Electric vehicles currently have a higher purchase price than their gas or diesel counterparts, but may have significantly lower operating costs over the lifespan of the vehicle. This is why it’s important to assess all EV lifecycle costs — also called Total Cost of Ownership (or TCO) — when evaluating suitability for your fleet. Beyond simply comparing the upfront costs of an EV or ICE vehicle, you calculate the yearly cost to run and maintain the vehicles to get the bigger picture.

The lower cost of electricity over time helps to offset the initial purchase price of an EV. This is why it’s important to look at total cost of ownership when comparing gas versus electric vehicles.

Total EV lifecycle cost: what’s included

To figure out the total cost of ownership for a particular vehicle, you add the purchase cost, any financing costs and running expenses. From that total you subtract the resale value when you sell the vehicle along with any rebates or incentives offered by provincial and federal governments and utilities. This total is then divided by the mileage put on the vehicle. With this number you can then compare vehicles as apples to apples.

While traditional TCO calculations can include everything from car washes and tolls to upfitting costs, when comparing powertrains it’s simplest to just focus on costs that are different depending on whether you choose an electric or combustion engine vehicle.

“We work with a number of experts internally — from sales to remarketing to our fleet department — to calculate the TCO from cradle to grave,” explains Timothy Tsao, a product manager with Canadian fleet supplier Jim Pattison Lease. “We look at the residual value, the rebates and subsidies, the cost of charging infrastructure and any tax incentives that are associated with the vehicles or infrastructure. And then the operational costs like the energy costs based on your location, ongoing costs for insurance, telematics and maintenance. We can even factor accidents and downtime into our forecast.”

The most important costs (or discounts) to factor in when comparing electric to combustion vehicles

  • Procurement cost
  • Rebates, incentives, subsidies and tax benefits
  • Fuel
  • Maintenance
  • Charging infrastructure
  • Insurance cost
  • Resale value

A sample lifecycle cost analysis

To help you visualize how the various factors can play out over the lifespan of a vehicle, we assembled the following bar graph using data supplied by fleet electrification services provider 7Gen

The graph depicts the total lifecycle costs associated with owning a Class 6 box truck in various jurisdictions across Canada. Working from left to right:

  • The left-most bar breaks down lifecycle costs for a Class 6 electric box truck purchased and operated in Quebec.
  • The second bar shows the lifecycle costs for owning/operating the same truck in British Columbia.
  • The middle bar shows the costs for the same truck in Ontario, where there are currently no provincial EV rebates in place.
  • The fourth bar shows the costs without any incentives, with electricity costs based on Ontario rates. (Federal incentives are currently available in every province and territory).
  • The bar on the right shows the lifecycle costs associated with a similar diesel-fuelled Class 6 truck for comparison. The cost of diesel fuel is based on NRCAN’s Canadian 6 month trailing average.
The bar graph shows six-year lifecycle costs based on January 2023 data from fleet electrification services provider 7Gen.

Incentives and rebates are game-changers

Later in this lesson, we delve deeper into the incentives and rebates on offer across Canada. But the chart above clearly shows how current government programs help to make medium-duty and heavy-duty EV ownership possible right now. The following graph breaks down the impact of the incentives.

Incentives breakdownBritish ColumbiaQuebecOther provinces/territories
Vehicle purchase price (before incentives)$335,000$335,000$335,000
Federal incentive$100,000$100,000$100,000
Provincial incentive$100,000$97,500
Final EV purchase price$135,000$137,500$235,000
Breakdown of incentives available for Class 6 EV box trucks in Canada.

The biggest cost differences: vehicle and fuel

When you are comparing EVs to combustion vehicles in this way, a few things stand out. 

The most obvious is the higher purchase price for EVs. This is primarily driven by the battery’s cost (the most expensive component) and the relatively lower volume of production. A 2022 Ford F-150 Lightning, for example, starts at $68,0001. The entry level gas-powered 2022 F-150’s base MSRP is $39,115, according to Ford Canada2. However, by factoring in both federal and provincial rebates you can immediately knock $12,000 off the procurement cost in Quebec, for example, $8,000 in Nova Scotia or $5,000 in Ontario, which currently has no provincial incentive program. And, as you’ll see in the example below, you will also likely want to compare an EV to a higher-trim ICE equivalent, since electric vehicles tend to have more bells and whistles, even for the entry level model.

