Vehicle Cost Calculator Assumptions and Methodology

The Vehicle Cost Calculator is a high-level screening tool that compares the ownership costs and greenhouse gas emissions among alternative fuel vehicles, advanced technology vehicles, and conventional vehicles currently on the market. For more information, see these sections below:

• Data Entry
• Cost and Emissions Calculations
• Data Sources and Values

Data Entry

Vehicle Data

A user selects vehicles to compare by model year, make, and model. For each vehicle selected, the calculator retrieves the city and highway fuel economy from the database licensed from the fueleconomy.gov website with data sourced from Edmunds. For most vehicles, a range of prices is possible depending on what options the buyer selects. For these vehicles, we present the possible low and high prices, and use the low price as the default value. The user may override the default price to better reflect the particular model of choice. For some models, a single price is available.

Fuel Prices

As each vehicle is selected, the fuel type and price is shown below the selected vehicles. The prices are based on a national average, as reported in the quarterly Alternative Fuel Price Report. The user may change the fuel price to reflect local prices.

Driver Behavior Information

To accurately calculate fuel costs for selected vehicles it is important to know how a user drives and how much of the vehicle's total mileage is driven using each fuel type. This is especially important for plug-in hybrid vehicles, which operate using both gasoline and electricity from the grid. The default values provided in this section are derived from U.S. averages reported by the Summary of Travel Trends, 2001 National Household Transportation Survey. The user may tailor this information to his or her situation by modifying the supplied values:

Value	Description
Normal Daily Use	This section captures information about the driver's daily, repeating usage pattern, for example, commuting to and from work or school or running errands. The user enters average daily driving distance, how many days per week and weeks per year the vehicle is used in this manner, and how much of this driving is done in city vs. highway conditions. For plug-in hybrid vehicles, the user can select how often the vehicle will be recharged in the Electricity Use box. The tool will determine how much of the driving distance can be done using electricity, given the frequency of charging, assuming that the vehicle will be fully charged each time it is plugged in. Any distance in excess of this amount will be assumed to be powered by gasoline.
Other Trips	This section captures information about typical weekend driving and longer trips. The supplied value for distance is again taken from U.S. averages. The user may modify the distance and the percentage of city vs. highway driving. For plug-in hybrid vehicles, the tool assumes that the vehicle will travel the city portion of this distance using electricity, and the highway portion of this distance using gasoline.
E85 Ethanol Use	This section captures the percentage of time a driver plans to use E85 in the selected flexible fuel vehicle.
Electricity Use	If the user has selected a vehicle capable of recharging from the electric grid -- namely, a plug-in hybrid electric vehicle or an all-electric vehicle -- the user may supply the state where the vehicle is most often charged to determine the fuel mix (coal, natural gas, oil, etc.) used to generate the electricity in the user's area. This is needed to determine the greenhouse gases (GHG) emitted when generating the electricity in that area because each fuel in the mix has its own GHG emissions factor. If a plug-in hybrid is chosen, the user can select how often they plan to charge the vehicle.
Biodiesel Fuel Use	This section captures the percent of time a user plans to use biodiesel (B20 or B100) in the selected diesel-fueled vehicles.

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Cost and Emissions Calculations

This section describes how the results are calculated, the assumptions made, and what underlying data are used.

Example Case Definition

Joe Blough lives in Denver, Colorado and he is in the market for a new car. He has narrowed his choices down to three vehicles:

1. A hybrid electric vehicle (HEV), which costs $28,200 and gets 36 mpg in the city and 34 mpg on the highway
2. A plug-in hybrid electric vehicle (PHEV), which costs $32,500 and gets 42 mpg city and 38 mpg highway when operating on gasoline and uses 360 Watt-hours per mile (Wh/mi) when operating on electricity in the city and on the highway. He plans to charge it daily.
3. A flex fuel vehicle (FFV), which costs $28,500 and gets a gasoline city/highway fuel economy of 20/28 mpg and 14/20 mpg when operating on E85.

He normally drives about 34 miles per day for 5 days per week and does this for 49 weeks per year. Twenty-five percent of this driving is done under highway conditions and the rest is city driving. His other trips, taken over the weekends and on his three vacation weeks, amount to 4,000 miles with 50% of that done on the highway.

