ICE and EV Comparison

Efficiency is driving EVs to cost parity

The 2008 Tesla roadster launched with an efficiency of about 21.7kWh/100 miles (4.6 miles/kWh). The Model S battery of 100kWh with the most recent software update would have an efficiency of 4.02 miles/kWh.  Quick math would suggest that the battery efficiency has only improved roughly 12.6%.  

But that is not the case.  Electric vehicle efficiency is highly dependent on weight of the vehicle.  The Tesla Efficiency Rating considers the vehicle weight to help normalize the artificially high efficiency of light cars using small EV batteries.  

The Tesla Efficiency Rating = Wh/km/weight.  Weight unit is in megagrams so that the final output is not a small decimal.

The 2008 Roadster had an efficiency ratio of 109.17, while the Model S Performance with the most recent software update would have an efficiency ratio as follows:

100000Wh / 646 km / 2.215 Mg = 69.88

Therefore, it takes only 70 Wh of energy to propel the Model S one kilometer.  In 12 years, Tesla improved the efficiency by 35%.  Meanwhile, when I compare the popular 2.5L 4cyl Nissan Altima, it’s fuel efficiency has only improved by 23% (2008 26mpg vs. 2020 32mpg) per Fueleconomy.

Now let’s look at prices.  Does it not seem that internal combustion vehicles are getting more expensive every year?   Indeed they are.  In 2008, the average price of a car was $30,400 - 2008 car price.  In 2020 that has increased about 25% to about $38,000 per Yahoo.  This is most-likely due to the added electronic features and gizmos incorporated to improve safety and navigation.   

Electric vehicles on the other hand are becoming cheaper and more affordable as efficiency improves and raw material costs drop.  In a report by Cox Automotive, the average EV price between July 2018 and July 2019 dropped by 13.4%.  This is due in large part to the drop in battery raw material and production costs.  The Li-ion battery constitutes the majority of the cost of the vehicle, so any reduction in production costs will cause substantial downward pressure on EV prices.  Battery prices in 2010 were above $1100/kWh, and have since fallen 87% to ~$150/kWh per a report by BloombergNEF.  Tesla’s CEO, Elon Musk, has hinted that battery prices could fall below $100/kWh, which would be another 33% reduction.  The chart below from UCSUSA displays the projected cost of Li-ion battery packs.  

The blue shaded region is the price range at which experts believe will bring ICE and EV transport to near cost parity.  

To go further.  The Wall Street Journal put together a great analysis of the Tesla Model 3 and found that the cost of the battery pack is roughly 40% of the total vehicle cost.  

The current sales price of the Model 3 - Standard Range Plus is $37,990.  Quick math would suggest that the battery makes up about $15,000 of the total vehicle cost.  A 33% reduction in the battery cost would slash the price by about $5000 dollars.  In one to two years I believe that we will permanently see the average sale price of an electric vehicle drop below that of a gasoline powered car.  

In the market for a new car?  I suggest you consider long and hard which route you want to go.