Several factors influence the total cost of driving an ethanol car, including purchase price and operating costs, such as fuel, maintenance and insurance. Generally, the cost is higher but it can be lowered by market incentives and fuel taxation.
The purchase price of FFVs is slightly higher than equivalent petrol vehicles. This extra cost is usually less than for other clean vehicles such as biogas or hybrid electric vehicles. At some BEST sites, such as Stockholm,Biofuel Region, Madrid and Rotterdam, vehicle manufacturers offer FFVs as standard for certain models. Ethanol cars sometimes qualify for special financial incentives aimed at stimulating sales of clean vehicles.
The operating costs of FFVs are comparable to those of equivalent petrol vehicles, except for fuel price and service costs. Ethanol cars require more frequent regular maintenance - if the cars run more than 10 000 km/year – and this adds a small recurring cost.
The price of bioethanol fuel E85 is generally higher than conventional fossil fuels. There are two reasons for this:
Taxation by volume.
When taxation is calculated by volume, E85 drivers pay higher tax per km than petrol drivers, if the tax levels per litre are equal. The lower energy content of E85 means higher fuel consumption. Even when E85 has a lower volume price than petrol it can be more expensive per kilometre. This means that taxation must take energy content into account if E85 is to be competitively priced.
The customs tariffs for bioethanol are higher.
This is because bioethanol is classified as a beverage in the international customs system and as an agricultural product by the WTO, rather than a fuel.
Bioethanol is price-competitive compared with petrol at oil prices of about $70/barrel – if it is treated equal, i.e. is subject to the same customs tariffs and a tax based on energy. Rising petrol prices increase operating costs for petrol vehicles. During the BEST-project, driving on E85 was sometimes the cheaper option in some countries.