IEEE Electrification - June 2019 - 29

in the short term under the premise that, once such a destination is
Input Data
reached, the driver can wait longer
Up-Front Cost of Vehicle Discount Rate TCO Horizon
Vehicle Performance
by using a level 2 charger. The
methodology checks for directions
Typical Yearly Driving Distance Estimated Energy Price Forecast
both to and from the destination to
Estimated Maintenance Cost Over the TCO Horizon
ensure that the EV user can reach
the starting point.
Figure 4 shows the proposal for
TCO Calculations
fast-charging infrastructure in
Costa Rica. The study reports that a
minimum of 34 level 3 chargers can
NPV of Total
Energy (kWh or L)
Energy Cost
cover the growing uptake of EVs.
Expenditures
Consumption
With such a network, new EV owners could complete the drive to any
place in the country, with the
exception of remote locales that Figure 5. The calculation methodology of the TCO.
even comparably sized IC vehicles
have difficulty getting to. A more robust charging network
would enable travelers to reach a destination and quickly
Argentina
return home, because there would be fast-charging sta**Bolivia
tions in the farthest towns.
Brazil
Ultimately, the outcomes from this methodology will
Chile
help Costa Rican policy makers determine the most suitColombia
able places for fast chargers across the country. FurtherCosta
Rica
more, because the methodology requires data that are
**Ecuador
usually available in most countries, it provides the basis
for similar methodologies that can be adopted in other
*El Salvador
Latin American countries (and internationally) where EV*Guatemala
charging infrastructure has yet to be defined.
*Honduras

The Economics of EVs: Total Cost of Ownership
The up-front cost of EVs is usually higher than that of IC vehicles; however, their yearly operation and maintenance costs
are typically lower. Therefore, to understand the cost effectiveness of EVs compared with IC vehicles, it is important to carry
out an economic assessment of total cost of ownership (TCO).
TCO quantifies the financial implications of owning and operating a vehicle over a span of years. The value calculated with
this analysis represents the net present value (NPV) of all
expenses over the ownership period (i.e., the TCO horizon). In
the following sections, we present a methodology for quantifying the TCO of vehicles and the corresponding results for the
region. The latter not only helps with understanding the economic barriers that EVs face in Latin America but also highlights some of the possible ways to promote their uptake.

Calculating the TCO
TCO analysis can include very detailed financial information, such as taxes, financial costs, maintenance, repairs,
costs of fuel (for IC vehicles) or electricity (for EVs), subsidies, and a salvage value when the ownership period
expires. However, obtaining all this information is still
complex in Latin American countries. Therefore, we present a simplified methodology for estimating the TCO of
vehicles in Latin America (see Figure 5).

Mexico
*Nicaragua
Panama
*Paraguay
*Peru
*Uruguay
0

5 10 15 20 25 30 35 40 45 50 61.6
Vehicle Purchase Cost (×US$1,000)
EV
Avg.:US$40,990

IC Vehicle
Avg.:US$21,960

*EV prices are the Latin America average.
**EV and large-sedan prices are the Latin America average.
Figure 6. The up-front vehicle costs in the analyzed Latin American
countries in 2019.

The input data for this methodology include
xx
up-front cost of the vehicle: indicates the retail price of

the vehicle
xx
discount rate: represents the opportunity cost of using

capital to own the vehicle
xx
TCO horizon: defines the vehicle-ownership period
xx
vehicle performance: indicates how much energy (in

kilowatt hours) or liters of gasoline are needed to
travel 1 km
IEEE Elec trific ation Magazine / J UNE 2 0 1 9

IEEE Electrification - June 2019

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