Competitive Cost Analysis of Alternative Powertrain Technologies.
ABSTRACT This paper examines the cost competitiveness of different electrified propulsion technologies from hybrid cars to full battery electric vehicles in the time horizon 2010 to 2020. The assessment shows that the current TCO gaps for alternative drivetrains will increasingly converge over time mainly driven
by decreasing production cost. However, the cost-efficiency of different powertrain architectures depends highly on the mileage a user expects to drive per year. In the mid-run, hybrid electric vehicles (especially with external charging) will be an attractive option in particular for users with high annual
mileages, who can benefit from the low operating cost of EVs in combination with unlimited driving range. The analysis concludes that there will be a variety of competing drivetrain architectures in the market, which in turn leads to increased risk and complex decision making for the portfolio of automotive OEMs and suppliers.
IAMF 2012 FULL PAPER
COMPETITIVE COST ANALYSIS OF ALTERNATIVE POWERTRAIN
Martin Redelbach, Bernd Propfe, Horst E. Friedrich
Institute of Vehicle Concepts, German Aerospace Center (DLR), Stuttgart, Germany
This paper examines the cost competitiveness of different electrified propulsion technologies from
hybrid cars to full battery electric vehicles in the time horizon 2010 to 2020. The assessment shows
that the current TCO gaps for alternative drivetrains will increasingly converge over time mainly driven
by decreasing production cost. However, the cost-efficiency of different powertrain architectures
depends highly on the mileage a user expects to drive per year. In the mid-run, hybrid electric vehicles
(especially with external charging) will be an attractive option in particular for users with high annual
mileages, who can benefit from the low operating cost of EVs in combination with unlimited driving
range. The analysis concludes that there will be a variety of competing drivetrain architectures in the
market, which in turn leads to increased risk and complex decision making for the portfolio of
automotive OEMs and suppliers.
Driven by ambitious CO2 reduction targets and a growing awareness for fuel economy by the
customer, automotive OEMs are increasingly required to develop energy efficient vehicles. In this
context electrification of the automotive powertrain is the most important lever to reduce green house
gas emissions and energy consumption of passenger cars. A variety of propulsion concepts from mild
hybrid to full electric cars has been developed and will be introduced into the market over the next
years. However, the question which technology will be accepted by the user and hence will prevail in
the long run has not been answered, yet.
Hence, the objective of this paper is to examine the cost competitiveness of different electrified
propulsion technologies. The analysis covers all basic powertrain architectures, from conventional cars
with internal combustion engines (ICE), hybrid electric vehicles (HEV), plug-in hybrid electric vehicles
(PHEV) to extended range electric vehicles (EREV) and full battery electric vehicles (BEV). A holistic
cost assessment has been performed for drivers with varying annual mileages to decide which
powertrain is cost optimal for which type of user. This analysis has been repeated for several points in
time to allow a fact-based outlook into the future market development.
As alternative propulsion technologies usually have higher initial purchase prices but lower operating
costs, a life cycle perspective is required when comparing them to conventional vehicles. This paper
comprehensively analyzes the total cost of ownership (TCO) from initial purchase to resale of the car.
Five different powertrain concepts are explored to cover the full range of technologies. The drivetrain
architecture and basic parameters of the analyzed vehicle concepts are summarized in Table 1. The
assessment focuses on passenger cars in the medium segment purchased and operated in Germany.
The gasoline powered ICE car serves as reference vehicle. Its configuration, weight, retail price, fuel
consumption etc. matches with the average midsize passenger car sold in the German auto market in
2010 according to ADAC and KBA data.1,2
Table 1: Vehicle setup and parameterization
To determine the energy consumption of the selected powertrain concepts the DLR proprietary
Modelica library AlternativeVehicles is applied.3 The software contains parameterized drivetrain
components (e.g. electric drives, transmissions, batteries) to build up and model different vehicle
architectures. The simulation allows analyzing the dynamic system behaviour during driving. Several
standardized driving cycles (e.g., NEDC or Artemis) are used to examine and compare the energy
efficiency of the powertrain concepts under varying conditions.
The simulation results are integrated in an extensive total cost of ownership model. The TCO
analysis covers all types of expenses accruing for a vehicle owner including one-time cost (e.g.,
purchase price, expected resale value) as well as operating cost (e.g., fuel/energy, vehicle tax,
general/exhaust inspection, maintenance, and repair). Figure 1 provides an overview of the general
structure of the TCO model. Unlike previous TCO analyses the model is flexible in annual mileage,
holding period, and use characteristics (i.e., share of urban vs. highway driving).4,5,6 This approach
facilitates the economic comparison for different types of users as well as it allows performing a great
range of sensitivity analyses.
