Cost analysis of Renault's Fluence ZE in Israel -- three methods of cost analysis

Example of calculations for the chart

Someone who drives about 24,000 km per year will drive a total of (24,000 km / year) * (7-years) = 168,000 km. Please notice that in this example the costs are spread over 168,000 km or 336,000 km; however, the chart shows a smaller denominator at each chart point between 10,000 and 90,000 km; therefore, the costs are slightly larger in the chart. They are, also, more precise since the relevant costs are calculated for the annual driving demand -- rather than the lifetime of two battery cylces.

1- Cost of battery -- Renault's Fluence ZE -- an unusual mixture of fixed and variable costs

• The argument of Better Place rests in the actual cost of the battery per kWh for what they are charging.
• At around $990 / kWh for a battery with 24 kWh of capacity this is ($990 / kWh) * (24 kWh) = $23,760.00.
• With an expected battery life of 7-years, this works out to (7-years) * (12-months / year) = 84 months.
• ($23,760.00) / (84-months) = $282.86 per month.
• Therefore, assuming (notice I said assuming) that the cost per kWh is $990, then the cost per month would be $282.86.
• $282.86 per month is about ₪ 961.71 per month.
• (However, there are too many internet sources strongly suggesting that the cost per kWh is much lower than $800 / kWh.) ^{[1] [2]}
• Therefore, if the battery cost per km is about ($23,760.00) / (168,000 km) = $0.14143 / km.
• However, for two battery cycles the cost is twice as much assuming no inflation in the price of the batery pack ($282.86 / month)*(7-years / battery cycle)*(12-months / year) (2-battery cycles).
• Therefore, the cost of two battery cycles is $47,520.00; $0.2829 = ($0.1414) x (2)

2- Cost of energy -- Renault's Fluence ZE -- variable cost

• 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) / (6.67 km per kWh), and at a cost of $0.177 / kWh, this would be $8,920.80 = ($0.177 / kWh) * (50,400 kWh).
• Therefore, $8,920.80 / (168,000 km * 2) = $0.02654 / km.

3- Cost of operation -- Renault's Fluence ZE -- variable costs and fixed cost

• This means that the average operating cost of the car would be $0.02654 + $0.2829 = $0.30944 / km.

4- Cost of the car -- Renault's Fluence ZE -- fixed cost

• If the cost of the car is $36,000.00 (and assuming 14-years of usable life from the car), then the cost per km of the car would be ($36,000 / ((168,000 km / battery cycle) * (2 battery cycles)) = $0.10714 / km.
• The cost of the car per km is $0.10714 / km -- assumes no additional taxes are levied.

5- Cost of ownership -- Renault's Fluence ZE -- mixture of fixed and variable costs

• Total cost of ownership of Better Place Fluence ZE over 14-years $0.2829 / km + $0.02654 / km + $0.10714 / km + = $0.4165 / km

1- Cost of maintenance -- Toyota, Prius -- variable cost

• 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.

2- Cost of energy -- Toyota, Prius -- variable cost

• For a Toyota, Prius, on the other hand, with an initial gasoline cost of $2.279 / liter and an annual energy cost escalation of 3%, then in 14-years the average cost of gasoline would be $2.782 / liter (the final cost per liter in 14-years would be $3.347 / 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 $46,737.60 ($2.782 * 16,800).
• The cost per km would be ($46,737.60) / (168,000 *2) = $0.1391 per km for gasoline.

3- Cost of operation -- Toyota, Prius -- variable costs

• The total operating cost of a Toyota, Prius would be $0.1391 + $0.04754 = $0.18664 per km for operating costs.

4- Cost of car -- Toyota, Prius -- fixed cost

• 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.

5- Cost of ownership -- Toyota, Prius -- mixture of fixed and variable costs

• Total cost of ownership of Toyota, Prius over 14-years $0.18664 / km + $0.13393 / km = $0.32057 / km

Analysis

• In summary, the operating cost of BP electric car per km is more than the Toyota Prius ($0.30939 / km for the electric car under BP in Israel vs. $0.18664 / km for the Prius ).
• The cost of the car, Prius ($0.13393 / km), is higher than the electric car ($0.1071 / km).
• However, the final cost of ownership, is higher for the BP electric car compared to a Prius.
• The total cost of ownership is $0.32057 per km for the Prius ($0.13393 + $0.18664), and the total cost of the BP electric car is $0.4165 per km ($0.10714 + $0.30939).
• This is $2,687.06 = ($0.41655 / km - $0.32057 / km ) * (24,000 km / year) more for, Fluence ZE, the electric car under the BP plan per year than the Toyota, Prius .
• Over a period of 14-years this is $32,244.74 = $2,687.06 x 14-years.
• 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 more than the average of 24,000 km per year since their cost for the battery could be considered fixed (the chart analysis below has more to say regarding this).
• Perhaps one of the more interesting observations from this analysis is the fact that the BP battery leasing plan is neither a variable cost nor a fixed cost, but it is a mixture of both of them.

