Vehicle efficiency standards could push lifetime cost of EVs below petrol cars

A new analysis has found that if car companies pass on the savings from the New Vehicle Efficiency Standards (NVEC), EVs would be priced closer to on par with cars run on petrol or diesel, and make them cheaper than internal combustion engine (ICE) cars over the life of the vehicle.

“The lower upfront cost, if credits are passed to customers, would help tilt the dial towards EVs being more economical to own and drive,” the report from the Commonwealth Bank Sustainable Economics team states.

“Great demand for [battery EVs] could spark a race to lower emissions by rival car manufacturers.”

The NVES set an annual limit on tailpipe CO2 emissions per kilometre, which is averaged across an entire car company. For companies that go above that limit, they can either purchase credits or pay a penalty of $100 per g/km. Companies that are below this limit can earn credits which they can sell to others above the limit.

The analysists compared one of the few models with both electric and petrol versions, the MG ZS Excite (an ICE vehicle) with the MG ZS EV Excite, two similar vehicles, on total overall costs (TOC) over 11 years in a number of scenarios.

The MG ZS EV Excite is one of the cheapest EVs in Australia, and with a direct petrol counterpart it makes it a good option for comparison.

The full price of the petrol MG ZS over its lifetime – including the cost of the car, fuel, registration, maintenance and insurance – was estimated to be just over $71,000.

This is about 8% less than the current total ownership cost of the MG ZS EV if the car is charging using solar or the grid.  But, if a NVES discount of 6.94% is added to the upfront costs of the car, the total ownership costs drops to just over $70,000 – making it cheaper than the petrol equivalent.

“We find that an EV charged at home with solar has the lowest TCO compared to the other charging options,” the report states.

“If credits earned are passed on to the customer via lower upfront purchase price, the higher upfront cost narrows to $8,479.  We estimate an owner of the EV is $988 better off overall compared to purchasing a petrol car.”