Figure 1: Structure of the TCO-model
The production cost of the powertrain components are based on a proprietary McKinsey study.7 In
this study, the future cost development of over 60 drivetrain components have been analyzed by
consolidating industry data, expert interviews, and economic forecasts. The basic car body, interior,
and chassis (excluding powertrain) is assumed to be identical for all examined vehicle concepts. For
the most expensive and crucial part of electric powertrains, the traction battery, a detailed cost model
has been developed. This DLR battery model allows estimating cell, module, and pack prices for the
most important Li-ion chemistries. (In this analysis NMC has been selected for high-energy storages
and NCA for high-power configuration.) A learning curve for the price development of Li-ion batteries
has been derived by applying the cost model for different output levels. The analysis indicates a cost
(Midsize car segment)
with 2 cluches,
with 2 cluches,
Power combustion engine
Electrical energy storage
Aerodynamic drag coefficient
decrease of 14% for a doubling of the cumulated production of high energy batteries, which are used
for PHEVs, EREVs, and BEVs. This implies that the battery price (for a BEV) will decrease from ca.
EUR 860 per kWh on pack level in 2010 to below EUR 250 per kWh, if the national target of 1 million
EVs in 2020 set by the German government can be achieved.
For all other external influence factors realistic scenario assumptions have been made. For example
the assumed oil price development reflects the current policy scenario published in IEA World Energy
Outlook 2011, which projects a moderate increase to 118 USD/barrel by 2020.8 Electricity costs are
based on expected distributer prices for Germany as specified in the 2010 study of the German
Federal Environment Ministry.9
The European Union CO2 emission target of 120 g/km will start in 2012 and decline to 95 g/km by
2020. If the fleet average of an automotive manufacturer exceeds this CO2 limit (corrected by a
weight-depended factor), a penalty of 95 per g CO2/km has to be paid, which is included in the TCO
In Germany – as of today – the only direct monetary incentive from government side is the motor
vehicle tax exemption for BEV holders with savings of approximately EUR 50 per year. Other benefits
or subsidies for EVs as proposed by the National Platform Electromobility have not been decided yet,
and therefore are not incorporated in the TCO model.10
In this simplified approach the depreciation of newly purchased vehicles only depends on the vehicle
miles travelled, assuming an identical holding period of 4 years for all vehicles. The extensive ADAC
database on resale values serves as data source to calibrate the model for the medium size vehicle
segment.1 Net present values of the resale values after 4 years have been calculated assuming a
discount rate of 5%. For a more detailed model on resale values of different drivetrain architectures
and vehicles sizes see Propfe (2012).11
M&R cost (EUR Cent/km)
Engine oilBrake pad
Brake disk Brake fluid
Clutch Gear oil
Air filterTiming belt
Vee belt Rocker cover gasket
Spark plugStarter motor
GeneratorAutomotive battery (Pb)
Traction battery (Li-ion)Fuel cell
H2 storageTraction e-motor
Cabin air filterAir conditioning
PE: AC/DCPE: DC/AC
Figure 2: Maintenance and repair cost in EUR/km for the medium car segment
[Source: DLR analysis]
To determine maintenance and repair costs on a EUR per km level more than 30 drivetrain
components have been evaluated in terms of mean times between failure, material cost, and required
labor input based on ADAC data. The bottom-up model incorporates different drivetrain architectures,
ranging from conventional ICEs to hybrids and full electric vehicles. Hybrids are differentiated into
serial and parallel hybrids, with two different parallel hybrid architectures (torque adding hybrids and
axle-split hybrids). Serial hybrids are defined as ideal serial hybrids with the electrical motor as single
driving motor. All hybrids are definable as grid connected with external charging unit or non-grid
connected hybrids. The results of the maintenance and repair model are presented in Figure 2. The
drivetrain architecture has been chosen to resemble the vehicle parameterization shown in Table 1.
The EUR per km values have subsequently been used to analyze the entire TCO of the vehicles.
Results and Discussion
In a first step total costs of ownership of the selected drivetrain options have been calculated for the
basic year 2010 (assuming a typical holding period of 4 years and an average yearly driving distance
of 10,000 km). The cost break-down for a midsize conventional car with a gasoline engine versus a
battery electric vehicle with 150 km electrical range is depicted in Figure 3. This comparison shows a
significantly higher purchase price for the BEV, which is mainly driven by the expensive traction
battery accounting for more than half of total production cost. On the other side operating costs are
lower in all dimensions. Especially BEV energy cost make up only 30% of the ICE fuel cost.
Furthermore full electric vehicles need less service and maintenance, e.g. no motor oil change and
less break wear due to energy recuperation. Additionally, zero-emission vehicles benefit from the
vehicle tax exemption and are not required to pass a regular exhaust inspection. However, this only
partly sets off their production cost disadvantage compared to cars with conventional gasoline
engines. The TCO gap between BEV and ICE exceeds EUR 20,000 for 2010 (neglecting the fact that
at this point in time almost no full electric car has benn available in the market).
