Understanding the Cost of EV Ownership Compared to ICE Vehicles
According to CEEW, in November 2024, about 5 million electric vehicle (EV) registrations in India were recorded between FY2014 and FY2024. The electric two-wheeler (E-2W) segment has the largest market share, with 53% of the market, followed by electric three-wheeled vehicles (E-3W) at 42%. The electric four-wheeler (E-4W) sector accounts for 4%, while the remaining 1% is comprised of other vehicles, such as electric buses and trucks.
Source: CEEW
Although there is growth in the market, many potential buyers still have a question, which is cheaper? EV or ICE?
To answer this question, let's consider examples from E-2W, E-3W, and E-4W markets.
Electric 2-Wheeler Segment
To make a comparison, let's look at two popular two-wheelers: representing the electric two-wheeler (E-2W) segment, we have the recently launched Ather Rizta Z (2.9 kWh), and from the traditional internal combustion engine category, we’ll consider the Honda Activa 125.
Purchase Cost: Ather Rizta Z (2.9 kWh) - ₹1.35 L (On-road Hyderabad)
Activa 125 – ₹1.12 L (On-road Hyderabad)
There is a difference of ₹23,000 between the two when considering the purchase cost.
Running Cost: The Ather Rizta offers a real-world range of about 100 km on a full charge, while the Honda Activa 125 provides a mileage of approximately 45 km/l. With a 5.3-liter fuel tank, the Activa can cover around 240 km on a full tank.
To match this range, the Ather Rizta would need to be charged 2.4 times. Given an average electricity cost of ₹6.5 per unit, charging the Rizta would cost around ₹45, whereas the Activa, with petrol priced at ₹100 per litre, would cost ₹530 for the same distance. That’s a significant cost difference.
For an average daily commute of 30 km, or about 11,000 km annually, the Ather Rizta would require around 110 charges, totalling ₹2,000 for the year. In contrast, Activa would consume roughly 244 litres of petrol, costing around ₹24,000 annually. As you can see, the cost difference between the two almost vanishes within a year, and EVs also have lower maintenance.
Electric 3-Wheeler Segment
To make a comparison, let's look at two popular 3-wheelers: representing the electric 3-wheeler (E-3W) segment, we have Mahindra Treo and for the ICE segment let's look at Bajaj RE CNG.
Purchase Cost: Mahindra Treo – ₹3.5L (approx. On-road price)
Bajaj RE – ₹2.7L (approx. On-road price)
There is a difference of ₹70,000 between the two when considering the purchase cost.
Running Cost: The Tata Punch EV offers a real-world range of around 330 km on a full charge, while the petrol-powered Punch delivers a mileage of approximately 14 km/l. With a 37-liter fuel tank, the petrol version can cover over 500 km on a full tank.
To fully charge the EV, which has a 35-kWh battery, it would cost around ₹230, with a per km cost of approximately ₹0.70, assuming an average electricity rate of ₹6.5 per unit. In comparison, the petrol version would cost around ₹3,700 to fill the tank, translating to a per km cost of roughly ₹7.
For an average daily commute of 30 km, or about 11,000 km annually, the EV would need to be charged about 33 times, costing around ₹8,000 per year. The petrol version would require refueling 22 times, amounting to about ₹81,000 annually. This results in a savings of around ₹73,000 per year with the EV.
Although the initial price difference of ₹5 lakh may take about 6.5 years to recover, when factoring in savings on maintenance and other operational costs, the time to break even is likely to be shorter. Most EVs come with a battery warranty of 8 years or 1.5 lakh kilometres, and since many people typically keep a car for 6 to 7 years, the concern about battery issues and the high cost of repair or replacement is largely mitigated during the ownership period.
As we can see from the comparisons across the electric two-wheeler (E-2W), three-wheeler (E-3W), and four-wheeler (E-4W) segments, while electric vehicles (EVs) generally have a higher upfront purchase cost, the running and maintenance costs are significantly lower compared to their internal combustion engine (ICE) counterparts.
For the E-2W segment, the Ather Rizta Z offers substantial savings in running costs over the Honda Activa 125, with the difference in annual fuel/charging costs almost eliminating the price gap within a year. Similarly, in the E-3W segment, the Mahindra Treo shows impressive savings over the Bajaj RE CNG, especially in terms of fuel cost per km, though longer charging times and battery replacement costs need to be factored in.
For the E-4W segment, the Tata Punch EV provides a more economical running cost compared to its petrol variant, and while the initial price difference is significant, the savings on fuel and maintenance could recover this difference in about 6.5 years, potentially even sooner when considering reduced upkeep costs for EVs.
However, the decision to switch to an EV is not solely financial. Factors like refuelling time, charging infrastructure, battery life, and resale value play a key role. For many, the reduced operating costs and lower maintenance of EVs may outweigh the higher upfront cost, making them a more attractive option in the long run.
Ultimately, as the market matures, with better infrastructure and advancements in battery technology, the price gap between EVs and ICE vehicles will continue to narrow, making EVs a more viable choice for a larger segment of consumers.
Frequently Asked Questions:
1. Are EVs cheaper to run than petrol or diesel vehicles?
Yes, EVs are much cheaper to run. For example, charging an electric scooter like the Ather Rizta for 100 km costs only about ₹45, while riding the same distance on a petrol scooter like the Honda Activa 125 costs around ₹530 in fuel.
2. How much can I save per year by using an electric scooter?
If you ride around 11,000 km a year, you could save around ₹22,000 per year on fuel by using an electric scooter instead of a petrol one.
3. How long does it take to recover the extra cost of an EV?
Depending on the type of EV and your usage, the extra money you pay for an EV can be recovered in 1 to 6.5 years. Higher daily usage usually means quicker savings.
4. Are batteries in EVs reliable?
Yes, most EVs come with an 8-year battery warranty. Since most people change cars every 6–7 years, battery issues are less likely to be a major concern during that time.