The following starting data is for a sub-compact ICE vehicle. Calculate the LCOM in €/km to 2 decimal places.Vehicle: 2020 Fiat 500 Average fuel consumption (kWh/km): 0
Average fuel consumption (L/km): 0.043 Cost of electricity (€/kWh): 0.15 Cost of fuel (€/L): 1.55 Annual distance driven (km): 20 000 Lifetime of vehicle (years): 6
Capex of vehicle (€): 15 400 Fixed opex (% of capex): 1% Interest rate annually: 1%

Question

BlackTom AI · Accepted Answer

We start by identifying the components that typically contribute to LCOM (cost of ownership per kilometer) for a vehicle: capital depreciation/financing cost per km, fixed operating expenses per km, and variable operating costs per km (fuel/electricity). The given data: 
- Capex (initial cost) = €15,400 
- Lifetime = 6 years 
- Annual distance = 20,000 km 
- Fixed opex = 1% of Capex per year 
- Interest rate = 1% per year (cost of capital) 
- Fuel: consumption 0.043 L/km, price €1.55/L 
- Electricity: 0 kWh/km, price irrelevant since consumption is 0
- Fuel/electricity consumption is used to compute energy cost per km; electricity cost per km is zero here since consumption is zero

Step 1: Compute total distance over the vehicle lifetime
- Total distance = annual distance × lifetime = 20,000 km/year × 6 years = 120,000 km

Step 2: Capital cost per year (annualized capex) using a simple equivalent annual cost (EAC) approach with interest rate i = 1% and n = 6 years
- Annualized capex factor = i / (1 − (1 + i)^−n) 
- (1 + i)^n = 1.01^6 ≈ 1.061520; thus (1 + i)^−n ≈ 1 / 1.061520 ≈ 0.942 
- Denominator = 1 − 0.942 ≈ 0.058 
- Annualized capex factor ≈ 0.01 / 0.058 ≈ 0.1724 
- Annualized capex = Capex × factor ≈ €15,400 × 0.1724 ≈ €2,655 (rounded to nearest euro) per year

Step 3: Capital cost per kilometer
- Capex per km = Annualized capex / annual distance = €2,655 / 20,000 km ≈ €0.1328 per km

Step 4: Fixed operating expenses per kilometer
- Fixed opex per year = 1% of Capex = 0.01 × €15,400 = €154 per year
- Fixed opex per km = €154 / 20,000 km = €0.0077 per km

Step 5: Energy costs per kilometer
- Fuel consumption per km = 0.043 L/km; price = €1.55/L
- Fuel cost per km = 0.043 × €1.55 ≈ €0.06665 per km
- Electricity consumption is 0 kWh/km, so electricity cost per km = 0
- Total energy cost per km = €0.06665

Step 6: Sum all per-km costs to obtain LCOM
- LCOM per km = Capex per km + Fixed opex per km + Energy cost per km 
- LCOM per km ≈ 0.1328 + 0.0077 + 0.06665 ≈ €0.20715 per km

Step 7: Round to two decimals
- €0.20715 per km rounds to €0.21 per km

Note: All computations assume LCOM is composed of annualized capital cost (financing/ depreciation), fixed annual operating costs, and variable energy costs per kilometer, with the given inputs. The electricity cost is zero due to the stated consumption figure, and the annuitized capex uses the standard formula for a level annual cost given interest rate and lifetime.

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