Good News About Electric Cars — They’re Driving Down Electricity Rates
There is good news about electric cars today from Synapse Energy Economics in the US and Indicata in the UK. In a study commissioned by the Natural Resources Defense Council, an analysis by Synapse found:
Rapid growth in electric vehicle (EV) adoption has raised the question of how electric cars affect the electricity rates paid by all households, including those that do not own EVs. To answer this question, Synapse compared the electric utility revenues from EV charging with utility costs associated with serving EV load, including the costs of utility EV programs. The results of our analysis indicate that, since 2011, EVs have contributed much more in utility revenues than costs. Because of this, electric cars have helped apply downward pressure on rates. This analysis was conducted on behalf of the Natural Resources Defense Council.
Between 2011 and 2021, electric car drivers in the US contributed $3.12 billion more than their associated costs, which drove down monthly rates for “all customers.” But by how much, we hear readers ask? The answer, according to Quartz, is that after Synapse adjusted its analysis to account for utility costs spent on EV programs, there was a net revenue gain of $2.44 billion.
The vast majority of all revenue generated by EV charging comes from drivers in the western US, primarily because of California’s rapid adoption of the technology. As of 2022, the 1.1 million EVs registered in California accounted for 37% of all electric cars in the US, according to the Energy Information Administration.
Time Of Use & Charging Electric Cars
In many communities, especially in California, utility companies rely on time-of-use (TOU) rates that differ depending on the time of day. TOU pricing encourages people to charge when total demand for electricity is low. By contrast, charging when demand is high — typically in the late afternoon and early evening hours — costs more. A 2019 report published by Lawrence Berkeley National Laboratory and Pacific Gas & Electric sponsored by the NRDC found that charging electric cars at off-peak times could allow the national grid to accommodate all US homes with electric cars without the need to make significant upgrades to the electrical grid.
The Electric Power Research Institute (EPRI) published a joint report with the NRDC on Wednesday that found EV efficiency improvements could reduce consumer costs by more than $200 billion annually by 2050 — as long as vehicle costs remained roughly unchanged. The report also found that advancements in EV technology could lower electricity demand by hundreds of terawatt-hours. To put that in perspective, the United States consumed about 4,000 terawatt-hours of electricity in 2022.
“Vehicle electrification is a critical strategy for meeting clean air and safe climate goals,” Luke Tonachel, a NRDC transportation strategist, said in a statement. “If we do it most effectively and efficiently, we can add to the environmental benefits by minimizing power demand from electric vehicles, right sizing the electrical grid and charging infrastructure, and minimizing battery materials.”
Nevertheless, the MAGA crazies insist on pushing for higher fees on electric cars because they don’t pay gasoline taxes. By that tortured logic, owners of conventional cars should be charged higher fees because they do not contribute to consumer savings attributable to charging electric cars, but making sense is never a high priority for those who insist that 2 + 2 equals 7.
Used Car Price Parity For Electric Cars
There has been an unholy hullabaloo about the price of electric cars being too high for ordinary folks. That myth was exploded by executive editor and exalted grand poohbah Zachary Shahan the other day when he wrote that the Tesla Model 3 and Model Y now cost $10,000 less than the average price of a new car in the US. An extensive new analysis by Indicata in the UK published this week shows that the price of used electric cars has now reached parity with the price of conventional used cars.
According to a report by Fleet News, the Indicata study shows that prices of used electric cars peaked in the third quarter of 2022, when demand surged and the chip shortage weakened supply. Prices fell later as manufacturers lowered prices on their electric cars just as the first used EV lease programs were ending. In 2023, demand could not keep up with this increased supply, which led to prices for used electric cars falling by over 20% in just six months. Prices for used conventional cars also fell at the end of last year.
Dean Merritt, UK head of sales for Indicata, said, “Price parity is vital for electric cars in the used market as consumers are now being offered all the latest fuel types at similar prices, where before used EVs were commanding a 25 to 30 percent price premium, which put buyers off going electric. Price parity is fueling demand just as the volumes of used EVs, particularly ex-fleet cars, are increasing, which is good news for the entire industry.”
Indicata specifically looked at used prices for several models that are available either as convention cars or as electric cars. It noted that electric and gasoline-powered Peugeots reached price parity in June 2023. But then the value of the electric version increased. Now the two are at parity again, with the average price for both in March at £14,250.
In January 2023, the Corsa EV was worth more than the equivalent diesel model by around £7,000. As of March 2024, the diesel Corsa was worth £16,000 and the Corsa BEV £15,250, which reflects how far market prices have moved on certain models in a short space of time, Indicata says. The EV version of a used MG ZS has remained about £1,250 higher than the gasoline-powered models, but the electric version of the Citroen C4 is now about £2000 less than the diesel version of the same car.
“Our data shows prices in general have moved much closer together,” said Merritt. “In the case of Peugeot 208 BEV and petrol models, prices were identical at the end of March 2024 while there was just a few hundred pounds difference between the Corsa BEV and diesel models at the same age and mileage.”
Hybrids Are The New Stars In The Used Car Market
Hybrids were the star performers in used cars in the first quarter of 2024 according to a separate analysis from Autorola in the UK. Its analysis shows sales of used hybrids more than doubled from the first quarter of the prior year. More demand means higher prices, and indeed prices for used hybrids are up by 3.7 percent year over year. Used hybrids increased their share of sales on Autorola’s MarketPlace online trade portal from 9.4 percent in Q4 2023 to 13.8 percent in Q1 2024.
Jon Mitchell, Autorola UK’s group sales director, told FleetNews, “We have been pleasantly surprised by the number of hybrids we are now selling, with our trade buyers reporting many consumers using them as a stepping stone before going fully electric.”
The Takeaway
The world of cars has gone crazy for hybrids lately, as major automakers like Ford and GM are saying they intend to add many new hybrid and plug-in hybrid models to their sales lineup. Jon Mitchell said it best — people are just flat out nervous about cars with plugs and see hybrids as a way to do something about lowering their fuel costs without actually climbing onto the EV bandwagon. (Hopefully some of them also want to reduce the amount of crud they spew into the air as they drive.)
The fear of plugging in is a major stumbling block for the EV revolution, spurred in large measure by falsehoods pedaled by oil companies terrified by what a transition to electric cars will mean for the outrageous profits they earn by turning the Earth into a cinder. All those lies may slow the rise of electric cars but won’t prevent it. We who are champions for electric cars will make sure the good news from Synapse and Indicata gets spread far and wide. Information is the best way to banish fear, so let’s all do our part.
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