Vehicle and Driver Behavior Information

Table 1 displays the selected vehicles' performance data being used for this example. And Table 2 summarizes the annual mileage data associated with the driving pattern that would be entered by the user.

Table 1. Vehicle performance and cost data

	Hybrid Electric Vehicle (HEV)	Plug-in Hybrid Electric Vehicle (PHEV)	FLEX-Fuel Vehicle (FFV) Gasoline/E85
Miles per gallon city (CMPG)	36	42	20/14
Miles per gallon highway (HMPG)	34	38	28/20
City Watt-hours per mile (CWh/mi)	-	360	-
Highway Watt-hours per mile (HWh/mi)	-	360	-
All-electric range (AER)	-	35	-
Cost	$28,200	$32,500	$28,500

Table 2. Vehicle annual mileage splits between city and highway driving

	Normal Daily Use	Other Trips	Total
Days per Week	5	-	-
Miles per Day (MPD)	34	-	-
Weeks per Year	49	-	-
Percent Highway Miles (PHM)	25%	50%	-
Annual Total Miles	8,330	4,000	12,330
Annual Highway Miles (AHM)	2,083	2,000	4,083
Annual City Miles (ACM)	6,247	2,000	8,247

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Vehicle Fuel Use Calculations

Fuel consumption is broken down into city driving and highway driving associated with normal daily vehicle use and with other trips. For gasoline vehicles like the HEV, this split is all that is required.

The HEV calculations are summarized in the following equations, and the results are shown in Table 3. These equations are used to calculate fuel consumption for all vehicles that are not run with electricity from the electrical grid. See tables 1 and 2 to decode the abbreviations used to name the parameters.

Total City Gasoline = 229 gal
Total Highway Gasoline = 120 gal
Total Gasoline = 349 gal

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For the PHEV calculations, each driving type is further broken down into miles on electricity and miles on gasoline. The user may select one of three recharging schedules for normal daily use driving — twice per day, once per day, or every other day. When fully charged, the PHEV is capable of operating on grid-derived electricity for a limited number of miles (referred to as the all-electric range or AER). The potential average daily miles driven on electricity is set at AER times the number of recharges per day (RPD) specified by the user — 2, 1, and 0.5 for recharging twice per day, once per day, and every other day, respectively. If the normal daily driving mileage is greater than the potential daily miles on electricity (as defined by RPD times AER), the PHEV uses electrical power until the batteries are depleted, and gasoline is used for the remainder of the daily miles. The city-highway mileage split is assumed to be the same for the miles on electricity and the miles on gasoline. If the value of RPD times AER exceeds the normal daily mileage, only electric power is required for normal daily driving.

For mileage in the "Other Trips" category, the PHEV is assumed to use electricity for the city portion of the driving and gasoline for the highway portion. The equations for the PHEV calculations are shown below.

If RPD*AER >= Normal Daily Use Miles, annual fuel usage is calculated as:

Example: = 6,247 * 360 * 0.001 = 2,249 kWh

Normal Daily City Miles Gasoline (NCMG) = 0

Example: = 2,083 * 360 * 0.001 = 750 kWh

Normal Daily Highway Miles Gasoline (NHMG) = 0

If RPD*AER < Normal Daily Use Miles, annual fuel usage is calculated as:

Table 3. Normal daily fuel use results

	City		Highway
	Electricity (kWh)	Gasoline (gallons)	Electricity (kWh)	Gasoline (gallons)
HEV	-	174	-	61
PHEV	2,249	0	750	0

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For Other Trips:

Table 4. Other trips fuel use results

	City		Highway
	Electricity (kWh)	Gasoline (gallons)	Electricity (kWh)	Gasoline (gallons)
HEV	-	56	-	59
PHEV	720	0	0	53

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The FFV calculations are similar to the HEV calculations, except that the driver can choose between using E85 and gasoline, so fuel use for each fuel must be tracked. To facilitate this tracking, the user must input into the tool the fraction of the time he expects to refuel with E85. In this example, the driver expects to fill up with E85 half of the time. This assumes that the driver refills with the same volume of E85 as he does when he buys gasoline. The following equations calculate the city-highway breakdowns of E85 and gasoline use for this example.

