Does the investment in an electric car pay-off?

Abstract

The increase in the general living conditions of population with the concomitant passenger car use has led to a significant increase in greenhouse gases (GHG) emissions, resulting from increased use of energy, which has contributed to environmental degradation. In this context, one of the policy measures that has been discussed and proposed is to incentivise the use of electric cars (EV) in order to contribute for a sustainable future. Therefore, the purpose of this paper is to assess, from a private owner point of view, whether the investment in an EV pays-off within the current Portuguese context. For that purpose, a comparison between a conventional car and an EV sold in Portugal was undertaken, and criteria such as the diesel fuel and electricity prices, vehicle's effiency, taxes or the purchasing of a home charger for EV were considered. Afterwards, a sensitivity analysis was performed to assess the robustness of the results obtained. The main finding of the paper is that, within the current Portuguese context, there is an excess cost on buying an EV when compared with the acquisition of a conventional fossil fuel car. Furthermore, with the sensitivity analysis performed was also possible to have an insight on which conditions the EV could become the preferred choice of buyers (from a financial point of view). However, it is less likely that those conditions are met in the next years.