Shows a vehicle cost comparison (MSRP) for 2022 Ford F-150: The ICE vehicle cost $62,000 and the EV $71,000.
Here’s a cost comparison from Jim Pattison Lease of two comparable F-150 vehicles (ICE and EV) for a 48-month lease.

EVs have lower lifecycle maintenance and fuel costs

On the other hand, internal combustion engine (ICE) vehicles are more expensive to operate and maintain. Fuel costs can be dramatically lower for an EV when charging is managed properly. Also, the complexity and moving parts of the combustion engine and drivetrain require more maintenance and repairs than an EV. Combustion engine vehicles are also more prone to roadside breakdowns and downtime in the shop. (There will be more on this in the next article.) 

Shows that fuel costs are 80 per cent lower for the 2022 Ford F-150 Lightning than for the combustion engine version.
Jim Pattison Lease looked at the fuel costs to run the F-150 combustion versus electric pickup trucks for one of its clients.
Infographic depicts 40 per cent reduction in maintenance costs for electric version of the 2022 Ford F-150 pickup truck, as compared with the the internal combustion engine F-150.

After looking at the EV lifecycle costs above, Jim Pattison Lease calculated that for one of its clients, looking at expenses to run a Ford F-150 (EV and ICE), the client would see significant savings by year four.

A financial projection suggests the EV F-150 will cost over $22,000 less to own and operate over four years, mostly due to fuel costs.
Jim Pattison Lease found the costs of leasing and operating a Ford F-150 Lightning for four years to be much lower than for that of the internal combustion F-150.

While the two vehicles are comparable to run for the first three years, the electric version is projected to start saving this business money after three years on the road. This means that by the time a vehicle has been in your fleet for three years, the purchase cost difference has been balanced out by reduced fuel and maintenance costs. After that point, the savings start to pile up. Medium-duty vehicles, because of their higher upfront costs, may take longer (typically five years or more) to break even.

Charging infrastructure costs

The costs of installing charging infrastructure can vary greatly depending on the size of your fleet and how you choose to manage EV charging. Installing chargers at a depot facility can incur significant upfront costs, especially since all facilities have different levels of electrical capacity. In a home charging context, the cost of the charging equipment is quickly recuperated through savings on fuel costs. See below for an example.

A breakdown of charging infrastructure costs: estimated cost to install a Level 2 charger at the workplace ($3,250) or at home ($2,050).
Sample costs from Jim Pattison Lease for a Level 2 charger for one or two vehicles, where no major electrical upgrades are needed.

Fuelling up

Two recent trends are further tilting the fuel cost comparisons in the EVs’ favour. ICE operators are being hit with volatile prices for gas and diesel. Meanwhile, some of the big utility companies, like BC Hydro, are offering more favourable electric rates to commercial operators who are running EVs in order to encourage more fleets to electrify.

In a recent study, Clean Energy Canada3 analyzed a 2022 Hyundai Kona versus Kona EV. The study assumes each vehicle travels 20,000 kilometres a year over eight years of use. The EV retails for $45,851, and the ICE version for $26,044. The comparison factored in the national average EV rebate and assumed home charging with electric power at 13.9 cents per kWh, and $1.45-per-litre gas (the average price from April 2021 to March 2022). In the end, the fossil-fuel-powered Kona’s total cost of ownership for eight years was $60,210, while the cost of owning the EV version came to $49,699. The fuel costs of the two vehicles help explain the TCO reversal: the EV cost just three cents per kilometre, while the combustion Kona was at 12 cents.

Fuel for a year: gasoline vs electricity in 2022

2022 Hyundai Kona ICE2022 Hyundai Kona EV
Fuel consumption47.4 L/100 km2.0 Le/100 km (17.4 kWh/100 km)
Fuel cost$2,930.40 @ $1.98/L (regular5)$285.36 @ 8.2¢/kWh (residential off-peak6)
Costs to fuel the 2022 Hyundai Kona ‘Preferred’ internal combustion engine and electric vehicle models for an annual driving distance of 20,000 km at gasoline and electricity rates as of July 1, 2022.

An EV lifecycle cost calculator

If you want to calculate a sample Total Cost of Ownership for the EVs you are considering for your fleet, this Microsoft Excel-based Fleet Procurement Analysis Tool from Atlas Public Policy is a good starting point. (Be sure to select the Canadian Market Defaults file if you’re based in Canada.)

Next, delve deeper into why maintenance costs are lower for EVs. Don’t forget to save your progress!

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