Example: = 8,247*0.5/((1-0.5)*20+0.5*14) = 243 gal

Example: = 8,247*(1-0.5)/((1-0.5)*20+0.5*14)=243 gal

Example: = 4,083*0.5/((1-0.5)*28+0.5*20) = 85 gal

Example: = 4,083*(1-0.5)/((1-0.5)*28+0.5*20)=85 gal

Total E85 Volume = 328
Total Gasoline Volume = 328

Where
TCM = total city miles
THM = total highway miles
FE85 = fraction of fill-ups on E85
CMPG = city miles per gallon for gasoline (gas) and E85 (e85)
HMPG = highway mile per gallon for gasoline (gas) and E85 (e85).

Table 5 summarizes the fuel and electricity use results for the three vehicles in this example.

Table 5. Summary of city and highway fuel and electricity use

	City			Highway			Total
	Gasoline	E85	Electricity	Gasoline	E85	Electricity	Gasoline	E85	Electricity
HEV	230	-	-	120	-	-	350	-	-
PHEV	0	-	2,969	53	-	750	53	-	3,719
FFV	243	243	-	85	85	-	328	328	-

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Fuel Emissions and Costs

Having calculated the usage for each fuel, we can now determine the annual fuel cost and greenhouse gas emissions (GHG) for each vehicle.

Annual Gasoline Cost = Total Annual Gallons * cost ($/gal)
Annual Electricity Cost = Total Annual kWh * cost ($/kWh)
Annual Gasoline Emissions = Total Annual Gallons * GHG (lb GHG/gal)
Annual Electricity Emissions = Total Annual kWh * GHG (lb GHG/kWh)

Table 6 summarizes the results of the cost and emissions calculations for the three vehicles.

Table 6. Vehicle fuel use, fuel cost and emissions summary

	Gasoline (and E85)			Electricity			Total
	Total Gallons	Cost ($)	GHG (lb)	Total kWh	Cost ($)	GHG (lb)	Cost ($)	GHG (lb)
HEV	350	$994	8,376	-	-	-	$994	8,376
PHEV	53	$151	1,272	3,719	$372	7,809	$523	9,081
FFV-Total	656	$1,726	12,562	-	-	-	$1,726	12,562
FFV-E85	328	$794	4,690	-	-	-	$794	4,690
FFV-Gasoline	328	$932	7,872	-	-	-	$932	7,872

(1) Electricity GHG emissions calculation based on the fuel mix for the region in which the user's state, Colorado in this example, is located. The emissions factor for Colorado is 2.1 lb GHG per kWh (versus 1.6 lb GHG <per kWh for the national average fuel mix)
(2) Gasoline Price = $3.08/gal (national average when document written)
(3) E85 price = $2.75/gal (national average when document written)
(4) Electricity price = $0.11 (regional average based on state)

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Additional Annual Costs

In addition to annual fuel and electricity costs, the calculator includes average costs for maintenance, tires, insurance, license, and registration. These costs were taken from a study done by the American Automobile Association (AAA), and represent average costs across the five vehicle classes studied — small sedan, medium sedan, large sedan, 4WD SUV, and minivan. Because of uncertainties in expected life and future costs associated with high-performance batteries, the cost to replace the battery pack has not been included in this tool. As of April 2011, the only commercially available advanced electric vehicles were the Nissan Leaf EV and the Chevrolet Volt PHEV and both have manufacturer warranties of 8 years or 100,000 miles.

The tires and maintenance cost varied by +/- 10% of the average over the five classes. The insurance, license, and registration charge varied by +/- 12% of the average over the five classes. The costs are calculated as follows:

• Tires plus maintenance = 5.38 cents per mile
• Annual cost for tires plus maintenance for this example:
  Total Annual Miles * $0.0538/mile * 12,330 miles/yr = $663
• Insurance, license, and registration = $1,616 per year

Table 7 presents a summary of the annual costs for the three vehicles in this example.

Table 7. Annual costs summary

	Tires and Maintenance	Insurance, License, and Registration	Fuel	Electricity	Total
HEV	$663	$1,616	$994	0	$3,273
PHEV	$663	$1,616	$151	$372	$2,802
FFV	$663	$1,616	$1,726	0	$4,005

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Vehicle Purchase Cost and Net Present Value

To compare the costs for each selected vehicle, we need to calculate the sum of the purchase costs and the net present value of the annual costs over the life of the vehicle. To do this, we selected annual escalation rates for fuel and electricity and a discount factor to convert future costs into present costs.