Figure 3: Cost break down for a conventional car (ICE) vs. full electric vehicle (BEV) in the reference
year 2010 (Assuming 10,000 km annual mileage, 4 years holding period)
[Source: DLR analysis]
Figure 4: Total cost of ownership for different users in 2010 and 2020 (holding period 4 years)
[Source: DLR analysis]
When comparing the TCOs of different powertrain concepts on a EUR per km basis over 4 years (see
Figure 4), the cost clearly increase with higher degree of electrification in 2010. This is mainly driven
by the growing battery size (from 2 kWh in the HEV to 30 kWh in the BEV), which is the most costly
component of any EV drivetrain. With technological improvements and increasing economies of scale
the production cost of electrified powertrain components will decline over time, which makes EVs more
and more cost competitive. (For examples BEV production cost will decrease by 6% on annual
average from 2010 to 2020.) This holds especially true for users with high annual mileages, who can
benefit from the low running cost of EVs. According to the analysis in Figure 4 in 2020 the PHEV,
EREV and BEV will be equally cost-efficient for user 2 with an annual driving range of 20,000 km.
In next step the annual mileage is varied continuously from 5,000 km to 50,000 km and the resulting
TCOs are plotted in a chart for the year 2014 (see Figure 5). This break-even analysis indicates the
driving distance, after which the higher initial purchase prices of the different alternative powertrains
are compensated by their lower operating costs. At the bottom of the chart is indicated which
powertrain concept is cost-optimal for which driving range. The analysis shows that in near future the
acquisition of hybrid cars will start to pay off for users with mileage above 24,000 km per year.
Figure 5: Break-even analysis for different powertrain technologies in 2014
In a second step this analysis has been repeated for each year from 2010 to 2020 for annual mileages
between 5,000 and 50,000 km. The results are summarized in Figure 6, which highlights the most cost
efficient drivetrain architecture as a function of the distance a user expects to drive per year. In
addition, the distribution of annual mileages in Germany according to MiD data is indicated in the lower
part of the figure to show the customer potential for each category.12 The results indicate that we will
see an increasing competition between conventional cars and hybrid electric vehicles over the next
years. In particular, hybrids with an external charging unit will be attractive, since they combine the
energy efficiency of electric driving with the unlimited range of conventional cars. As electric motors
are more energy efficient than combustion engines, the share of electric driving should be higher the
more a car is used to minimize overall cost. Generally speaking, the higher the annual mileage, the
higher the cost efficient battery size. According to this analysis in 2020 the EREV with a 15 kWh
battery, which enables up to 70 km fully electric driving, will be the preferred option for drivers with
more than 20,000 km a year, because the significantly reduced energy consumption overcompensates
the additional one-time cost for a larger battery. For annual mileages smaller than 20,000 km the
PHEV with 5 kWh battery size will be the cost optimal choice.
From a pure cost perspective full electric vehicle (BEV) are beneficial for high road performance,
because they have the lowest operating cost of all assessed concepts. However, their limited driving
range and long charging time will not allow realizing large mileages in most use cases. So over the
next decade BEVs will only be interesting for niche markets (e.g. car sharing within cities) or for
customer with great willingness to pay for zero emission driving.
In the long run also fuel cell vehicles (FCV), which have not been assessed in this paper, have a great
potential, because they promise longer driving ranges than battery electric vehicle at comparable
energy cost and relatively short refill times of their hydrogen storage. Prerequisite for the market
acceptance of hydrogen powered cars is a sufficient H2 infrastructure and a significant decrease in
production cost of fuel cells. However, FCVs should be included in future cost analyses.
Figure 6: Analysis of cost-optimal powertrain choice for users with different annual mileages from
2010-2020 versus distribution of annual mileages driven by German passenger cars
[Source: DLR-analysis, MiD 2008 data]
The assessment shows that the current TCO gaps for alternative drivetrains will increasingly converge
by 2020. However, depending on the specific driving characteristics different powertrain concepts will
fit best to different users. This implies that there will not be one dominant powertrain design over the
next decade. Hence, OEMs have to monitor closely the future technological development and
regularly review their powertrain portfolio. In this context the paper provides a methodology and fact-
basis to assess the cost competitiveness of alternative powertrains.
Finally, the key insights of this analysis should be summarized:
The TCOs of different powertrain concepts are converging over time, which will intensify the
competition between alternative propulsion technologies.
The cost-efficiency of powertrains depends highly on the mileage a user expects to drive per
year and the point in time of its purchase.
From a cost perspective, cars with electrified drivetrains should be first choice for people
driving high mileages in the future. However, the limited electrical range of full electric cars
(BEV) will restrict their market success for the foreseeable future to few selected use cases.
Hence, in the mid-run hybrid electric vehicle (especially PHEV and EREV with external
charging) will be an attractive option due to their low running cost in combination with
unlimited driving range.
Due to the great number of influencing factors decision making becomes more complex.
In conclusion, this dynamic market environment will lead to a variety of different drivetrain
architectures, which in turn lead to increased risks for automotive OEMs and suppliers.
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und Handelsnamen Jahr 2010 (FZ4); Federal Motor Transport Authority; Flensburg, Germany;
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Energien in Deutschland bei Berücksichtigung der Entwicklung in Europa und global; Federal
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Vehicle including Maintenance & Repair Costs and Resale Values; EVS26 Los Angeles, USA; May
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