Modelling of life cycle cost of conventional and alternative vehicles

Life cycle cost model

An analysis of life cycle costs is an economic analysis of the assessment of the total cost of acquisition, ownership and liquidation of a product. It is applicable during the entire life cycle of the product or a life cycle stage or combination of different stages²¹ and²².

There are five period phases of the vehicle life cycle:

Generally, the total costs for the above listed phases are acquisition costs, ownership costs and liquidation costs²¹ and²². For the LCC model, I recommend to divide the life cycle costs into four categories:

where LCC—the life cycle cost of vehicles, LCC_s—the specific life cycle cost of vehicles, C_P—the vehicle purchase cost, C_M—the maintenance cost, C_O—operating state of vehicle cost, C_D—the vehicle disposal cost, t—the time of vehicle operation.

The model for evaluating the economic viability of products is based on the general LCC model which is based on acquisition and ownership costs

where C_P—purchase cost, C_OW—ownership costs.

Acquisition cost (C_P) is represented by the purchase price at the time of acquisition of the assessed passenger vehicle.

Ownership cost (C_OW) is significant during the life cycle of a motor vehicle and varies according to the type of the vehicle. This cost includes the costs of maintenance and operation time can be defined as follows¹⁰

where C_M—cost of maintenance, C_O—operation cost.

The cost of ownership a vehicle (C_OW) can be defined as follows

where C_O—operation cost, C_MC—corrective maintenance cost, C_MP—preventive maintenance cost.

The cost of ownership (C_OW) may include the operating and maintenance costs which consist of the corrective maintenance cost (C_MC) and the cost of preventive maintenance (C_MP) of a motor vehicle.

Calculation of operating costs

Operating cost C_O is determined by the price and amount consumed of conventional or alternative types of fuel. It cover the cost of fuel C_F, operating fluids, oils and lubricants C_OL that are supplied during vehicle operation (not during service inspection), tyres C_T, accumulator batteries C_AB, vehicle insurance fee and road tax or other mandatory fees C_IRT, cost of the motorway tax sticker C_MT, mandatory vehicle inspection and emission measurement in special vehicles C_ETC. The costs are calculated according to

Fuel costs (C_F) are affected by the average consumption of a given type of propulsion vehicle. Then the comparative fuel costs (C_F) can be expressed by the equation

where C_F—total fuel costs (EUR), (bar{c})_aF—average fuel consumption (l/100 km), p_F—fuel price (EUR/l), t_l—service life of a passenger vehicle (km).

Costs for operating fluids, oils and lubricants (C_OL) are any costs for operating fluids, oils and lubricants that are replenished during operation and not during service maintenance; it can be expressed by the equation

where (bar{c})_aOL—average consumption of oil and lubricant (l/100 km), p_OL—price of oil and lubricant (EUR/l).

The cost of tyres (C_T) can be expressed by the equation

where (bar{d})_aT—average life of a passenger vehicle tyre (km), n_t—number of tyres on the passenger vehicle (pc), p_T—price of one piece of tyre (EUR).

Accumulator battery costs (C_AB) —can be expressed by the equation

where (bar{d}_{aB})—average life of one accumulator battery (km), n_AB—number of accumulator batteries in the passenger vehicle (pc), p_AB—price of an accumulator battery (EUR).

Costs arising from laws (C_IRT) are the costs of motor vehicle insurance (compulsory liability, accident insurance, or other). Some of them can be omitted in case of the same costs due to the simplification of the model. Otherwise, they can be expressed by the equation

where C_S1—price of mandatory annual insurance of a passenger vehicle (EUR), C_A1—price of the annual accident insurance of a passenger vehicle (EUR), C_RT—price of annual road tax (EUR), C_R—price of statutory fee (EUR), t_la—operating time of the passenger vehicle until decommissioning (years).

The cost of obtaining a motorway sticker (C_MT) may be omitted if the same type of passenger vehicle is compared. Otherwise, the cost of a motorway sticker (C_MT) can be expressed by the equation

where c_MT—price of annual motorway sticker for the passenger vehicle (EUR).

The costs of the mandatory vehicle inspection and emission measurement (C_ETC) include the costs incurred for the measurement of emissions of the drive engine unit (C_E) and for the technical inspection of the passenger vehicle (C_TC). For the proposed model, the costs of the mandatory technical inspections and emission measurements can be expressed by the equation

where C_E—costs related to the measurement of passenger vehicle emissions (EUR), C_TC—costs of mandatory technical inspection (EUR), y_n—number of years of legal validity of emission measurement and technical condition for the given type of the passenger vehicle (years).

Calculation of maintenance cost

The total costs for vehicle maintenance C_M consist of the cost of preventive maintenance C_MP and the cost of corrective maintenance C_MC^10,11

Vehicle maintenance costs include the cost of material and the cost of labour

where C_M—cumulative maintenance costs, C_MC—corrective maintenance costs, C_MP—preventive maintenance costs, C_MCM—costs of material used for corrective maintenance, C_MCL—costs of labour force for corrective maintenance, C_MCF—costs of workshop equipment used for corrective maintenance, C_MPM—costs of material used for preventive maintenance, C_MPL—costs of labour force for preventive maintenance, C_MPF—costs of workshop equipment used for preventive maintenance.

