Cost of Converting to Alternative Fuel Vehicles

Preliminary Estimate of the Cost for Oregon to Convert to Alternative Fuel Vehicles

4/22/19 Greg Peterson PE


Before starting a new undertaking, stakeholders should know the scope, schedule, and cost, but unfortunately with HB 2020, and its many amendments, this has been obscured, so that very few Oregonians know what is involved with the scope of HB2020, particularly the cost of replacing most internal combustion engine (ICE) vehicles with alternatives fuel vehicles (AFV).  Based on currently available vehicles, this memo will provide a preliminary opinion of the cost to convert to electric vehicles(EVs).

As with any purchase, citizens want to weigh vehicle cost and suitability, before deciding to change to an AFV.    California’s cap & trade program began in 2012, and steadily increases a tax on fossil fuels and creates various incentives through their Clean Vehicle Rebate Project (average of $4500) and with other incentives from utilities, municipalities, counties, as well as a $7500 Federal rebate, encourage the purchase of 200,000 AFVs by 2018, or about 1.3% of the state’s 14.5 million cars.  This helped both Tesla and Chevrolet Bolt US production to pass 200,000 vehicles, which resulted in half of their Federal subsidy being eliminated Jan 1, 2019, with another quarter to be cut July 1, 2019, and the last quarter on Jan 1, 2020. Tesla and Bolt Q4 sales dramatically rose as buyers rushed to get the full Federal tax credit, and then dropped for several months afterwards. European countries have also found that the rate of AFV sales is heavily influenced by incentives and high fuel prices.

In 2018, Oregon began a $2500 Charge Ahead Rebate(funded from a vehicle privilege tax on all new vehicles) for AFVs under $50k and the $2500 Clean Vehicle Rebate (for low & moderate income households), and when  coupled with the Federal rebate, led to about 20,000 AFVs at the end of 2018, or about 0.5% of Oregon’s 4 million vehicles. These were a combination of subcompacts (about 100 mile range), and popular Chevy Bolt and Tesla models (about 237 mile range under ideal conditions), with battery capacity and weight being the main factors influencing range, and many EVs owners are also enthusiastic about performance.   Most AFVs were purchased as a second or third car, with ICE vehicles used for long trips and adverse weather.

HB2020 calls for an 80% reduction in fossil fuels from the 1990 level, which is actually a 91% per capital reduction, after accounting for population growth.  This is the most aggressive GHG (green house gases) reduction goal in the world, and meeting it will require converting nearly all ICE vehicles (and equipment) to AFVs, with the presumption that the remaining pool of fossil fuel will be selectively used for ICE hand tools, emergency generators, specialty equipment, and occasionally used special vehicles by 2050.  The role of AFVs will become that of primary vehicles that are reliable in any kind of weather and be able to refuel/recharge quickly. HB2020’s goal makes this transformation far more complicated and costly than a carbon-neutral GHG goal. It should be noted that agriculture, planes, marine, and railroads will get a pass on AFV conversion, creating a signifiant dichotomy between various industry groups.

The Oregon Constitution restricts the use of fuel taxes to road, highway, and rest area improvements, and prohibits use for AFVs and charging station rebates. Without additional incentives, the primary way to encourage AFV conversion is to raise the carbon tax rate, which the OCP has the authority to do as it sees necessary to meet GHG reduction goals.  However, half of the auction proceeds will used for social engineering and environmental justice agendas, which have nothing to do with reducing Oregon’s future carbon footprint, and instead have other goals that are counterproductive to reducing carbon footprint.

Alternative Fuel Vehicle (AFV) Types

HB2020’s GHG goal goes well beyond making Oregon carbon-neutral and necessitates conversion to AFVs, which are broadly defined as electric (EV), hydrogen fuel cell (FCEV), and plug-in hybrids(PHEV).  AFVs are significantly more expensive than todays ICEs, although incentives, fuel savings, and lower maintenance can offset some of this premium. Electric vehicles have gotten the most media attention and would seem to be a logical choice, given our supply of hydroelectric power, however today’s EVs also come with issues, such as; range anxiety, charging station availability, battery limitations, and extra power grid load.  FCEVs have a similar range as EVs, but are currently more expensive to purchase and operate and need their own refueling network. To entice buyers, Honda, Hyundai, and Toyota currently offer 3 years of free FCEV fuel ($15,000) and are committed to creating a refueling network for the long-game. The third AFV type is a plug-in hybrid (PHEV), which Toyota, Ford, and other manufacturers have identified as the best near-term approach to reduce GHG, primarily because they require smaller lithium-ion batteries and do not need new infrastructure.  

