Abstract:

Ensuring that the cost per mile in an electric vehicle is favorable compared to gasoline underpins the transition to electrification. However, electricity prices vary widely across the United States and can be more expensive than gasoline per mile even at the lowest electricity rate offered by one’s local utility. This study provides a brief overview of the energy cost per mile for a vehicle using gasoline versus the energy cost per mile using electricity in the United States. It highlights the imperative to consider electricity costs for electric vehicles in the context of all competing gasoline alternatives including gasoline hybrids. In addition, this briefing provides an overview of opportunities to lower the cost of electricity for electric vehicles by better reflecting the utility cost of service. This brief highlights strategies and policies that utilities use to drive down the cost of electricity and increase the attractiveness of electric vehicles. Based on the assessment of the current cost of travel in the context of utility prices and rate structures, the author makes three conclusions, they are: (1) Pricing electricity too high risks losing electric vehicle customers and electric miles. (2) The marginal cost to serve electric vehicles with time-of-use rates or smart charging is very low. (3) Separate metering of an electric vehicle provides the consumer with a clearer view of costs and a transparent evaluation of system impact.