economics of sustainable mobility

Mobility can be categorized as a very fundamental human need and can be arguably placed right below physiological needs in terms of the hierarchy of human needs. Mobility in its current stage (ICE vehicles) is predominantly dependent on unsustainable energy sources which is very problematic. Fortunately, there has been an upward trend in electric vehicle adoption driven by both businesses and government intervention. Electric mobility however in its current stage cannot be indefinitely categorized as a form of sustainable mobility though, as it is still indirectly and majorly dependent on unsustainable energy sources (fossil fuels that power electric grids). However, unlike ICE vehicles, electric vehicles still have the ability to harness sustainable forms of energy (solar + wind +geothermal) which gives it a leg ahead.

Now coming to the economics of electrical vehicles, it is currently at a very pivotal stage. Rapid technological innovation and economies of scale, has exponentially driven down the manufacturing costs. However, the upfront costs of electric vehicle is still significantly higher than the ICE counterparts, which is one of the many factors barring consumers from switching to an electric vehicle. However, an interesting way to look at the costs involved in electric vehicles is to look at TCO i.e. total cost of ownership. A large majority of consumers only compare the upfront costs while purchasing a vehicle and end up overlooking the operating costs involved i.e. fuel and maintenance. Factoring in operating costs makes a significant difference to the cost equation and tips the scale heavily in favor of electric vehicles. The like-for-like unit cost of electricity is significantly lower than that of hydrocarbon fuels. Fuel prices are also rising due to scarcity issues and the occasional geopolitical factors, which further worsens the equation for ICE vehicles.

Large scale manufacturing especially in battery technology (which accounts for about 40% of vehicle cost) is expected to further drive down the upfront costs of electric vehicles and eventually position them as the clear winner in the cost equation. So contrary to the popular trend of buying an electric vehicle only to benefit the environment, the truth is buying an electric vehicle (in the near future) can additionally provide you with an economic benefit too.