SUV, van, pickup, and truck models, that are at the core of our transportation system are at least 5+ years away from widespread availability in any AFV type. Arguments can be made for each type of AFV, but battery capacity, government incentives, and public refueling/recharging will influence which type becomes widespread.  Despite their higher cost, manufacturers have yet to make money with any hybrid or AFVs. “Through no fault of their own, hybrids have recently lost the media popularity contest to electric vehicles, which have become the “new” answer to the future of motorized transportation. That is until you take a deeper dive and look squarely at the fact that no pure electric vehicle has ever made a dime in profit” (1)  “

Ideally, there would be only one type of AFV and new vehicles would be added at a gradual and predictable rate, allowing new infrastructure to be gradually added alongside existing ICE infrastructure, which must remain in operation.  Specific issues that will need to be addressed include;

  • What financial incentives and taxes will be used to encourage ICE conversion to AFVs to meet the desired GHG goals? If GHG goals are not met on schedule, how will these increase, and who who will pay?
  • How will average Oregonians afford the added cost of AFVs (over ICEs) and how will low-income Oregonians, who need one or more used vehicles of little value, be able to afford new AFVs?
  • Which AFV type and infrastructure will be the focus of State-incentives, or will all AFV types be supported, particularly in rural and eastern Oregon?
  • Since battery replacement is a major cost, what will manufacturers guarantee, and will public charging stations be built to prevent battery damage?
  • Will there be enough EV public recharging/refueling stations to adequately serve EV owners that don’t have home AV charging units or who are visitors in a timely manner?

AFV Premium Price and Issues

With Federal subsidies fading away for the most popular EV brands and minimal State subsidies, Oregonians will have to pay most of the premium cost for AFVs and home charging stations, so AFV economics will be far different than in California.  Today’s available AFVs demand a premium price but have a limited range, with additional range available at a higher price. AFV advocates tend to gloss over AFV limitations, and are optimistic that future technology advances will quickly improve range and reduce costs to be comparable to ICE vehicles by 2025(4).   If this is the case, the urgent need to pass HB2020 is not apparent.

This cost opinion addresses the cost associated with todays EVs.  Consideration of FCEVs or PHEVs would produce different results. Todays EVs typically have a range of about 100-280 miles, although this range drops substantially with extreme temperatures and battery age.  Achieving longer range at a reasonable price is the key goal, with many battery advances coming from Tesla, although its recent rift with Panasonic could affect future joint battery development. EV owners have also said that EPA mi/kw and other ratings don’t reflect real world experience;

  • “All batteries have their life shortened by heat and require a cooling system.  Without an effective cooling, a 23oF change can cut a battery’s life in half, so cooling systems are essential for long-term owner of a hybrid or electric vehicle” (1)
  • “In extreme hot climates, the Chevy Volt battery will last at least ten years ,150,000 miles, and 6,000 cycles.  EPA estimates Volt fuel economy as 106mpg in electric mode and 42mpg with gas, although achieving this depends on how you drive and when you recharge.”(1)
  • “In the early days of hybrids, 2001-2005, there were issues with hybrid battery longevity, but since then, better software has improved battery monitoring, to track individual cell hot spots and to minimize overcharging or undercharging.  Todays lithium ion batteries have better inherent cycle lives, which makes them more durable.” (1)
  • “For the next generation of hybrids and electric vehicles to succeed, they’ll have to show that they’re not only the best cars to own based on the bottom line, but also based on that magic elixir known as performance” (1)
  • “As the first mass market vehicle to have more than a 200 mile range, the Chevy Bolt has become electric royalty, however such numbers are heavily dependent upon ideal weather, such as Southern California.  That number can easily drop by 100 miles or more, depending on road conditions, driving style, and most important, cold weather. Many EV drivers quickly learn that low temperatures are the enemy of range. Batteries have to use energy to heat the battery, as well as for abundant heater use.  Fast driving, multiple quick trips, and conventional braking, drops EV range even more. Parking garages, where many of the charging stations in town are located, often close after dark.” (2)
  • “The EV is a commuter car, and it’s probably not the car you’d drive on a trip.  The ideal EV owner has a couple of cars and a home where they can charge the EV a few times a week. Your Bolt mileage will vary, especially if you’ve got cold weather and an aggressive driving style working against you”(3)