For calculating the cost of the vehicle, we assumed the buyer financed 90% of the vehicle price and took out a five-year loan at 6% interest (AAA 2010 pamphlet). This results in an annual payment of 0.232 times the net price of the vehicle for each of the first five years of vehicle ownership. Year one must also include the 10% down payment. Table 8 presents these costs for the three vehicles in this example.

Table 8. Vehicle costs for a 5-year loan at 6% interest and 10% down payment

	Vehicle Price	Year 1	Years 2 - 5	Total
HEV	$28,200	$8,708	$5,888	32,260
PHEV	$32,500	$10,036	$6,786	$37,180
FFV	$28,500	$8,801	$5,951	$32,605

For any year, x, between the year of purchase and the vehicle's end of life, the escalated cost of fuel or electricity is calculated as:

where EF = annual escalation factor

The net present value (NPV) of the total annual costs (TAC) for any year is:

where DF = discount factor

The following annual costs elements comprise the TAC: escalated cost of gasoline + escalated cost of E85 + escalated cost of electricity + maintenance/tire cost + insurance/license/registration cost + vehicle down payment (year 1 only) + annual vehicle loan payment (years 1 through 5 only). The escalation factors and discount factor used in these calculations and in the tool are listed in Table 9.

Once we calculate the net present value for each year's vehicle cost, we can calculate and graph the cumulative NPV for each vehicle for each year. The cumulative NPV for any year is the sum of the annual NPVs up to and including that year. This allows us to compare the cost of owning each vehicle as the cost accumulates over its life. Figure 1 presents the cumulative NPVs for the 3 vehicles in this example.

Figure 1. Cumulative net present value of annual costs

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Key Calculation Assumptions and Data

The following assumptions were made:

1. For normal weekday driving, the user selects the frequency of PHEV re-charging — twice per day, once per day, or every other day. The chosen normal weekday re-charging frequency does not impact mileage on "Other" trips (described in item 3 below).
2. For PHEVs during normal weekday driving, battery electricity is used until the battery is depleted and then gasoline is used; for both electricity and gasoline, the city-highway mileage split is assumed to be the same for the miles on electricity and the miles on gasoline.
3. For mileage in the "Other Trips" (which encompass both normal weekend driving and vacation driving) category, the PHEV is assumed to use electricity for the city portion of the driving and gasoline for the highway portion
4. For E85 FFVs, the user inputs the percentage of the time he refills with E85. The tool assumes that this equates to the percentage of the fuel volume that is E85. This in turn assumes that the driver refills with the same volume of E85 as he does when he buys gasoline.
5. Because of uncertainties in expected life and future costs associated with high-performance batteries, the cost to replace the battery pack has not been included in this tool. As of April 2011, the only commercially available advanced electric vehicles were the Nissan Leaf EV and the Chevrolet Volt PHEV and both have manufacturer warranties of 8 years or 100,000 miles.
6. The cost of purchasing and installing a charging system has not been included in this tool. It is assumed that suitable outlets are available for the selected frequency of recharging. Cost estimates vary considerably depending on a number of parameters - level of electrical service chosen, availability of government and other incentives, a variety of possible battery charging business arrangements involving the car dealer or third parties, the house's or business' current electrical service, etc.
7. This analysis does not include the vehicle trade-in value. If included, this could help the more expensive electric vehicles defray some of their excess upfront costs, depending on how they maintain their value relative to conventional vehicles.
8. Table 9 presents the data and their sources used in the calculations.

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Data Sources and Values

The following data sources and values were used in the calculations (Table 9).

