The Australian Electric Vehicle Association

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You Might as well i-MiEV

(Or, how should you value your second hand EV)

Wondering about the cost of going electric? For 3 years it has been possible to walk into a dealer and order a zero-emission car. Pricey yes, but not more so than a luxury European and less than a lot of 4WD’s. Plus prices are going down, and fuel prices are going up. The recent run-out of the Mitsubishi I-MiEV, Australia’s most fuel efficient car, has them sitting on lots at less than $30,000.

So what is the true cost of going emission free in today’s market?

Well in the July 5th 2013 issue of Cars Guide, we are provided with a breakdown of the costs of buying and running a small car. Also, the first release i-MiEVs are 3 years old which provides an opportunity to value them on depreciation over the same time period as the Cars Guide report.

DEPRECIATION

As you can imagine, valuing a car that retails at $30,000+ against one at $17,990 may not result in the cost saving going the way of the electric vehicle, but the results may surprise you, and of course, anyone buying a new high end luxury car can easily lose $17,990 in depreciation over a 3 year period.

For the purpose of my analysis, I have valued the i-MiEV at $29,000 as when I checked in early July, they could be purchased new, off dealer lots at this price and the delivery price in the US in January 2013 was $US 29,125. I also found one 2010 model for sale at $19,990 and have taken the depreciation value as $9,000.

Using my own experience of fuel cost over 3 months of use mainly to work and back, the cost of off peak electricity for the 3,400 km traveled was approximately $75. This gives a ‘cents per kilometre’ cost of 2.2. If you calculate this value with my off-peak power cost of $0.1764 (including GST) and an average power use of 140 watts per kilometre the cost is 2.47cents.

The next variable is servicing costs, the Mitsubishi capped price service costs are:  every 15,000 km $280, and every 30,000 km $480. Over the 3 year 45,000 km period this is a total cost of $1040. Whether these costs should be a little lower, considering the service schedule is just check and inspect and put the car on a diagnostic, with no cost of oil or replacement fluids at all, is probably a matter for consideration by Mitsubishi.

The final variable is factoring in the cost of Battery replacement, something the ICE cars do not have to take into consideration.  However the life of the battery pack is a consideration when valuing a second hand EV. Around this cost there is a lot of uncertainty.  Mitsubishi Australia warrant the traction battery for 5 years or 100,000km. (In the US where it was 7 years it has recently been extended to 8 years and 160,000 km [100,000 miles] Realistically if you were using the car mainly for a round trip to work of 60km (as I do) then in a year, 240 days travel would equal 14,400 km. Which is very close to the 15,000 a year baseline used for the comparison. I find this amount of usage results in about 8kw of use daily which requires the battery to be re-charged nightly, although it is generally only charged right up to full once a week or less.

After 5 years of this use, there would be 1200 charging events, at 300 charge events a year the 5 year total would be 1500. As long as there is no abuse of the battery, manufacturer’s warranties usually cover 1500 re-charges. The fact that Mitsubishi US has extended its warranty is indicative, that with the quality of the batteries fitted, 1500 re-charges would be a low expectation of lifespan. After the 5 years at 15,000km per year, 75,000 km would be traveled. 1500 re-charges at the 240 per year schedule is 6.25 years or 93,750km traveled. These 2 figures and the 100K warranty were used for the baseline comparison.

The Mitsubishi price for a replacement battery pack is $10,380, and an estimate of fitting cost of $600 was estimated by my local Mitsubishi service centre. (They had never actually done one) However battery costs are constantly reducing and performance increasing, various targets have been set around this, from a 50% cost reduction in the next 10 years in Europe to an 80% cost reduction in the USA.     Also an aftermarket 16KwH battery pack could be purchased for  $7,000 (whether it would fit is another question) Given this scenario comparison is calculated at both a $10,980 and $7,600 replacement cost. As a rule of thumb, the above information indicates second hand EVs should have the value of their battery packs discounted by $1,000 per year over 7years for a 16KwH pack or $62.50 per year for each KwH.

Case 1  Measured fuel cost +$7,000 battery replaced at 100,000km

Case 2 Calculated fuel cost +$7,000 battery replaced at 6.25 years = 93,750km

Case 3 Calculated fuel cost +$10,320 battery replaced at 100,000km

Worst case Calculated fuel cost +$10,320 battery replaced after 5 years (75,000km)

 

i-MiEV 3 years

Case 1

Case 2

Case 3

Worst Case

Electricity Cost

$992.65

$1111.57

$1111.57

$1111.57

Battery Deval

$3420.00

$3648.00

$4941.00

$6588.00

Total Fuel Cost

$4412.65

$4759.57

$6052.57

$7699.57

Depreciation

$9,000

$9,000

$9,000

$9,000

Service cost

$1,040

$1,040

$1,040

$1,040

Total

$14,452.65

$14,799.57

$16,092.57

$17,739.57

 