With HB2020, EVs would change from part-time use to being the primary vehicle used every day, and requires a far more rigorous infrastructure and a serious look at the costs and associated risks.  It is assumed that Oregonians will choose the most-cost effective option that meets their needs for moving family and goods. A list of top selling EVs in the US includes;

Q1 2019 Top selling EVs
ModelQ1 SalesCurrent Price, after Federal tax credit2020 Price, after Federal tax credit New Battery kWhWarm Weather Energy use combined city/hwy (Wh/mi)WarmWeather Range, 90% batteryCold Weather Range with 90% battery
Chevy Bolt EV4316$33,745$37,49560283212106
Tesla Model 3 Std Range Plus22425$34,950$38,70059.5251237119
Tesla Model 3 Long Range Plus 2WD$41,950$45,70080.5259311155
Tesla Model 3 Long Range Plus AWD$45,950$49,70080.5291277138
Nissan Leaf e+SV/SL2685$31,950$31,9506232419196
Tesla Model S Long Range AWD3625$82,450$86,200100330303152
Tesla Model X Long Range AWD3850$86,950$90,700100387258129
Notes; Q1 Top selling EV sales, price, battery capacity, and energy use from Inside EVs 4/5/

Example of the Cost to Convert to Electric Vehicles

While  EPA’s future mileage standards project that car + pickup mileage will increase from a combined average of 22.5 mpg today to 38 mpg in 2050, the associated reduction in GHG is largely negated by a projected increase in the number of vehicles and miles driven.(4) To assemble an example of the cost to convert to EVs to meet HB 2020 GHG goal, it was assumed that;

  1. Oregonians would use their existing ICE vehicle and pay the added carbon tax, until this added cost equalled the added payment for an AFV (+ charging unit), less any operating savings, i.e. time of equilibrium.  At an initial tax of $15/mTCO2 + $2/yr & 3% inflation, it will take 60 to 100 years for this point to be reached, and thus there would be no appreciable conversion or reduction in transportation GHG by 2050, other than that which would already occur through EPA’s mandated mileage standards,  It was assumed that AFVs would be mandated in 2050.
  2. HB2020 gives the Office of Carbon Policy (OCP) authority to unilaterally increase the carbon tax as necessary to force people out of ICE vehicles to meet GHG goals and so a second scenario was developed, where the carbon tax was increased 5-fold, as an example of the kind of measure that may be necessary to financially burden people away from ICE vehicles.  Such a higher tax would reduce the time of equilibrium, to 11 to 24 years for 3 vehicle types considered(sedan, SUV, pickup), before people would convert to AFVs.  
  3. This estimate was based on the cost of financing the premium cost of an AFV above a comparable ICE.   However, mid-way through the conversion program, the trade-in value of ICEs could be prone to unanticipated depreciation or even have negligible value.  If so, some Oregonians will face the daunting challenge of paying off an old car, as well as paying for a new AFV. The additional cost associated with such a scenario could be considerable but was outside of the scope of this estimate.
  4. The $2500 Charge Ahead Rebate (less than $50,00 vehicle) and $2500 Clean Vehicle Rebate (low-income households) may help with new AFV payments, but some may be unable to do so and will be forced to carpool, Uber, or use public transportation, regardless of the extra time and inconvenience.  
  5. Oregonians will pay both the added carbon tax up to the point when they finally purchase an AFV, as well as the premium cost of an AFV.  Half of the carbon taxes paid will have gone to social re-engineering and environmental agendas.