Chart analysis

• The chart based on cost per kilometer vs. kilometers driven per year shows that the operating cost is lower for the Toyota, Prius compared to Renault's Fluence ZE until about 15,000 kilometers.
• Notice that between 15,000 and about 23,000 kilometers the graph shows the Fluence ZE to have a slightly lower total cost (up to 2.5 to USA cents less than the Toyota, Prius -- up to $600.00 less in total costs than the Prius per year).
• Between about 23,000 and 40,000 kilometers the graph shows the Toyota, Prius to have a lower cost than the Fluence ZE (up to 4.8 USA cents less than the Renault, Fluence ZE -- up to $1,350.00 less in total costs than the Fluence ZE).
• The graph shows the Renalut, Fluence ZE to have a lower cost after 50,000 kilometers (more than what the typical average private car is driven per year in Israel; however, below the average of company cars).
• Notice that in this graph I have extrapolated costs for annual driving ranges greater than 30,000 per year (this information was not available to me at the time of this post).

Annual driving range	Which car has the lower operating cost to drive (Toyota Prius or Renault's Fluence ZV) in Israel?	Maximum cost in dollars per km (₪3.5 per dollar)	Dollar value of maximum savings (₪3.5 per dollar)
Up to 15,000 km	Prius has the lower operating cost	4.9 cents of a dollar per km at 10,000 km	10,000 km ($490.00), 15,000 km (nil)
15,000 km - 23,000 km	Fluence ZE has the lower operating cost	2.5 cents of a dollar per km at 20,000 km	15,000 km (nil), 20,000 km ($500.00), 23,000 km (nil)
23,000 km - 40,000 km	Prius has the lower operating cost	4.8 cents of a dollar per km at 26,000 km (the cost is extrapolated after 30,000 km)	23,000 km (nil), 26,000 km ($1,248.00), 30,000 km ($1,350.00), 40,000 km (nil)
More than 40,000 km	Fluence ZE has the lower operating cost	6.0 cents of a dollar per km at 90,000 km (the cost is extrapolated after 30,000 km)	40,000 km (nil), 50,000 km ($1,100.00), 60,000 km ($2,220.00), 70,000 km ($3,290.00), 80,000 km ($4,320.00), 90,000 km ($5,400.00)

Annual driving range within the battery lease plan	Monthly cost of battery lease in Israel	3-year cost of battery lease plan in Israel
Less than 20,000 km	₪1,090.00 per month	₪39,240.00 per 3-years of battery leasing
Less than 23,000 km	₪1,300.00 per month	₪46,800.00 per 3-years of battery leasing
Less than 25,000 km - with 3-year package	₪961.11 per month	₪34,600.00 per 3-years of battery leasing
Less than 26,000 km	₪1,470.00 per month	₪52,920.00 per 3-years of battery leasing
Less than 30,000 km	₪1,599.00 per month	₪57,564.00 per 3-years of battery leasing

Amounts	Description of all-inclusive plan for battery and car charges for Renault's Fluence ZE by Better Place in Israel
₪157,500.00	all-inclusive, three year package which includes the Fluence Z.E. and a free service package for three years (driving less than 25,000 km per year).
₪122,900.00	cost of car
₪34,600.00	cost of battery leasing for 3-years is the difference left
₪961.11	cost of battery leasing per month for 3-years

Amounts	Toyota Prius starting price in Israel [3]
₪154,000.00	cost of car

• If the driving needs of the driver are between 15,000 and 23,000 km or more than 50,000 km, then the Fluence ZE is a better alternative. However, the amount of savings is not that impressive below 50,000 km.
• The savings for the Fluence are less than 1.5% ($500.00 / $ 45,000.00 at ₪3.5 per dollar) per year up to 50,000 km.
• The savings are greater for driving needs above 50,000 km ($1,100.00), 60,000 km ($2,220.00), 70,000 km ($3,290.00), 80,000 km ($4,320.00), and 90,000 km ($54,000.00).
• Please keep in mind that after 30,000 km I have extrapolated the chart based on available public information. If Better Place will charge per km above 30,000 km, then this will change the costs.

Notice that the company (with the battery leasing and the car price) and the government (with the car price) are not exactly motivating average drivers to get into an electric vehicle today. However, as the graph and the tables above show, the incentives are much greater for corporate drivers or taxi drivers which require more driving than average drivers.

• As the graph shows, for average consumers driving less than 50,000 kilometers a year, there is not too much in the way of savings to cover the required learning curve costs associated in changing transportation technologies from an ICE to an EV.
• In addition, the amount of savings is, also, too small to cover the necessary transaction costs of exchanging an ICE vehicle for an EV.
• These two (learning curve costs and transactions costs) might be real impediments for a massive change to electric vehicles since most of the typical savings in taking an EV and exchanging it for an ICE vehicle have been evaporated due to the complicated leasing plans.

• The chunk of savings appear to be for drivers whose annual driving needs are greater than 50,000 kilometers per year or greater than 137 kilometers of driving a day.
• Moreover, for those driving between 23,000 and 50,000 kilometers a year (a large proportion of drivers), the graph appears to suggest a real disincentive to change to the Fluence ZE. In other words, drivers will save more money in this range of driving by keeping a Toyota, Prius (at 40,000 km the savings are null).

