Understanding the Cost of EV Ownership Compared to ICE Vehicles

The rise of electric vehicles (EVs) has reshaped the automotive landscape, offering an environmentally friendly alternative to traditional internal combustion engine (ICE) vehicles. EV sales in India have been growing in the past few years.

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 Treo offers a real-world range of about 110 km on a full charge, while the Bajaj RE provides a mileage of approximately 28 km/kg. With a 4-kg CNG tank, the RE can cover around 110 km on a full tank.

Given an average electricity cost of ₹6.5 per unit, to fully charge a Treo, which has a 7.3 kWh battery will cost around ₹48, whereas considering an average CNG cost ₹85/kg, the RE would cost ₹340 to run the same 110kms. This totals to a cost per km of ₹0.45 for Treo and around ₹2.8 for RE

Considering a commute of 80 km/day or 28,000 km a year, the Treo will total about ₹13,000 whereas RE would cost ₹78,000, indicating a difference of around ₹65,000/year

However, it's important to note that charging an electric vehicle, such as an electric three-wheeler, typically takes around 5 hours, whereas refuelling a CNG vehicle takes only a few minutes. This significant difference in refuelling time can be a major drawback for many, as it directly impacts the vehicle’s uptime and operational efficiency. Additionally, most electric three-wheelers come with a 3-year battery warranty, and after that period, if any issues arise with the battery, it can be quite expensive to replace or repair.

Electric 4-Wheeler Segment

To make a comparison, let's look at the EV and petrol variants of the popular electric car, the Tata Punch.

Purchase Cost: The Tata Punch (Petrol) – 11L (On-road Hyderabad)

The Tata Punch (EV) – 16L (On-road Hyderabad)

There is a difference of ₹5L (can be more or less depending on the variant) between the two when considering the purchase cost.