About 25% of Oregonians and 47% of Portland residents live in multi-unit housing(4).  Another significant number live in older houses with dated electrical panels, lack room for a dedicated charging pedestal, and/or have only street parking,  Any of these situations can pose a signifiant logistical challenge, and if it is at all possible, will involve substantially higher cost to provide overnight home charging.  While the State has ordered that newly constructed residential and commercial building have the infrastructure to enable future Level 2 chargers, it has not addressed chargers at existing buildings.  EV owners without a dedicated charging unit, will have no choice but to use public charging stations, although doing so overnight is not practical, so they will be forced to use these stations either before or after their commute. Since even a Level 3 DC fast-charging station requires an hour charging time, there is the potential for congestion and long lines, which make for longer work days.  At the present, there are 1272 public EV charging stations for 20,000 EVs, and an increase to 5.46 million EVs would imply a proportional increase of 350,000 public charging stations in 2050 to accommodate these EV owners, as well as visitors who need to recharge before returning home. Assuming that half of the EV owners would not have their own home charging unit, this would be equivalent to 1 charging station for every 8 EVs plus visitor EVs.  The Biennial Energy Report (4) states that;

“ it is important to encourage battery electric vehicles to charge at times most optimal for the grid to avoid system capacity constraints.   With the ability to shift charging to off-peak hours, Oregon could add significant numbers of EVs without needed to build or procure additional generation resources”,

The Department of Energy needs to explain how this will be possible, given the large number of EVs that will be dependent on public charging stations during peak grid demand.   Another issue that needs to be addressed is where to locate public charging stations, since they need to be along existing routes, preferably near high density residential areas, and require ample room for both the stations and waiting lines.   Such space in metropolitan areas is already in high commercial demand and will be expensive. Conflicts with zoning restrictions and land use laws will need to be worked out. Stations will also needed at regular intervals along all highway corridors across the state, preferably at no more than 30 mile intervals.

In preparing the cost for both the initial carbon tax rates and a 5-fold rate increase, three vehicle types were considered; compact sedan, mid-size SUV, and pickup truck. The following assumptions were made;

  • Use the current EV retail price after Jan 1, 2020.  There will be no federal tax credits for Tesla or Chevy Bolt
  • Sedan, SUV, and pickup with new battery capacities of 60, 100, &180 kWh, respectively, and were adjusted by 10% for age, and by 25% to average all weather conditions, heating/cooling needs, system inefficiencies, and and non-optimal conditions.
  • Lithium-ion batteries would have a 150,000 mile life and Telsa projects the 2025 replacement cost to be about $150/kw or $15000 for a 100kWhr battery.  Replacement is prorated on a per mile basis, and added to EV operating cost.
  • Residential power average of $0.10/kWhr, gasoline is $3.50/gal.
  • Maintenance of $40/6000mi for ICE vehicles, and $25/6000mi for AFV vehicles
  • Home EV chargers will be 240 volt Level 2 , requiring a new 100 amp circuit and limited main panel rewiring, and a secure outdoor pedestal.  A $1000 utility rebate & an average $5000 residual were assumed for Level 2 home chargers for each EV, which should be adequate for most newer single facility homes that have room for a dedicated charging pedestal.  
  • Public and truck/bus base chargers are assumed to be Level 3 DC fast-charging units, 200 or 400 amp 3-phase service, with separate meter, separate pad, with a charge point capable of accommodating CCS (Combined Charging Standard), CHAdeMO, or Tesla plugs. A $15,000 allowance is included for local grid upgrade.  No allowance was included for property purchase or site work.
  • After rebates, the additional cost of EV+charger will be financed with 72 month car loan, 3.75% or a $1627/yr payment for each $10,000.
  • In 2018 Oregon had 3.938,000 passenger vehicles, motorcycles, motor homes, government vehicles, and snowmobiles.(5)  By 2050, this total is expected to reach 6.2 million vehicles.(4)  In 2018, there were also 37,100 trucks and 5,640 buses (5), and it is assumed that this will increase to 56,000 and 9000, respectively, by 2050.   The capital and other costs to convert buses and trucks to AFV was assumed to be 4x the cost of the pickup truck used in this analysis.  Since only prototypes are available at this time, this assumption should be revisited as information becomes available.


