Electrical Vehicles versus Conventional in Colombia: a Financial Analysis Comparing Ownership Total Costs

Abstract

Electric vehicles are gaining more and more acceptance and they are considered an interesting solution for sustainable mobility and low emissions, but the purchase cost is the main barrier to their mass adoption. This paper presents a Total Cost of Ownership (TCO) model for personal use cars in Colombia. The objective is to compare an Electric Vehicle (EV) and a Conventional Vehicle (CV) with similar characteristics. All costs that occur during vehicle expected useful life are considered and analyzed for both cases, including purchase cost, taxes, mandatory insurance in face of traffic accidents, maintenance and parts costs, periodic technical reviews, and fuel or electricity cost. The TCO for both vehicles is calculated for a product lifetime of 10 years; the Consumer Price Index is used as the annual rate of increase in costs to be calculated; then, the Net Present Value is calculated, using the Fixed Term Deposit rate, since vehicle purchase is considered as an investment that user is going to do. The results are presented and exposed for which cases, the electric vehicle is already a more financially attractive option than a conventional vehicle, considering the average distance traveled per year by the user. In addition, the purchase cost of EV is estimated so that the TCO is equal to CV