Comparison of Electric and Internal Combustion Engine Vehicles from an Economic Perspective in Developing Islands

Abstract

This paper introduces a global model for analyzing diverse car segments, featuring a novel algorithm as a decision-making tool for future calculations and policymaking. This analysis was carried out by using the total cost of ownership (TCO) across seven car segments categorized by the European Union Commission, spanning from small to luxury models. Focusing on North Cyprus as a case study—particularly relevant for developing islands—the study assesses how adopting 100% photovoltaic (PV) energy affects electric vehicle (EV) TCO. Given the absence of current financial incentives in North Cyprus, the research evaluates two support schemes tailored to different segments, measuring the minimum and maximum incentives required based on EV sales prices. In the base-case scenario, TCO ranges from €23,790.79 to €176,498.07. In general, a 13.92% average support is required as an incentive for EV TCO to be equivalent in price with internal combustion engine vehicles, this decreases to 7.99% with a value-added-tax-free and road-tax-free incentive toward EVs. Some segments show TCO price equivalence, reducing reliance on substantial incentives and preserving government revenue, vital for developing islands. The analysis reveals an average TCO reduction of 8.81% for smaller segments and 13.5% for larger segments with applied incentives. 100% PV energy adoption leads to an average TCO decrease of 4.54% for smaller segments and 2.84% for larger segments. Additionally, the study notes a correlation between rising automobile purchase prices and a decrease in the impact of social cost of carbon and the levelized cost of PV energy.