• Preventive maintenance costs (C_MP) are costs that include all costs associated with preventive maintenance performed to reduce degradation and mitigate the likelihood of failure. At present, preventive maintenance is performed at predetermined time intervals (according to the manufacturer’s preventive maintenance program) or when a specified number of kilometres are not covered before the next service maintenance, depending on the time. In practice, for passenger cars, it is usually 1 or 2 years, depending on the use of engine oil. This mainly includes the cost of:

  • material consumed during preventive maintenance,

  • work spent on preventive maintenance,

  • workshop equipment, training of preventive maintenance specialists.

    $${C}_{MP}=frac{{t}_{l}}{MTB{M}_{p}}left({C}_{MPM}+{(bar{c}}_{p}{bar{t}}_{pm})right),$$

    (17)

    where MTBM_p—mean operating time between preventive maintenances (km), C_MPM—costs of material used for preventive maintenance (EUR), (bar{c})_p—average hourly cost of labour and workshop equipment used for maintenance (EUR/hour), ̅t_pm—mean time of labour-intensity per one preventive maintenance (hour).

Design of a model for the analysis of selected life cycle costs of a passenger motor vehicle

The model for performing an analysis of life cycle costs for the purchase of a new motor vehicle is based on the basic Eq. (3), (18). We will not count the costs of improvement (CE) and the costs of the decommissioning phase (CD) for the mentioned model due to the calculations of costs that are unnecessary for the analysis. Then the model can be expressed as follows

Then, the following Eqs. (6), (7), (8), (9), (10), (11), (12), (13), (16) and (17) are substituted into the given equation, and the selected costs can be calculated for individual vehicles. The resulting model for calculating the LCC costs has the following form

It is presented in a Fig. 6.

In this way, the cumulative costs for each passenger motor vehicle are calculated. Since the passenger motor vehicles may have a different service life t_l which is expressed in kilometres, it is recommended to convert this equation to specific costs which are related to one kilometre of use. The selected LCC_S life cycle specific costs can be expressed by the following equation

LCC model input values and items affecting ownership costs for alternative drives

The process of the calculation of selected life cycle costs for the propulsion of passenger vehicles and the structure of individual cost items is shown in Fig. 6. These are the input parameters to the LCC model.

The total life cycle costs are divided into two main cost groups, which are the ownership and acquisition costs for a given drive type. Fuel costs are determined by the price and the quantity of conventional or alternative fuel consumed. For the calculation of the selected LCCs, the authors of the paper assume that the availability of conventional and alternative fuels is not limited in any way. It is assumed that the availability of fuels is ideal, which is not entirely true in practice. This is dependent on the support for each alternative fuel in each state.

In practice, therefore, multiple costs may arise due to the distance to the refuelling station to provide alternative fuels such as E85, CNG, LPG and hydrogen. In addition, there is a distance to the charging station for electric drives.

Another item that affects the cost of operation for hybrid passenger vehicles is the percentage of alternative fuel driving, which can have a significant impact on life cycle costs. Values for this item are given as a percentage, which is then converted into the number of kilometres driven on alternative and conventional fuel.

One of the important parameters for calculating the life cycle operating costs for the hybrid-electric and electric drive is the setting of a threshold value for the capacity of the electric vehicle battery (EV battery) when the replacement is performed. For the model calculation, a limit value of 70% of the electric vehicle battery capacity at 20 °C was set.

Return on investment

Return on investment (ROI) is a performance measure used to evaluate the efficiency or profitability of an investment or compare the efficiency of a number of different investments. ROI tries to directly measure the amount of return on a particular investment, relative to the investment’s cost. To calculate ROI, the benefit (or return) of an investment is divided by the cost of the investment. The result is expressed as a percentage or a ratio^12,23.

For our calculation of the return on investment ROI on alternative and conventional passenger car propulsion the following formula is used, which is expressed as a percentage

where LCC_A—selected live cycle costs of the alternative passenger car propulsion (EUR), LCC_C—selected live cycle costs of the conventional passenger car propulsion (EUR).

The return on investment of an alternative vehicle ROI_AV purchase expresses after how many kilometres the increased cost of purchasing an alternative fuel vehicle compared to a conventional one is recovered. If the value is negative, the payback will not occur for various reasons. The following equation is used to calculate ROI_AV

where ({C}_{{P}_{AV}})—purchase cost on alternative vehicle (EUR), ({C}_{{P}_{CV}})—purchase cost on conventional vehicle (EUR), ({C}_{O{W}_{CV}})—ownership cost on conventional vehicle (EUR), ({C}_{O{W}_{AV}})—ownership cost on alternative vehicle (EUR), t_l—service life of the passenger vehicle (km).

Ownership costs on conventional vehicle are expressed by the following equation

Ownership costs on alternative vehicle are expressed by the following equation

The rate of return on investment for the purchase of an alternative vehicle depending on the kilometres travelled t_o is expressed by the following equation

where t_o—operation of the passenger vehicle (km).

Source: Ecology - nature.com