Two things are starting to make me consider the shift to an electric vehicle (EV) for daily use: improvements in vehicle capability, and operating and maintenance cost. It all started with a test drive in August, that allowed me to personally drive an EV through water at wading depth, which boosted my confidence in an EVs ability to survive Philippine roads.
Then, recent information that locally available EVs now have ranges of about 400 kilometers for every full charge. And more recently, a discussion with a dealership regarding operating and maintenance costs, warranties, and after-sales support. Another confidence booster was the story on how some local logistics companies have shifted to EV fleets.
EVs are presently more expensive than regular cars, and the price difference is more than enough to make one think twice about taking the plunge. Also, hybrids appear to be more practical especially if a household can own only one car. An incentive, of course, is that by law, EVs and hybrids are exempted from number coding until 2030.
Former BusinessWorld colleague Brian Afuang gave me the chance to view up close and personally try out the fully electric Audi Q8. The experience made me realize how extensively technology has changed motoring.
The boosters: improved range and lifespan of EV batteries. The 400-kilometer range seems to have become the standard, while battery life now hovers around eight to 10 years. Improved design has also made EVs more weather-proof. But the more important consideration, in my opinion, is operating and maintenance costs.
For people who can afford to own and keep more than one motor vehicle, the option is to own at least one EV — mainly for city driving — and one gasoline or diesel car. For people who can afford only one, I suggest a hybrid car that runs on gasoline and batteries. Fuel cost and coding exemption will be the main consideration, and the limited number of public charging stations will not be an issue.
The Audi Q8 E-Tron is only for the wealthy few who can afford its price tag of P6.25 million to P7.25 million. It has a claimed range of up to 600 kilometers, and can wade in about half-meter of flood water. As I wrote previously, I am sure by next year even more EVs will start trumpeting longer ranges as well. And I would not be surprised if EV makers, by 2024, retails EVs with ranges of 700-800 kilometers.
A recent story by Reuters published in this newspaper reported the plan of the German government to put 15 million EVs and hybrid cars on the road by 2030. German Chancellor Olaf Scholz planned on meeting car executives, ministerial leaders, energy executives, and labor unions to discuss how Germany could achieve the target in seven years. To date, there are roughly 2.2 million cars with an electric motor on German roads, of which 1.3 million were fully electric cars.
“The chancellor is convinced the goal could be reached if carmakers produced more cheaply priced and longer-range cars,” government spokesperson Steffen Hebestreit told a press conference. A spokesperson for the transport ministry also said the government was working to add more to the over 100,000 public charging stations already built.
Locally, having more public charging stations will be a big plus to EV ownership. I am certain additional investments in charging networks are forthcoming. It is inevitable, especially with corporations now shifting to EV fleets. Fleet sales is a major multiplier of EV sales, and should be the focus over retail. Corporate fleets have the most to gain from the EV shift.
As for households looking at EVs for personal use, mainly in the city, the numbers have seemingly become favorable. For P1.6 million, for instance, one can buy a China-made EV or a Japan-brand hybrid car built in Indonesia. The China car gets a five-year service warranty, while the Japan car gets only three. Both have a 100,000-kilometer warranty. But, in addition, the China car gets an eight-year battery warranty.
Now, let us assume a household that runs maybe 12,000 kilometers annually, or 1,000 kilometers monthly. For the hybrid car, assuming a mileage of 25 kilometers per liter, then it is a monthly consumption of 40 liters of fuel. At an average of P60 per liter, then it is a monthly fuel cost of P2,400. For the year, it’s a total of P28,800.
In comparison, the China car claims a range of 400 kilometers for every full charge. It comes with a charging unit that can be installed at home. Eight hours to full charge from zero, I am told. I am uncertain as to how much the charging cost will be, or how much will be added to your monthly electricity bill at home. But at 400 kilometers per full charge, then the unit will have to be charged maybe only three times every month. If it adds less than P2,400 to the utility bill every month, then the EV comes out ahead in terms of “fuel” cost.
As for maintenance, at 12,000 kilometers annually, then the hybrid will need to be serviced maybe twice a year. In my case, I go for preventive maintenance service or PMS every 5,000 kilometers. At an average cost of P6,000 at every interval, for oil and lubricants and service and others, then that’s maintenance of at least P12,000 yearly for the hybrid.
As for the EV, I was told that it will require first inspection at 5,000 kilometers, then an annual inspection thereafter — just to make sure everything is in order. Unless something needs to be fixed, repaired, or replaced, then annual inspection should not cost much. Probably just a matter of checking battery life and performance. No oils or lubricants to replace, no used oil to dispose of.
Price difference? The EV costs P1.6 million. The hybrid is priced the same. The non-hybrid version of the Japan-brand car is P1.3 million. The P300,000 difference in the price of the non-hybrid and the EV can be recovered from not having to pay for fuel and higher maintenance cost. Over a five-year period, that difference is P5,000 monthly. The higher the mileage yearly, that difference becomes smaller.
While the financial math appears to make sense, I guess the only remaining question is whether one is comfortable with buying and owning a wholly China-made car. This is where brand equity, track record, and reliability will come into play.
Marvin Tort is a former managing editor of BusinessWorld, and a former chairman of the Philippine Press Council