3 year @15K

Honda Jazz

VW Polo

Holden Barina

Mazda 2 Neo

Fuel Cost

$4437.18

$4249.80

$4907.79

$4571.64

Depreciation

$8095.50

$9745

$9714.60

$9068.80

Servicing

$1711.58

$1085

$740

$1949

Total

$14,244.26

$15079.80

$15,362.39

$15,589.44

 

Aha!  By now you have spotted the anomaly.  I am not going to admit a mistake. If you have sold the car after 3 years for $20,000 with the original battery pack intact, then how can you have spent between $3420 and $6588 on the battery? Well in fact you have not, so if you sell after 3 years and get $20,000 then that cost is not incurred, and the actual cost of ownership is between $11,032 and $11,151 making it a much cheaper option than the ICE car.  Alternatively we could assume the 2010 car used as an example was low mileage, and the battery pack had more life left than one which had done 45,000 km. If we assume the 3 year old car is valued at $20,000 less the amortised cost of usage of the battery pack. Then the buyer would subtract this from the price, using my rule of thumb, $3,000. Making the price $17,000. Obviously, you could then claim depreciation is actually $12,000, not $9,000 and go around in circles working out the true value.  The important thing is, not to double count.

It now seems this could benefit from some more analysis.

Some people may change their car after 3 years, but many keep them for longer.    So what is the value proposition for 6 years or longer, and replacing the battery.  Using Case 1 and Case 3, and for simplicity changing the battery at 90,000 km and valuing all the 6 year old cars at $5,000. Below is the case for selling.

6 years x 15K

Honda Jazz

GM Barina

i-MiEV Case 1

Case 3

Price

$17,990

$17,990

$29,000

$29,000

Resale value

$5,000

$5,000

$5,000

$5,000

Fuel cost

$8874.36

$9815.58

$992.65

$1111.57

Servicing

$3423.16

$1480

$2080

$2080

Maintenance

$1,000

$1,000

 

 

Total

$13,297.52

$12,295.58

$4065.30

$4303.13

Cost less resale

$26,287.52

$25,285.58

$28,065.30

$28,303.14

Battery cost

 

 

$7,600

$10,920

Cost to Buyer

 

 

$12,600

$15,920

EV driving seems to have cost us $2,000. So how does this work out for the buyer ?

Next 6 years

Honda Jazz

GM Barina

i-MiEV Case 1

Case 3

Price

$5,000

$5,000

$12,600

$15,920

Running Cost

$13,297.52

$12,295.58

$4065.30

$4303.13

Total Cost

$18,297.52

$17,295.58

$16,665.30

$20,223.14

 They seem to have done better than us, probably because we should have sold the EV for $6,000+. So what happens if we keep the car for 12 years?

Price

$17,990

$17,990

$29,000

$29,000

Running Costs

$26,595.04

$24,591.16

$15,730.60

$19,526.28

Total

$44,585.04

$42,581.16

$44,730.60

$48,526.28

All this assumes the cost of petrol, electricity and batteries do not change relative to each other. Also remember that we calculated the battery change at 90,000 km.

From the above figures we can see the cost of owning and using the Barina is about $230 per 1,000 km. Compared with $47 to run the EV. If we use the battery to the warranty distance of 100,000 km then we benefit to the comparative value of $1,800, (6 years)and $3,600 (12 years) (Alternatively we could use 11% of battery replacement cost. $844 - $1213 times two.)  Suddenly the costs are lot more equal.  Plus remember, the batteries are warranted to 160,000 km in the USA. The more you get out of them the better off you are.

But, that’s not all !  Why are we replacing the batteries anyway?

Unlike your torch batteries, the traction battery pack is unlikely to die completely, although this may happen to individual batteries. The reason for replacement is that the capacity of the batteries will decline over time. This could be up to 3-5% a year.  This means the 16 KwH pack may reduce to an 11 KwH pack after 7 years and a nominal range of 115 km becomes 80 km.

The traction battery pack is usually considered for replacement at 70% of capacity, due to the reduced capacity and a higher chance of failure of individual batteries.  But this does not mean the batteries are useless, they probably have another 5 years of life as energy storage. At a third of their ‘as new’ value per kilowatt hour, the old batteries could be worth $1,600.  They are your batteries, don’t give them back for re-cycling yet, if you can sell them or use them, it further reduces the 12 year cost by $3,200. 

So Honda Jazz cost 12 years 180,000km                        $44,585

I-MiEV (Case 1) expected cost 12 years 180,000km        $44,730

Less +10,000Km battery use ($2,000) + resale $3,200 

Adjust for $500 in power to travel the 20,000 km       total        $40,030 

This shows we can manage to stop polluting, get the EV grin, and save money.

Groups audience: 

Comments

Daryl,

Please dis-ambiguate 'battery' some places should read 'cell' to make the story less confusing.

Cheers

Bruce Armstrong