The Delta Dilemma: EV Cost Savings Miss the Point

(Source: RMI Electric Vehicles as Distributed Energy Resources)

Where are you, rational car buyers?

The myth of the rational economic man lurks around the issue of electric vehicles (EVs). 

See, rationality is something to which many learned folks aspire, but it turns out to be a mirage. Yes, we stumble towards it in a thirsty stupor, dreaming of drinking up its cool, clean sensibility. But, we never get there. It always remains a misty illusion just out of reach. 

The rationality dilemma with EVs is pretty simple. Let’s make it clear -- EV purchasers are no more rational than EV skeptics. EV purchasers will look at the graph above, and say -- ha! -- I am saving money on a per mile basis compared to all of your fools with internal combustion engine (ICE) cars. They are not wrong, but neither are they entirely right. 

EV skeptics will look at the graph above and say -- ha! -- you are being duped into assuming this is an apples-to-apples comparison. Again, they are right, but that is not the whole picture, either.  

Why you are going to lose the “EVs are cheaper over the long haul” debateIt boils down to this.

Yes, electricity is a great source of energy, and it is cheaper on a per mile basis than gasoline (even the highly subsidized gasoline that we enjoy, and abuse, in the US). 

But electricity is electrons, difficult to contain, eager to be used immediately. Gas is a portable, energy dense liquid fuel that affords the owner of this magical worker unsurpassed flexibility in how and when to use it. Ironically, in certain places electricity and gas are made of the same stuff -- oil. I am looking at you, Curacao and Gibraltar, where 100% of electricity is generated from oil! 

So the real calculation about EVs is more complex because the services that you gain from gas and electricity are not interchangeable. 

What value do you place on your American right to cruise the highways to your heart’s delight? If the answer is high, then the comparatively lower cost of an EV-mile is meaningless. Your peace of mind in hitting the road without a worry in the world as to how your next mile will be fueled is, in economic terms, infinite. It trumps all other concerns. The term of art for this is “range anxiety.”

What value do you place on cheap, clean transportation within a relatively small driving radius? If the answer is high, then the EV vs. ICE cost comparison is how your explain to your beloved significant other why you just purchased a car that cannot comfortably drive the family to visit your in-laws. Oh, and by the way, the sticker price was a little steeper than that conventional car you had agreed to purchase.

But really, the EV question is even more complicated than that

​And that is just the tip of the iceberg. There are many other factors -- your comfort with rapidly improving battery technology, your assumption that EV charger networks will continue to expand, your belief that manufacturers will not bail on EVs in the future, etc. -- that ultimately weigh heavily on any rational calculation justifying or dismissing the idea of purchasing an EV. 

Dilemmas breed a “let’s wait and see” attitude, how boring

Which brings me to the last point. I grant you permission to purchase (or lease) an EV (or PHEV if just want to dip your toes). Don’t feel like you have to explain yourself to your neighbors (though this tactic will not work with your significant other). 

After all, why did they buy that Honda Odyssey? Was it on a purely rational, benefit-cost maximizing basis? No, they wanted something comfortable and reliable for the family, period. 

They just wanted it, just like you just want an EV. And let’s be real, you want it because it is cool, wave-of-the-future technology. Because it allows you to avoid ever patronizing another neerdowell, franchised Exxonmobil (or BP, or Shell, or fill-in-the-blank) gas station. Or maybe you just like getting all the best EV charger parking spots. 

It doesn’t matter - embrace the irrationality. Be an early(ish) adopter. Get onboard, because EVs are where we are headed, like it or not. Queue EV hockey stick graph.

(Source: RMI Electric Vehicles as Distributed Energy Resources)