An Analysis of Total Cost of Ownership and Cost Competitiveness of Privately-Owned Electric Vehicles in Nepal

Abstract

The fossil fuel has been the dominant power source of the transportation all over the world in the past centuries. With the development of electric powertrain technology and growing concern over the detrimental effects of fossil fuel like greenhouse gas emission which is associated with negative environmental effects, the transport sector is transforming to electric globally. The Government of Nepal has also announced different policy measures as well as national plans to adapt to this growing trend of electric vehicle (EV) adoption in the country. Since EV are considered to have higher capital cost compared to the internal combustion engine vehicles(ICEV), the operational cost differs significantly due to the different maintenance cost and electricity prices. Also, the separate tax policies for EVs posed by the government plays another important role in the purchase price and annual costs. In this study, a model to calculate the total ownership cost of battery electric vehicles (BEVs) and their ICEV counterparts is developed. The different parameters like purchase price, annual kilometer travel(AKT), annual tax and insurances, fuel and electricity prices, annual maintenance cost etc. are used to estimate the total ownership cost per km (TCO/km)for the two wheeler and four wheeler EVs and ICEVs. The model shows that two wheeler EVs (E2W) have a comparable and even lower TCO/km than the two wheeler ICEVs (ICE2W), while four wheeler EVs (E4W) have lower TCO/km than the ICEV counterparts (ICE4W) only for the lower ends of vehicle segments (hatchbacks) but not for the SUVs and MUVs. Also, the sensitivity analysis shows purchase price and AKT as the most sensitive parameters among others in the TCO/km calculation. The breakdown in the total costs shows that EVs have higher capital cost and lower operational cost over all the segments of vehicles. The estimation of breakeven AKT that makes EVs economical than ICEVs counterparts by comparing specific models in those segments shows that low priced petrol vehicle (hatchback) have lower TCO/km at 7760 km whereas in the case of SUV segment, it is more than 2000 km. For the diesel vehicles, the breakeven AKT in case of hatchback is less than 5000 km due to the high price of diesel fueled vehicles, whereas for the higher ends (MUV), the breakeven AKT is 8840 km. In case of two wheelers, it is found that 75% of E2Ws are economical at AKT of 2000 km and all the E2Ws are economical at the AKT of 5000 km.