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Breaking down the $11.7bn savings!

Updated: Feb 28, 2019

OK so if you watched my video outlining ChargeSmart's mission you would have heard my intro. This short blog let's you know how I broke that down.

The core numbers

OK so every good calculation needs some core numbers from some credible sources. The numbers that form the basis of how I came to the Big Number are:

  • Kiwi's drove 11,691km's on average per light vehicle in 2018 (MoT)

  • The average EV on NZ roads gets 5.66km/kWh. What this means is that for every kWh of battery available you can drive 5.66km on average. Of course newer cars can go further (a Kona gets 7.5km/kWh for example), but let's use a fleet average.

  • 11,691km's at 5.66km/kWh means a fleet of EV's would use on average 2,066 kWh of energy each

  • The national average electricity price is $0.2903 according to MBIE (OK so I got this wrong in the video - I said $0.293!)

  • Kiwi's drove just over 48 billion kilometres in 2018 and this has been climbing. Yep we love our cars!

Fuel savings

OK let's start with the big one - savings on fuel. Using the above figures as the core inputs, here's the calculation:

  • on average, using both and the MOT petrol and diesel cost comparator, the cost per km is $0.1955

  • over 48bn kilometres this is $9.42bn

  • in comparison, 48bn kilometres driven by EV's costs $2.47bn

  • the difference is $6.95bn, or $1,685/yr per vehicle in your back pocket

Yep the diesel cost includes RUC so you could recalculate this and apply it to EV's (see below). The bottom line is though, the difference is massive.

Maintenance Savings

This one isn't as large as fuel savings, but it will be a nice comfort in Kiwi's back pockets. According to the AA, the average ICE costs $550 p.a. to service excluding tyres. Tony Seba, global economist based in California and author of Rethinking Transport 2020-2030 estimates that EV's cost on average 80% less to maintain. Here's the numbers:

  • Across the entire light fleet that's $2.27bn to maintain ICE vehicles

  • Maintaining EV's will cost $453m in comparison.

  • Thats a country saving of $1.8bn, or $440/yr per vehicle in your back pocket.

  • On top of this Seba highlights that EV's should get 800,000+km with minimal servicing.

Health Cost Savings

OK so as I say in the video, this is where it gets a little interesting. We don't get exposed to the sort of studies being undertaken in Europe, but it's fair to say that diesel is not viewed in a good light. There is even a group called "Doctors against diesel" to give you an idea about how passionate some fact based specialists are. Estimates by the World Bank (see report reference below) indicated across a number of countries that airborne pollution had a 2.5-4.9% of GDP cost to the local economy in developing countries. Here's a direct quote from one of their reports (if you click the WHO logo below it will take you to the full report):

" 44 WHO European Member States the societal costs (of heavy particulate air pollution) are equivalent to more than 1% of the respective gross domestic product and in only four of the 48 Member States considered in the analysis do these societal costs amount to less than 1%."

For NZ the numbers look like this:

  • total GDP (Gross Domestic Product) was $300bn NZD in 2017

  • 1% of this is $3bn in health costs related to respiratory illness, heart disease, and premature death

Total Potential Savings

If we add all of these figures together we get $11.79bn. Now I can hear some of you saying "but what about grid upgrades". Yes we are going to need some of those. But if we choose to go a technologically advanced path involving smart EV charging the costs don't get close to this so we still save. Sure the cost of manufacturing EV's need to come down so the purchase price is cheaper, but this is going to happen aggressively over the next 5 years, and it will keep declining.

So that is a big number. But I'm willing to bet it's even bigger when we take into account:

  • the macro economic benefits associated with a positive contribution to NZ's brand as 100% Pure (more eco tourism)

  • the savings we could get by encouraging older vehicles off our roads and into the scrap heap. New cars (including EV's) have radar, autonomous emergency braking and lane departure warnings - this stuff saves lives.

Road User Charges

OK so if you've made it this far and you know your math, you'll have realised the headline is a tad sensationalist. There are no road user charges included in the EV fuel costs currently, and when EV's hit 2% of all light vehicles this is likely to come into play. So let's do that and see where it lands using the MoT calculator:

  • 48,160,267,821 kilometres driven

  • $0.5913 per kilometre for road user charges = $2.7bn

  • $0.00887 GST per kilometre = $427m

  • Combined additional cost = $3.27bn

Therefore the actual savings when RUC are applied to all EV when all light vehicles are electric is only $8.52 bn.

Take me to task!!

I love a good debate so if you think I've calculated it wrong please let me know by sharing your own analysis (hint: I want solutions not problems and just saying 'you're wrong' is just another problem).

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