Analysis of total cost of ownership for conventional and alternative vehicle technologies: evidence from France

Battery Electric Vehicles (BEVs) have been in the market for over 10 years; however, their market diffusion has been slow despite their environmental and social advantages. Their high purchase cost is one of the most significant barriers towards their wider adoption. Policy makers have used the Total Cost of Ownership (TCO) estimate to expose the lower fuel and maintenance cost of BEVs relative to gasoline-based vehicles. In this paper, a model is developed for private consumers on the principles of the TCO that assesses different vehicle technologies and incorporates the consumers’ preferences when purchasing a new vehicle. The TCO model is applied on three representative vehicle technologies, including an Internal Combustion Engine Vehicle (ICEV), a Hybrid Electric Vehicle (HEV) and a BEV; for three vehicle classes (i.e., small, medium and SUV), resulting in the assessment of nine vehicle models. The TCO is quantified by using data for France. A weighted TCO per vehicle is also estimated by using the Analytic Hierarchy Process (AHP) to incorporate the consumers’ preference on TCO parameters. The TCO and the Weighted Average Cost (WAC) estimates for each vehicle are used to assess the nine vehicle models and compare results. The ICEV has the lowest TCO for the small and medium classes, while the BEV is ranked as the most economic vehicle for the SUV class. As the WAC is greatly influenced by the purchase cost, vehicle rankings change for only one class. Our method suggests that a dynamic TCO should capture consumers’ preferences and support policy makers to adjust incentives at local level.