Is the Better Place Renault Fluence worth EURO 27,500? The highly taxed Danes may think so.
As we get closer to spring, we may also be getting closer to some actual launchings of electric car networks, including that of the much talked about Better Place EV company, headed by Shai Agassi, who recently remarked that electric cars are not getting a good enough tax incentive in the UK. They appear to be getting a much better one in Denmark, which is about to begin selling the Renault Fluence electric model using Better Place’s battery exchange technology. A recent article in Globes financial news site, reported that the Better Place cars will be selling in Denmark for 27,500 Euro, which is virtually a “tax free” price for Danish purchasers.
The Globes article compared the selling price of these cars in Denmark to the proposed price in Israel, when finally made available in the country of Agasi’s birth. In Israel, the cars will be selling for around NIS 125,000 or EURO 25,000 including 60% government taxes. Danish Better Place subscribers who drive 40,000 kilometers (25,000 miles) a year will pay 400 Euro (NIS 2,000) a month, while subscribers who drive less than 20,000 kilometers a year (12,500 miles) will pay 199-249 Euro a month to the Better Place network. The drivers will also be subject to a one-time fee of 1,340 Euro for the battery charging post will be installed at their home.
Better Place’s battery exchange station network is not entering Denmark with a splash, however, as it was reported earlier that only about 10 battery pack exchange stations will be in place when the cars begin selling in that country.
This doesn’t mean that the electric car concept won’t work in Denmark, as due to the very high taxes levied on fossil fuel driven cars by the Danish government (180% of the car’s pre-tax value), driving a tax-free electric model can definitely have it’s advantages there. Electric cars are being promoted in that country by people like Martin Thomson, whose website easyecar.com regularly mentions electric and hybrid models which he personally takes on test drives. He has test driven the Better Place cars, as well as a variety of others.
He plans to check out the new VW Bulli electric minibus, which was featured at the recent Geneva Auto Show.
Following the Better Place network debut in Denmark, and as reported in Globes, Better Place is expected to publish its Israeli prices in the second half of 2011. The company is planning leasing options together with GE Capital, the financing arm of General Electric, which is expected to finance the purchase of batteries against a lien on the revenue from subscribers. Since Denmark is also a small country, Israeli auto reporters will be waiting news the car’s Danish debut to see how Agasi’s concepts will work in Israel, which has a much different climate and car driving mentality.
Read more on Better Place electric car concept:
Better Place Prepares to (Slowly) Enter the Danish Electric Car Network
Better Place Says UK Not Giving Electric Cars a (Tax) Break
Maurice Test Drives the Better Place Electric Car – Like a Dragster!
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The argument of Better Place rests in the actual cost of the battery per kWh for what they are charging.
At around $800 / kWh for a battery with 24 kWh of capacity this is ($800 / kWh) * (24 kWh) = $19,200.00.
With an expected battery life of 7-years, this works out to (7-years) * (12-months / year) = 84 months.
($19,200) / (84-months) = $228.57 per month.
Therefore, assuming (notice I said assuming) that the cost per kWh is $800, then the cost per month would be $228.57.
(However, there are too many internet sources strongly suggesting that the cost per kWh is much lower than $800 / kWh.)
Someone who drives about 24,000 km per year will drive a total of (24,000 km / year) * (7-years) = 168,000 km.
Therefore, the battery cost per km is about ($19,200.00) / (168,000 km) = $0.114 / km.
If the cost of the car would be $20,000.00 (and assuming 14-years of usable life from the car), then the cost per km of the car would be ($20,000 / (168,000 km * 2) = $0.0595 / km.
Assuming an initial cost per kWh of $0.15 / kWh and an annual energy cost escalation of 2.5% per year, then the average cost of energy (electricity) per kWh over a period of 14-years would be about $0.177 / kWh (in 14-years the cost of electricity would be $0.207 per kWh).
If the car will drive 6.67 km per kWh, then if would require 50,400 kWh of energy to drive (168,000 km * 2), and at a cost of $0.177 / kWh, this would be $8,920.80 = ($0.177 / kWh) * (50,400 kWh).
$8,920.80 / (168,000 km * 2) = $0.02655 / km.
This means that the average operating cost of the car would be $0.02655 + $0.114 = $0.14055 / km.
The cost of the car per km is $0.0595 / km — assumes no additional taxes are levied.
For a Toyota, Prius, on the other hand, with an initial gasoline cost of $2.086 / liter and an annual energy cost escalation of 3%, then in 14-years the average cost of gasoline would be $2.546 / liter (the final cost per liter in 14-years would be $3.063 / liter).
The car (assuming a conservative 20-km per liter), would require for 24,000 km (24,000) / (20 km / liter) = 1,200 liters of gasoline per year, and for a 14-year period would require 16,800 liters (1,200 liters per year) * (14-years).
The cost of this gasoline would be $42,772.80 ($2.546 * 16,800).
The cost per km would be ($42,772.80) / (168,000 *2) = $0.1273 per km for gasoline..
If the annual maintenance of the Toyota, Prius, is an extreme $1,000.00 per year with a 2% annual inflation rate, then the average cost per year would be $1,141.00 per year, and a total maintance cost of $15,973.94.
Therefore, ($15,973.94) / (168,000 *2) = $0.04754 per km for maintenance.
The total operating cost of a Toyota, Prius would be $0.1273 + $0.04754 = $0.1748 per km for operating costs.
If the cost of a Toyota, Prius is $25,000.00 and 180% in taxes is levied, then the final cost is $45,000 ($25,000.00 * 180%), and the cost per km is ($45,000) / (168,000 *2) = $0.13393.
In summary, the operating cost of the Prius per km is more than the BP electric car ($0.1748 / km for the Prius vs. $0.14055 / km for the electric car under BP).
The cost of the Prius ($0.13393 / km) is higher than the electric car ($0.0595 / km).
However, the final cost of ownership, is lower for the Prius than for the BP electric car.
The total cost of ownership is $0.30873 per km for the Prius ($0.13393 + $0.1748), and the total cost of the BP electric car is $0.20005 per km ($0.0595 + $0.14055).
This is about $2,608.32 = ($0.3505 / km – $0.20005 / km) * (24,000 km / year) more for the Toyota, Prius than the electric car under the BP plan per year.
Remember that the cost of energy has been increased over a period of 14-years both for electricity and for gasoline in this example.
In addition, depending on how many kilometers are driven, then this example can be modified to account for this.
The people who might benefit from an electrical car under the BP plan would be those that drive the average of 24,000 km per year or more since their cost for the battery could be considered fixed.
My last conclusion was incorrect due to missing the energy cost for the electric car. I hope I got right this time!