1- This is a first way of analyzing the cost of driving a Renault, Fluence ZE in Israel compared to other efficient ICE vehicles.

A few other interesting things to learn from the curve has to do with the slope of the total cost both for the Prius and the Fluence ZE. The slope of the curve is downward sloping from left to right. In other words, as the fixed costs of the car are driven more, the cost per kilometer drops.

In addition, you may notice a hump for the battery cost and operating cost of the Fluence ZE between 20,000 and 30,000 kilometers. If you compare this to the right and left (less than 20,000 km and more than 30,000 km), you may notice that these curves are, also, downward sloping. This shows an almost unnatural increase in the downward sloping curves in order to increase the costs of the Fluence ZE battery leasing scheme.

• What is probably happening in these numbers has to do with the promise of the economy of scales for battery technology.
• As battery technology matures, the battery capacity should increase, and in addition the cost per kWh should decrease.
• This means that the slope of the curve for battery technology should be downward sloping from left to right.
• Moreover, as new battery technologies at new price points are introduced in the future, newer, lower, downward battery cost curves should be the result, and the total cost of an electric vehicle should "always" stay below the total cost of the Toyota, Prius with no "humps."
• Therefore, for the most part, the total Fluence ZE operating cost should be below the total Prius operating costs, and it should be downward sloping from left to right, also, with no "humps." However, due to the pricing scheme this is not observed.

• The downward sloping curves for the Toyota, Prius are gentler in their fall than the Fluence ZE. In fact, they are almost (but not quite) flattish.
• This shows the maturity of the technology, and it shows the difficulty to extract further efficiency out of it.

Analysis based on leasing plan cost and gasoline cost

Amounts	Description
	Toyota Prius
	Prius at @ 20 km per liter
	25,000 kilometers -- driving demand
₪7.75	per liter
₪9,687.5	per year in gasoline
₪29,062.5	per 3-years of gasoline

• The difference between the cheapest leasing plan per month for 3-years and the gasoline costs for 3-years with a Prius (₪34,600.00 - ₪29,062.5) is about ₪5,537.5.
• This should be enough to cover the maintenance costs for a Toyota, Prius in Israel for a period of 3-years.

2- This is a second way of analyzing the cost of driving a Renault, Fluence ZE in Israel compared to other efficient ICE vehicles.

Analysis based on a cross comparison of different vehicle costs

	Leaf	Prius	Hyundai E	Renault's Fluence ZE
miles driven	150,000	150,000	150,000	150,000
mpg or miles per kWh	4.17	49.6	33	4.17
$ / gallon or $ / kWh	$0.16	$8.61	$8.61	$0.16
miles / $	26.06	5.76	3.9	26.06
$ / mile	$0.04	$0.17	$0.26	$0.04
cost of battery				$46,164.71
cost of fuel or energy	$5,755.40	$26,038.31	$39,136.36	$5,755.40
cost of car	$25,280.00	$24,000.00	$14,830.00	$26,000.00
A/C			0
Automatic transmission			0
Total	$31,035.40	$50,038.31	$53,966.00	$77,920.10

Cost of the battery $46,164.71 = ((₪1,090 / month) / (₪3.4 / $)) * (12-months / year) * (150,000 miles / (12,500 miles/year)).

Conversion of miles to years 12 years = (150,000 miles / (12,500 miles/year))

Conversion of km to miles 12,500 miles = 20,000 km / (1.6 km / mile) for the cost of the battery

Conversion of shekels per liter to dollars per gallon $8.61 / gallon = ((₪7.75 /liter) / (₪3.4 /$)) * (3.78 liters / gallon)

Notice that I have artificially lowered the price of the Fluence ZE in this table by $10,000.00 in order to better compare it against other vehicle costs.

These are prices at which, for instance, US consumers might become interested in electrical vehicles. In addition, notice that the two ICE vehicles in this table both have a significant tax in Israel added to the manufacturer's cost.

The only electric car offered in Israel at this time is the Fluence ZE; however, it is of interest to compare it in this table against Nissan's Leaf for several reasons. ^[4]

• First, both the Fluence ZE and the Leaf are manufactured by the same group of allies Renault-Nissan. ^{[5] [6] [7] [8]}
• Second, the Leaf is offered in the US with a battery at a lower cost than the Fluence ZE without a battery in Israel. ^{[9] [10] [11] [12] [13]}
• Third, the Fluence ZE is supposed to have already been sold in large numbers.^{[14] [15]}
• Finally, the Israeli government offered a lower tax on electrical cars. ^{[16] [17]}

3- This is a third way of analyzing the cost of driving a Renault, Fluence ZE in Israel compared to other efficient ICE vehicles.

Summary

In summary, the three independent methods of analysis show the following:

1. The Renault's Fluence ZE offers the greatest amount of savings over efficient ICE vehicles for a driving demand of about 20,000 km (more than 15,000 km and less than 23,000 km) and more than 50,000 km of driving demand in Israel.
2. The Renault's Fluence ZE's cheapest leasing cost battery plan is more expensive than the normal operating cost of a Toyota, Prius in Israel.
3. The Renault's Fluence ZE total cost is higher than some other vehicle alternatives in Israel.