EV or combustion? How to tell which one pays off for your fleet
Sticker price is misleading. What decides whether an EV makes sense is total cost per mile over its useful life, and here’s how to calculate it.
More and more clients ask me whether it’s time to add electric vehicles to their fleet. My answer is always the same: it depends on your numbers, not your neighbor’s. And the right comparison is never price against price, but total cost of ownership (TCO).
What goes into total cost
To compare fairly, add up everything you’ll pay for each option over the time you’ll keep the unit:
- Purchase price minus incentives or tax credits.
- Energy: fuel in one case, electricity in the other, including the difference between depot and public charging.
- Maintenance: EVs skip oil changes, engine filters and spark plugs, and their brakes wear less thanks to regenerative braking.
- Tires and insurance, which can cost more for EVs in some markets.
- Charging infrastructure, spread across the units that will use it.
- Resale value at the end of the period.
A simple example
Take a delivery van that drives about 30,000 km (18,600 miles) a year and that you’ll keep for five years. These numbers are illustrative only:
| Item | Combustion | Electric |
|---|---|---|
| Purchase price | US$28,000 | US$40,000 |
| Energy per km | US$0.12 | US$0.03 |
| Maintenance per km | US$0.05 | US$0.03 |
| Annual operating cost | US$5,100 | US$1,800 |
The EV costs US$12,000 more up front but saves about US$3,300 a year to operate. So the gap is recovered in a little over three and a half years, before counting incentives, the charger or resale value.
However, if the same van drove only 12,000 km a year, annual savings would drop to about US$1,300 and payback would stretch past nine years. Same vehicle, opposite conclusion.
What moves the needle most
- Annual mileage. The more you drive, the faster the EV pays off.
- Electricity vs fuel prices in your country and at your charging hours.
- Route type. Stop and go urban routes favor EVs, while long highway routes require checking range and charging time.
- Local incentives, which vary widely between countries and states.
Run the numbers with your data
So you don’t have to build this from scratch, I put together an Excel calculator where you enter your own prices, mileage and costs, and it returns cost per distance for each option, the break-even point and projected savings year by year.