One of the benefits of owning a plug-in hybrid electric vehicle (PHEV) is the flexibility to use electricity, gasoline, or a combination of the two. Well-informed consumers may determine the usage of each fuel type based on both use-case (i.e., length of trip) and economy of fuel choice (i.e., the comparative price of each fuel). Until recently, the decision about whether or not to recharge your PHEV at every opportunity was a no-brainer because running on electricity was consistently cheaper per mile than gasoline. With the state’s recent electricity price increases, however, the economic advantage of PHEVs has diminished. Let’s take a look at the economics.
Location and power supplier make a huge difference in the equation around electricity fuel cost. The table below displays the gasoline-equivalent price to recharge PHEVs in various service districts.1 The green prices indicate where and when electricity is cheaper and red prices indicate where and when electricity is more expensive than the 2024 year-to-date average gasoline price of $4.75 per gallon. For example, the Hyundai is significantly cheaper to use electricity in SMUD territory at $2.09 per effective gasoline gallon, than the prevailing gasoline price. However, gasoline fuel is cheaper in the Hyundai in PG&E territory at 0.35/kwh cost $5.09 per effective gallon. Not listed in the table below is the cost of charging at a public charger. On average, that cost is 20-60 cents per kilowatt hour (kWh).
Gasoline-Equivalent Prices for Residential Electricity to charge PHEVs ($/gallon)
Sources: Stillwater Analysis of EPA Fuel Economy Guide 2024 model-year Combined Fuel Economy values and Utilities Electricity Residential Rates
Notes:
- Green prices highlight electricity cost (per gasoline-gallon equivalent) below $4.75 while red prices indicate electricity cost (per gasoline-gallon equivalent) above $4.75.
- Off-Peak = midnight to noon
- EV-specific Off-Peak Rate = 11:00 PM-7:00 AM
- Mid-Peak = Noon to 5:00 PM and 8:00 PM to midnight
- Peak = 5:00 PM to 8:00 PM
As can be seen in the table above, decision-making around the most economical fueling plan for your PHEV can be complicated. Utility rates differ significantly between regions depending on whether the utility is publicly owned (non-profit) or privately owned (for-profit), where and how the electricity is sourced (lower-cost hydroelectric vs higher-cost solar, wind, or natural gas), and varying costs to maintain different power grids. So, if you drive a Hyundai Tucson PHEV it is significantly cheaper to run on electricity rather than gasoline in Sacramento (SMUD territory), but gasoline is cheaper than electricity in that same Hyundai in the broader Northern or Central California region (PG&E territory) if you’re considering charging during “peak hours.” To complicate matters, however, electricity is actually cheaper in your Hyundai Tucson in PG&E territory if you can change your service to dedicated EV rates and charge in “off-peak hours.”
Of course, there is also significant variability in the gasoline prices against which we’re comparing electricity rates. The figure below shows how the average price of all grades of gasoline combined has varied seasonally over the last two years. Note that average regular grade gasoline prices are 14 cents per gallon lower than the average of all grades of gasoline shown below. So, a PHEV owner who wants to fuel in the most economic fashion would want to track gasoline prices in real time rather than simply utilizing the annual average. Gasoline prices also differ significantly between regions. For example, Los Angeles and San Francisco often have higher prices compared to rural areas due to higher demand and local taxes. Other factors such as proximity to refineries, transportation cost, and local competition also play a role in pricing differentials.
Average Retail Price of All Gasoline Grades in California
Source: U.S. Energy Information Administration, California Regular All Formulations Retail Gasoline Prices
A bigger picture question for folks considering the purchase of a PHEV is whether the potential savings from usage of electricity rather than gas would cover the added cost of the PHEV compared to a standard internal combustion engine vehicle. A full assessment of that total cost of ownership is beyond the scope of this article, but “back of the envelope” calculations can give a sense of the range of possible outcomes. Assuming usage of the lowest priced SMUD electricity rates and an annual average of 12,000 miles driven, the PHEV’s electric operation would save the Ferrari and Bentley owner $2,600-$3,100 per year – the largest savings available. On the lowest end of the scale, the Toyota Prius would save its owner $500 annually.
Bottom Line: If electricity prices continue to rise quicker than gasoline prices and consumers become aware of the disparity in pricing, this may influence consumer behavior toward minimizing PHEV recharging. Furthermore, most of California’s population lives in the higher cost electricity utility districts (PG&E, Southern California Edison, and San Diego Gas & Electric) which may explain, in part, why PHEV sales in California appeared to reach an upper limit of 3.5% of new vehicle sales for the last eight years.
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