HB 2020 sets a very high goal for reducing GHG, with particular focus on the transpiration sector, with the stated goal of financially forcing citizens to convert to alternative fuel vehicles (AFVs) although today no one knows which AFV vehicle type, cost, or schedule that it will take to reach this goal.  In particular, funding and siting the attendant network of public refueling/recharging stations required for EVs will be a major financial hurdle. Since Oregon’s Constitution specifically prohibits the use of fuel taxes to provide incentives for AFVs or recharging/refueling stations, the carbon fuel tax will become the primary means to force conversion to AFVs, but it can do nothing to increase the number of public recharging stations, nor integrate them into existing infrastructure or land use.

The first scenario considered 3 passenger vehicle types (sedan, SUV. & pickup) and the initial carbon tax rate (see Tables 1 & 2).  This estimate showed that this initial carbon tax rate would likely not be a sufficient burden to force EV conversion, although it would collect an average of $14,222, $17,777, and $23,704, respectively, in carbon tax for each ICE vehicle by 2050. It was assumed that all ICEs would be mandated to convert to EVs in 2050. The added carbon tax, electric vehicles, charging stations, and other costs would have a cumulative cost of $360 billion (about $86,000 per capita) by 2050.

To force the rate of conversion, it was assumed that either new incentives will be created or OCP will increase the carbon tax rate, so a second scenario, which increased the carbon tax rate by 5-fold (see Tables 3 & 4) was developed.  This proved to be a sufficient burden to financially force* EV conversion at 12, 24, and 23 years, respectfully. Oregonians would pay an an average of $13,273, $48,787, and $64,348, respectively, in carbon tax for each ICE sedan, SUV. & pickup by the time of EV conversion, and the owner would then purchase EVs.  The added carbon tax, electric vehicles, charging stations, and other costs would have a cumulative cost of $582 billion (about $139,000 per capita) by 2050.

Off-road, construction, and logging equipment will face similar issues, but access to EV charging stations will be limited, and

need to consider biodiesel, fuel cels, or other fuel source.   A similar estimate could be prepared to estimate the HB2020 roll out cost for these sectors of the economy.

  • Defined as when the added carbon tax equals the loan payment(3.75%, 72mo) for the AFV premium cost plus home charging unit, less any operating savings.


  1. How Long do Electric Car Batteries Really Last?, Stephen Lang, The Drive, August 11, 2016
  2. GM Claims the Chevy Volt gets 238 mpg per charge.  Here’s why that is Misleading. Peter Holley, The Washington Post, April 16, 2018.
  3. Dan Edmonds, Director of vehicle testing for automotive website,
  4. BiEnnial Energy Report, Oregon Department of Energy, 2018
  5. Oregon Motor Vehicle Registration, Oregon DMV, 2018

Table 1 Vehicle Cost with Initial Carbon Tax, 3% inflation

DescriptionHonda CRVTesla Model 3 LRange +Mid-Size SUVTesla Model S Long RangeToyota Tundra or F150Rivian R1T Pickup
initial vehicle cost$32,000$45,700$60,000$86,200$45,000$84,000
Level 2 charging station$6,000$6,000$6,000
Battery Capacity, kWh60100180
Ave of Warm & Cold Weather Range, mi233228300
mpg  & Ave kWhr/100mi (warm and cold weather average)253520521560
Fuel cost; $/gal   & power cost $/kWhr$3.50$0.10$3.50$0.10$3.50$0.10
Fuel/Power Cost/100mi$14.00$3.45$17.50$5.16$23.33$6.00
Battery Replacement Cost @150k mi$9000$15,000$27,000
Battery Replacement Cost/100mi$6.00$10.00$18.00
6000 mi Maintenance /100mi @$40 & $25$0.67$0.42$0.67$0.42$0.67$0.42
Operating cost before carbon tax /100mi$14.67$9.87$18.17$15.58$24.00$24.42
Gallons Fuel/yr @15k miles/yr6007501,000
Rebates/Incentives, after 1/1/20$3,500$1,000$8,500
Total additional EV + charger capital cost over comparable ICE vehicle$16,200$31,200$36,500
Annual Loan Cost  3.75%, 7year$2635$5,076$5,938
Equivalent ICE Vehicle operating cost/100mi$27.44$49.41$64.00
Year when ICE  Operating cost=loan cost>60 years>60 years>60 years
Carbon Tax Paid per Vehicle thru YR 30$14,222$17,777$23,704

