Affordability of electric vehicles for a sustainable transport system: an economic and environmental analysis

This paper compares the economic and environmental benefits of electric and hybrid electric vehicles with that of conventional vehicles. Without tax credits, only the hybrids without plug-in incur lifetime total costs equivalent to a conventional vehicle whereas the consumer affordability for all other vehicles is less encouraging and depends on changes in gasoline prices. With the provision of federal tax incentives, the lifetime total cost for all electric vehicle types that are driven for 120,000miles over 12 years was found to be generally affordable with no more than 5% higher in lifetime total cost than a conventional vehicle, except the hybrid electric plug-in equipped with a 35-mile electric driving range. Results of sensitivity analysis reveal that a greater lifetime driven mileage would promote further overall cost savings even at a greenhouse gas abatement cost as low as $42per ton. Our study has demonstrated the importance of an energy policy that includes tax credits to address the inadequacy of cost differentials and consumer affordability. The environmental benefits provided by the electric and hybrid electric vehicles should satisfy consumers' interest in protecting the environment, reducing the dependence on imported fossil fuels, and switching from traditional to alternative fuel vehicles.