Breakdown: cost of gas vs. electricity for my EV?

Electric boat at Balboa Bay © Vision Marine Technologies

Environmentally friendly "zero emission" goals are not the only defining issues surrounding the push for electric transition.

The cost of fueling a typical gasoline powered vehicle or fueling a large marine vessel's tank has continued to skyrocket due primarily to the recent spike in fossil fuel prices, across the board.

Earlier this month, oil prices (as measured by benchmark West Texas Intermediate crude (WTI) jumped to a high of $134 per barrel, before pulling back to today's $113 quote (the highest since 2008). With gasoline prices at a current $4.30 per gallon nationally (more than $6 per gallon in California), the conversation surrounding the transition into electric vehicles and recreational and marine boating seems to have taken center stage.

Why are gas prices rising?

Global gasoline prices have surged due to several contributing factors. Most recently, the largest contributing factor has been Russia's invasion of Ukraine last month.

Russia is one of the world's biggest oil suppliers, supplying some 8% of US crude oil requirements. Although the vast majority of Russia's hydrocarbon production flows to Europe and Asia, global oil supply is affected as a whole in that oil is priced through global market supply and demand.

Hydrocarbon products (such as gasoline and heating oil) have clearly risen sharply due to the attacks in Russian, low global inventories, and the inhibited future spending by oil companies. The Covid outbreak in China has also had a large impact on global oil prices. China is the world's largest energy consumer (4.6 billion barrels in 2019) and biggest importer of crude oil. Throughout China's Covid related lockdowns, factories and industrial cities suffered strict mandates inhibiting work flows, which has in turn adversely impacted demand. These same issues have also dislocated the global supply chain.

Electricity prices are also rising

For decades, it has always been the case that the cost of diesel or gasoline is far more expensive than electric charging, although it should be mentioned that electricity prices have also seen a rise in prices. A driving component in the surge in electricity prices is due in part to the rise of natural gas prices, which in turn have been affected by an increase in demand, with a constrained incremental grid infrastructure in place. The United States gets approximately 40% of its power from natural gas fired plants.

Studies show that the total cost of ownership (TCO) of an EV is about $4,700 less than that of an internal combustion engine (ICE). While battery prices will likely not decrease due to the surge in pricing of critical battery metals (lithium, graphite, nickel, copper and cobalt), it is expected that increased battery efficiency will balance these price increases. Therefore, we will see a continuously improving TCO as more and more electric vehicles are on the road over the next decade.

Couple riding electric boat - photo © Vision Marine Technologies

What is the cost differential between filling up my gas tank and recharging my EV?

Let's break a few things down to figure out how much it costs to add 100 miles of range onto the average ice powered vehicle, as compared with the average electric vehicle. We will start by using the average costs change over the last three years, and how much those costs varied in the United States.

The Environmental Protection Agency (EPA) uses the term "MPGe" to comparatively measure the equivalent of an electric vehicles' miles per gallon to a legacy gasoline engine. The "MPGe" helps consumers understand how far an electric vehicle is able to travel on 33.7 kilowatt-hours (kWh) of charge.

The 33.7 kWh is used because it is the amount of electricity that is chemically equivalent to the energy in a gallon of regular gasoline. In 2022, electric vehicle models of that year sold in the United States had an average MPGe rating of about 97. This means that driving 100 miles in that average vehicle would consume 34.7 kWh of electricity. To compare this to gasoline engine vehicles, the EPA reported that in 2020, the average ICE vehicle sold in the United States had a combined fuel economy rating of 25.7 miles per gallon. This essentially means driving 100 miles in that average vehicle would use 3.9 gallons of gas. (the EPA has not yet released figures for 2021 or 2022).

What does this all mean?

Using monthly data between February 2019 through February 2022, as compiled by the US Energy Information Administration and Bureau of Labor Statistics (for electricity rates) validates that the cost of gasoline continues to be far more expensive in comparison to electricity.

At 3.9 miles per gallon for gasoline, relative to the price of 34.7 kWh over time, the US national average sits at $14.08 per gallon for gasoline and $5.14 per gallon equivalent for electricity.

Cost efficiency, the race to zero emission and increasing local, state and federal mandates is clearly strong encouragement, which will increasingly continue to fuel rapid growth electric transition. The marine industry will need to adhere to current and future global government mandates, and nurture an environmentally friendly future, while also benefiting from the financial advantages that electrification brings.