Table 9. Data Descriptions, Values, and Sources

Parameter	Value	Description and Source
Vehicle Attributes
Vehicle Prices		From fueleconomy.gov. Users may also substitute their own prices.
Vehicle Fuel Economies		From fueleconomy.gov; fuel economies of vehicles older than 2008 have been adjusted to be equivalent to those from EPA's more rigorous testing procedures started in 2008
PHEV All-Electric Range	35 miles	Based on Chevrolet Volt specifications
Fuel Attributes
Fuel Prices	Automatically updated	Quarterly Alternative Fuel Price Report; www.afdc.energy.gov/price_report.html
Fuel GHG Emissions		Full fuel cycle (well to wheels) Greenhouse Gas emissions (GHG) factors derived from GREET model version 1.8d results; in CO2 equivalents. (model available at http://greet.es.anl.gov)
Gasoline	23.5	Pounds of CO2e per gallon of Gasoline
E85	14.3	lb GHG/gallon E85
CNG	19.8	lb GHG/gasoline gallon equivalent
LPG	15.6	lb GHG/gasoline gallon equivalent
Diesel	28.3	lb GHG/gallon
B20	23.9	lb GHG/gallon
B100	6.2	lb GHG/gallon
Gasoline Escalation Rate	1.8% per year	Annual Energy Outlook 2011, Table A3, Transportation section.
E85 Escalation Rate	1.6% per year	Annual Energy Outlook 2011, Table A3, Transportation section.
CNG Escalation Rate	0.3% per year	Annual Energy Outlook 2011, Table A3, Transportation section.
LPG Escalation Rate	1.3% per year	Annual Energy Outlook 2011, Table A3, Transportation section.
Diesel Escalation Rate	1.8% per year	Annual Energy Outlook 2011, Table A3, Transportation section.
B20 Escalation Rate	1.8% per year	Assumed the same as diesel.
B100 Escalation Rate	1.8% per year	Assumed the same as diesel.
Electricity Attributes
Electricity Prices		Electricity prices from Ventyx.
GHG Emission Factors		Greenhouse Gas emissions (GHG) factors from GREET version 1.8d model (converted from grams/kWh in Electric worksheet, Table 5); based on fuel used to generate the electricity. (available at http://greet.es.anl.gov)
Coal	2.6	lb GHG/kWh
Oil	2.0	lb GHG/kWh
Natural Gas	1.2	lb GHG/kWh
Propane	0.75	lb GHG/kWh
Renewables	0	lb GHG/kWh
Nuclear	0	lb GHG/kWh
Fuel Mix		Energy Information Administration, Electricity Net Generation, Open Data, API https://www.eia.gov/opendata/
Electricity Escalation Rate	-0.3% per year	Annual Energy Outlook 2011, Table A3, Transportation section.
Vehicle Operating Costs
Tires + Maintenance Cost	5.38 cents per mile	American Automobile Association (AAA) publication, "Your Driving Costs," 2010 Edition
EV Tires + Maintenance Cost	4.10 cents per mile	AAA maintenance reduced by 28% based on: DeLuchi, Mark and Lipman, Timothy, An Analysis of the Retail and Life Cycle Cost of Battery-Powered Electric Vehicles; UC-Davis Institute of Transportation Studies. http://escholarship.org/uc/item/50q9060k
Insurance + License + Registration Cost	$1,616/year	Average of averages of 5 vehicle classes — small sedan, medium sedan, large sedan, 4x4 SUV, Minivan; 5 averages within +/- 12% of grand average
Vehicle Purchase Down Payment	10% of vehicle price	American Automobile Association (AAA) publication, "Your Driving Costs," 2010 Edition
Loan Interest	6% annually	American Automobile Association (AAA) publication, "Your Driving Costs," 2010 Edition
Term of Loan	5 years	American Automobile Association (AAA) publication, "Your Driving Costs," 2010 Edition
Discount Factor	2.3%	Assumed value based on the current national average return on a 5-year CD (http://www.bankrate.com/cd.aspx).
Default Travel Data (can be changed by the user)
Normal Weekday Miles	34	Based on 2001 National Highway Transportation Survey: Summary of Travel Trends; Table 29. Prepared for the U.S. Dept. of Transportation Federal Highway Administration. December 2004.
Normal Weekday days per week	5	Assumed Value
Normal Weekday Weeks per year	49	Assumed Value
Normal Highway % Highway	45%	Based on city-highway split for the Environmental Protection Agency's Federal Test Procedure.
Annual Other Travel Miles	3,596	Based on 2001 National Highway Transportation Survey: Summary of Travel Trends; Table 29. Prepared for the U.S. Dept. of Transportation Federal Highway Administration. December 2004.
Other Travel % Highway	80%	Assumed value

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