Cost-Benefit Analysis of Plug-In Hybrid Electric Vehicle Technology

Markel, T.; Simpson, Andrew · 2007 · OpenAlex-citations

DOI: 10.3390/wevj1010294

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Summary

This paper presents a cost-benefit analysis of Plug-in Hybrid Electric Vehicle (PHEV) technology, addressing the trade-off between incremental vehicle costs and petroleum displacement. Motivated by the potential of PHEVs to reduce fleet petroleum consumption using electricity, the study evaluates how varying battery capacities, fuel costs, and vehicle performance attributes influence the economic viability of PHEVs compared to conventional vehicles (CVs) and standard hybrid-electric vehicles (HEVs). The research aims to determine the specific petroleum reductions achievable at specific incremental costs, identifying the conditions under which PHEVs offer a compelling business case. The methodology employs a detailed, iterative simulation model implemented in Microsoft Excel to predict petroleum reductions and costs for several hundred PHEV designs. The model uses a reverse-calculation, power-flow approach to simulate second-by-second energy consumption over EPA standard driving cycles (UDDS and HWFET). It couples performance, mass balance, energy-use, and cost sub-models, validating results against a Toyota Camry and Honda Civic Hybrid with less than 5% error. The study compares PHEVs with all-electric ranges (PHEVx) from 2 to 60 miles against a baseline midsize sedan. Two powertrain technology scenarios are analyzed: a near-term scenario (2005–2010) using Nickel-Metal Hydride (NiMH) batteries and current technologies, and a long-term scenario (2015–2020) utilizing Lithium-Ion (Li-Ion) batteries and advanced electric drive components. The results indicate that PHEVs equipped with 20 miles (32 km) or more of energy storage can achieve petroleum reductions exceeding 45% per vehicle. However, these benefits come with significant cost implications. The long-term incremental costs for these high-displacement PHEVs are projected to exceed US$8,000, with near-term costs being substantially higher due to more expensive NiMH battery technology. The analysis reveals that high petroleum prices and low battery costs are necessary to make PHEVs economically attractive without external incentives. While hybridization alone (in HEVs) offers limited petroleum reduction (typically under 50%), PHEVs leverage charge-depleting modes to achieve greater savings, though with diminishing returns as battery capacity increases beyond typical daily driving distances. The study concludes that while the economic case for PHEVs is sensitive to fuel and battery costs, their large potential for petroleum reduction provides strong justification for governmental support to accelerate deployment. The findings highlight that PHEVs are a promising technology for energy security, capable of displacing a significant fraction of fleet petroleum consumption, provided that battery costs decrease and fuel prices remain elevated. The paper underscores the importance of balancing battery energy capacity with cost to optimize the cost-benefit ratio for market penetration.

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