (crude oil for gasoline & diesel, natural gas, biomass, coal, etc. for electricity and hydrogen) as well as the capital and operating expenses in generating and bringing the fuel to the filling station.

This chart provides an estimate of the cost of fuel in cents/mile for regular gasoline internal combustion engine vehicles (ICV), gasoline hybrid electric vehicles (HEVs), hydrogen-powered fuel cell electric vehicles (FCEVs), and battery electric vehicles (BEVs). Each alternative vehicle cost per mile is plotted as a function of the fuel price:

Gasoline-powered ICVs and HEVs are plotted vs. the cost of gasoline between $2/gallon & $5/gallon

Hydrogen-powered FCEVs are plotted as a function of the cost of natural gas between $2/MBTU & $10/MBTU, assuming that hydrogen is initially produced by reforming natural gas onsite with a capacity of 1,500 kg/day in production volumes of 500 units [1].

BEVs are plotted as a function of the cost of electricity between 4 cents/kWh & 10 cents/kWh

We conclude that:

- BEVs will have the lowest cost per mile unless electricity costs more than 10 cents/kWh and natural gas costs less than $4/MBTU [2].
- Hydrogen-powered FCEVs will have the second lowest cost per mile unless natural gas costs more than $8/MBTU and gasoline costs less than $2.50/gallon, in which case a gasoline HEV would have similar cost per mile.
- Gasoline-powered HEVs will have third best fuel cost per mile, and
- Conventional (non-hybrid) ICVs will always have the highest fuel cost per mile.

Note: the fuel economies assumed for this chart are 60 miles/kg for the hydrogen FCEV [3] (approximately equal to 60 mpg of gasoline), 37 mpg for the HEV and 25 mpg for the ICV. All vehicles are full 5-passenger cars with lightweight bodies. We assume that the BEV has 250 miles range that requires 0.45 kWh of grid electricity to travel one mile (0.33 kWh/mile of stored battery energy), as described in the fuel efficiency pages.

[1] Eventually the cost of hydrogen should be reduced with central production and pipeline distribution. As shown in the natural gas fuel efficiency page, it is more efficient to convert natural gas to hydrogen for a FCEV than to convert natural gas to electricity for a BEV. Therefore the natural gas component of FCEV fuel cost should be less than the natural gas part of BEV fuel cost.

[2] The average cost of industrial natural gas was $4.52/MBTU in 2001. The EIA is projecting that natural gas costs will remain below $6/MBTU throug 2023, and may rise to $7.37/MBTU by 2035.

[3] Engineers from two DOE National Laboratories have measured the on-the-road fuel economy of a Toyota SUV FCEV at 68.3 miles/kg of hydrogen, a better fuel economy than assumed here.

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