#### Intro

Electric vehicles (EV) are cheaper to fuel (I’m writing in 2023) than internal combustion engine (ICE) vehicles.

In this exercise, a student will learn to compute the breakeven time to own the EV to recoup the higher purchase cost.

Note that this exercise is an analogy to businesses where the operating profit (variable) recoups the fixed costs to generate an IRR.

#### Setting up the problem

You can use the following inputs or vary the difficulty by asking the student to find reasonable values to the variables.

#### Inputs

**Vehicle Costs**

ICE = $40,000

EV = $55,000

**Fuel Costs**

Gasoline = $6 /gallon

Electricity = $.25 /kWH

**Fuel Efficiency**

ICE = 20 MPG

EV = 4 MPkWH

**Fuel Demand**

Miles driven per year = 12,000

**Questions**

**Questions**

- How many gallons are needed per year for the ICE?

- How many kWH are needed per year for the EV?

- Annual fuel cost per vehicle?

- How many years do you need to own the EV to breakeven or recover initial cost difference?

- Graph cost per mile

- Graph total cost vs miles driven

- What year does the second chart touch $15,000?