Paying extra to buy EV over petrol car? OpEx advantage may shock you; check break-even point, ROI, cash-flow benefits

An electric SUV can offset its higher purchase price through lower running and maintenance costs. At 40 km of daily driving, estimated annual savings are nearly ₹90,000.

Paying more for an electric car can feel difficult when comparing showroom prices. However, lower running costs could help recover that extra payment over time. The key question is how much you drive every day.

OpEx advantage

The real advantage lies in the Operating expenses (OpEx). Consider a compact SUV driven 40 km daily, covering around 14,600 km annually. Assume the petrol version delivers 15 km per litre. Let's say petrol costs ₹100 per litre. The electric version covers 8 km per unit of electricity, costing ₹8.

These assumptions put petrol expenses at roughly ₹6.66 per kilometre. The EV costs ₹1 per km, reducing energy expenses by about 85%. Annual petrol spending reaches ₹97,333, against electricity expenses of ₹14,600. That results in annual energy savings of ₹82,733.

Maintenance adds another difference. The petrol car's annual maintenance is estimated at ₹12,000. The EV's maintenance is estimated at ₹5,000, reflecting fewer moving parts. This adds ₹7,000 to annual savings.

Together, fuel and maintenance cost ₹1,09,333 annually for the petrol vehicle. The EV's corresponding bill comes to ₹19,600. The resulting annual saving is ₹89,733.

Now, consider paying ₹3 lakh extra for the EV after road-tax benefits. Divide this extra payment by the yearly saving of ₹89,733. The additional purchase cost is recovered in around 40 months. This is the break-even point, when accumulated savings match the extra purchase expense.

After that point, continued savings improve the household's cash flow. Under these assumptions, you save nearly ₹90,000 annually, compared with running the petrol car. This explains the return from paying extra upfront. The benefit comes through lower expenses, rather than a separate cash payment.

Tax benefits of EVs

Purchase taxes and registration benefits can also affect the initial price difference. For tax comparison, let's consider 5% GST for EVs. There is 28% GST for petrol vehicles, alongside a 1%-22% compensation cess. Road-tax waivers or discounts can further reduce the EV's effective purchase cost.

You are estimated to have ₹1.2- ₹1.5 lakh savings on a ₹15 lakh car through such benefits. However, these benefits are already accounted for when assuming a ₹3 lakh premium. They should not be counted again while calculating annual running savings.

Initially, these savings repay the extra purchase cost. Later, they support the household budget through lower regular vehicle expenses.

Conditions apply

However, driving less sharply changes the calculation. Below 15 km per day, the estimated recovery period exceeds 8 years. Lower usage means fewer opportunities to save on every kilometre.

An EV's higher price, therefore, needs to be compared with its running expenses. The strongest advantage appears when regular driving produces enough savings. Buyers should match the calculation with their expected daily distance.