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Getting An Electric Vehicle May Financially Be Worth It

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The ever-increasing prices of fuel and heavy dependence on foreign countries for fuel needs are one of the leading factors for car buyers to consider buying an EV. EV or Electric Vehicles are still in their early days, as compared to ICE or Internal Combustion Engine vehicles, but they are catching up fast. 

Globally, EVs accounted for about 5% of all car sales for the year 2020, whereas in India it is just 1.3%. However, the same is expected to grow at 90 percent CAGR between 2021 and 2030. Should you join the bandwagon and purchase an EV? Does it make financial sense to do that?

Here are a few simple calculations to help you deduce whether it makes financial sense to opt for an EV or not. The cost of ownership of a vehicle comprises the cost of buying a car, maintenance spending, and running cost. 

The cost of ownership for a five-year period between a petrol, diesel, and EV car is as follows. We have made some assumptions such as an annual running of 15,000 km and 75% of it being in the city and the remaining 25% being on the highways.

Parameters

Units

Petrol

Diesel

EV

Total Mileage

Km

75,000

75,000

75,000

Fuel Efficiency

Km/Ltr

14

17

A full charge gives 250 km s of Range

Cost per Unit

Rupee/litre

Rupee/kWh

110

94

10

Running Cost

Rupees

5,89,285

4,14,705

82,500

Servicing

Rupees

38,000

40,000

25,000

Total (A)

Rupees

6,27,285

4,54,705

1,07,500

The cost of buying a car is the biggest cost that you must incur. That would majorly depend on the manufacturer and model of the car. Also depends on the state where you are buying the car, since all the states have slightly different incentive programs. To give some perspective, here is the example of Tata Nexon, in all its three variants, Petrol, Diesel, and EV.

Petrol Automatic

Diesel Automatic

EV

Cost without Incentives (B)

13,80,000

15,64,000

16,58,600

Total Cost (A+B)

20,07,285

20,18,705

17,66,100

Cost with Incentives (B)

13,80,000

15,64,000

14,08,700

Total Cost (A+B)

20,07,285

20,18,705

15,16,200

The government of India is also pushing EVs quite strongly as well. The Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme is in its second phase and provides incentives for buying EVs. It is also working on strengthening the charging network for better connectivity to the charging network.

Running Cost

One of the major benefits of opting for an EV is the lower running costs. For petrol based cars, the running cost comes to about INR 8-10 per kilometer. However, EVs run at INR 1-2 per kilometer. In short, they run at 20% of the cost of running an ICE car.

Based on the city where you are living and approximate running per year, you can easily deduce the operating cost of owning an EV. The above example shows that owning an EV for 5 years is about INR 5 Lakhs cheaper. Thus, making for a strong financial case for itself.

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