In prior posts, I noted that my “break-even” price of electricity for my wife’s Prius Prime is currently around 24 cents per kilowatt-hour. That’s the point where running the car on electricity costs as much as running it on gas, with gas at $3.24 a gallon
I can say that with precision because the Prius Prime can use either fuel. As long as I know the EPA ratings for miles-per-gallon and miles-per-kilowatt-hour, it’s trivial to figure out the break-even rate, for that one car.
Breakeven electricity price = Gas price x (miles-per-KWH/miles-per-gallon)
In other words, if one KWH takes you 7% as far as one gallon of gas, then the break-even price for that KWH is 7% of the price of a gallon of gas.
Call that term at the end — (miles-per-KWH/miles-per-gallon) — the “break-even ratio”.
Here’s something that I find interesting. All PHEVs have roughly the same break-even ratio. To show that, I downloaded the EPA 2022 model year vehicle mileage database. Using the MPG (gas) and MPGe (electric) figures, and the constant that one mile per KWH is 33.705 MPGe, I was able to calculate this break-even ratio for every PHEV offered in the U.S. in 2022.
Roughly 70% of all the PHEVs offered in 2022 currently have a break-even electricity price between 23 cents and 25 cents per KWH. That’s using today’s current U.S. average gas price of $3.36 per gallon of gas (per the Federal Reserve Bank of St. Louis).
Note that each one of those ratios is a straight-up apples-to-apples comparison, because it’s literally the same vehicle being driven either as a gas hybrid or as an electric vehicle.
By contrast, for a lot of pure electric vehicles, there is no obvious way to do that apples-to-apples comparison. Most famously, there is no such thing as a gas-powered Tesla. Less obviously, even if a vehicle manufacturer offers the same vehicle in gas and electric versions, the versions won’t be identical because factors such as interior volume will change between the models.
An important caveat for the table above is that all of these PHEVs are hybrids, when they are burning gasoline. That’s going to translate to above-average gasoline fuel economy. And, because the efficiency of the electrical side of the vehicle does not change much across manufacturers, that’s going to lead to a low break-even price.
But what about those cars where the gas “twin” uses a conventional gas engine? What would the theoretical “break even” price be, for those nearly apples-to-apples comparisons? You’d expect that without the hybrid efficiency in the gas “twin”, the break-even price of electricity ought to be higher.
It’s much hard to do this electric/gas “twins” analysis from the EPA data, for a couple of reasons. First, there aren’t many examples of conventional gas/EV twins. Second, you have to find them by searching the EPA database for instances of the same model, but different propulsion system. I also have to rely on manufacturers using the same base model name for both gas and electric models.
I only found four plausible “twins”, and two of them have so many power trains listed for both electric and gas that I’m not sure I’ve made an apples-to-apples comparison. That said, the two at the bottom appear to be fairly unambiguous twins. They both suggest a break-even gas price (say) 34 cents per gallon. Which makes sense, as standard (non-hybrid) gas engines are inefficient relative to the hybrid engines of the prior table.
The outlier is the Mustang, and there’s good reason to believe that’s not a coincidence. Performance cars have notoriously fuel-inefficient engines. Likely, the more you move toward the performance end of the gas-car spectrum, the higher your break-even electricity rate is. And the higher your fuel cost savings would be in switching to a performance electric vehicle instead of gas vehicle.
So, if your only two options were a pair of seemingly-similar cars — one using a standard gas engine, the other using electricity — and you would not consider a car with a hybrid gas engine — and you’re not looking for a performance vehicle — then, plausibly, you could start counting you fuel cost savings at 34 cents per KWH. Because your gas-vehicle comparison is so inefficient.
Obviously, YMMV. For any two cars that you consider to be close substitutes — one gas, one electric — you can simply look them up on fueleconomy.gov and do the math.
For example, the Tesla and BMW above have nearly identical interior volume, and are similar in price. Doing the math, the 132 MPGe equates to (132/33.705 =) 3.92 miles per KWH. The break-even price of electricity for this pair of cars, at $3.36 per gallon of gas, is $3.36*(3.92/30) = $0.44 per KWH. Presumably that’s due to the fuel-inefficient engine in the gas BMW, for performance driving.