Table 2. Cost of Converting to AFVs (Alternate Fuel Vehicles) by 2050

Description#Assumed Government Contribution/ eachCost (millions)Remaining Cost Privately Paid / eachCost (millions)Carbon Tax Paid on Equivalent ICE up to AFV purchase (millions)
compact sedan, 60 KW battery, $13,700 premium, 1,680,000$2,500$4,200$11,200$18,816$2,389
SUV/van; 100 KW battery, $26,200 premium,1,680,000$0$0$26,200$44,016$29,865
Pickup, w/ 180 KW battery. $39,000 premium2,100,000$7,500$15,750$31,500$66,150$49,778
Hi-rate Level 3 charge Hwy350,000$90,000$31,500$0$0
Level 2 home charger,5,460,0001000$5,460$5,000$27,300
Buses 720 KWhr battery, $156,000 premium9000$156,000$1,404$853
Level 3+ base charger9000$80,000$720
Trucks, 720 KWhr battery, $156,000 premium56000$0$0$156,000$8,736$5310
Level 3+ base charger56000$5,000$280$75,000$4,200$0
20% Contingency Allowance$63,346

Table 3 Vehicle Cost with 5-fold increase in Initial Carbon Tax, 3% inflation

DescriptionHonda CRVTesla Model 3 LR PlusMid-Size SUVTesla Model S Long RangeToyota Tundra or F150Rivian R1T Pickup
initial vehicle cost$32,000$45,700$60,000$86,200$45,000$84,000
Level 2 charging station$6,000$6,000$6,000
Battery Capacity, kWh60100180
Ave of Warm & Cold Weather Range, mi233228300
mpg  & Ave kWhr/100mi (warm and cold weather average)253520521560
Fuel cost; $/gal   & power cost $/kWhr$3.50$0.10$3.50$0.10$3.50$0.10
Fuel/Power Cost/100mi$14.00$3.45$17.50$5.16$23.33$6.00
Battery Replacement Cost @150k mi$9000$15,000$27,000
Battery Replacement Cost/100mi$6.00$10.00$18.00
6000 mi Maintenance /100mi @$40 & $25$0.67$0.42$0.67$0.42$0.67$0.42
Operating cost before carbon tax /100mi$14.67$9.87$18.17$15.58$24.00$24.42
Gallons Fuel/yr @15k miles/yr6007501,000
Rebates/Incentives, after 1/1/20$3,500$1,000$8,500
Total additional EV + charger capital cost over comparable ICE vehicle$16,200$31,200$36,500
Annual Loan Cost  3.75%, 7year$2635$5076$5938
Equivalent ICE vehicle operating cost/100mi$27.44$49.41$6400
Year when ICE Operating cost=loan cost11.924.223.2
Carbon Tax Paid Per Vehicle prior to EV Purchase$13,273$67,401$77,126

Table 4. Cost of Converting to AFVs with a 5-fold higher carbon tax

Description#Assumed Government Contribution/ eachCost (millions)Remaining Cost Privately Paid / eachCost (millions)Carbon Tax Paid on Equivalent ICE up to AFV purchase (millions)
compact sedan, 60 KW battery, $13,700 premium, 1,680,000$2,500$4,200$11,200$18,816$22,299
SUV/van; 100 KW battery, $26,200 premium,1,680,000$0$0$26,200$44,016$81,962
Pickup, w/ 180 KW battery. $39,000 premium2,100,000$7,500$15,750$31,500$66,150$135,131
Hi-rate Level 3 charge Hwy350,000$90,000$31,500$0$0
Level 2 home charger,5,460,0001000$5,460$5,000$27,300
Buses 720 KWhr battery, $156,000 premium9000$156,000$1,404$2317
Level 3+ base charger9000$80,000$720
Trucks, 720 KWhr battery, $156,000 premium56000$0$0$156,000$8,736$14414
Level 3+ base charger56000$5,000$280$75,000$4,200$0
20% Contingency Allowance$96,931

Table 5  Carbon Tax Data

YRCarbon tax w/o inflationCarbon tax with annual increase & Inflation @3%GHG goal x106 mTCO2Carbon Fuel Tax Collected Inflation @3%Initial Carbon Tax/1000 gallons Inflation @3%Cumulative Initial Carbon Tax/1000 gallons 3% inflation

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