In summary: If you’re the sort of person who is considering buying either a hybrid or an EV, at today’s gas prices, your break-even electrical rate is going to be somewhere around 24 cents per KWH. If you insist that your only realistic choice is either a standard gas vehicle or an EV, your insistence on using the less-efficient gas technology means that your break-even electrical rate is going to be plausibly somewhere around 34 cents per KWH. But if you insist that your comparison is between gas and electric performance cars, you can plausibly boost that break-even electrical rate to around 45 cents per KWH, or so. YMMV.
What’s the policy point?
Almost all discussion of electric vehicles either explicitly or explicitly assumes that electricity is a much cheaper fuel than gasoline. The standard reasoning is that sure, EVs may be more expensive up front, but they’ll pay you back in fuel savings.
By inference, then, there’s an assumption that sooner-or-later, EVs will be the economically preferred choice, owing to their lower fuel costs.
My point is, that’s only true sometimes.
The only true apples-to-apples comparison of gas versus electric fuel costs comes from PHEVs. In that case, the exact same car can use either fuel. There, the break-even price of electricity is centered around 24 cents per KWH currently, with gasoline at $3.36 per gallon. Anything cheaper than that, and electricity is the cheaper fuel.
There’s a caveat. The gas engines in those cars are all hybrids, so that benchmark really only applies to individuals who are considering a purchase of either a hybrid or an EV. My guess is, that’s most of the EV market. For those folks, that current 24-cent break-even price is appropriate. But as you move up the scale of inefficiency, from hybrid to standard gas engine to gasoline performance car, your savings from electricity grow, and your benchmark break-even electrical price rises.
That said, for anyone driving a PHEV now, or anyone considering buying either an EV or a hybrid, that’s the correct current benchmark rate at which gasoline and electricity are equally costly fuels (with gas at $3.36/gallon).
As long as we are talking about PHEVs, or electric versus hybrids, large portions of the U.S. population face electrical costs for vehicle charging as high or higher than that break-even rate. At current electrical and gas prices, there are no fuel savings from going electric.
First, in New England, recent spikes natural gas prices have resulted in unprecedented electrical rates. Prices seem to be easing a bit in most states, but only a bit.
Source: US EIA.
A PHEV user in New England will get little-to-no cost savings from driving on electricity rather than gasoline, assuming they pay somewhere near the U.S. average price for a gallon of gasoline. Which appears to be true, per the American Automobile Association. By inference, a New Englander choosing between similar hybrid and EV models probably could not count on significant fuel cost savings from going EV. At today’s gas and electric prices in that area, a hybrid and an EV would have roughly equal fuel cost per mile.
Source: AAA, accessed 2/7/2023
But a far more important population is individuals who cannot charge at home, and must use public charging stations. This probably includes most of the roughly 30% of the U.S. population that does not live in single-family dwellings. For these individuals, charging is expensive enough to eliminate any material fuel savings from electricity, compared to driving a gas hybrid.
My experience is that for most public charging stations, it’s just about impossible to figure out the cost. But I think the following ad is representative of the best rates you are likely to find.
Source: EVgo.
Ignoring the weasel-wording (“as low as”, “TOU pricing applies”), and paying attention to the monthly fees, none of these options offers any material fuel savings for the PHEV owner or for the individual considering electrical versus gas-hybrid transport.
Bottom line is that at current prices, EVs are going to be a hard, hard sell for people who have to rely on expensive public charging stations. At least at current gas prices.
Rather than turn a blind eye to that, public policy needs to acknowledge it.
I’m a big believer in electrical transport. Right now, it doesn’t make good economic sense to a large portion of the population, looking narrowly at purchase price. And for a pretty big chunk of the population, there will be no material fuel cost savings to offset that higher purchase price.
Maybe that will change, somewhere down the road. Some combination of higher gas prices and lower electrical prices might result in universal fuel savings from EVs compared to hybrids. But right now, you really shouldn’t based policy on the assumption that everyone will see fuel cost savings from EVs.
