Electric Cars

I am on an automobile kick this week. There was a big story on the news about electric cars hitting the market with some history of the vehicles and some interesting information on the cars.

The Chevrolet Volt was prominently mentioned. It is supposed to get 230 miles per gallon of gas and cost about $43,000. What a deal that must be. Let’s take a look at that.

Assume that you buy a Volt and drive exactly 230 miles per week. That’s a gallon of gas a week. Suppose in 2 or 3 years gas is at $5 per gallon. It’s going to cost you $5 per week or $260 per year. Not bad.

Instead you buy a Toyota Prius for about $23,000. It gets 50 miles per gallon. You drive the same 230 miles per week it’s going to cost you $23 a week — essentially five times the cost of gas for the Volt. So you will be spending $1,200 per year on gas, an increase of $940 over the Volt. That means that it will take 21 years to get back your added investment of $20,000 in the Volt. Of course this calculation changes if you drive more or less than these numbers or if the price of gas is different than $5 per gallon. You also can get a tax credit of $2,500 for the Volt but no credit for the Prius.

Taking it one step further, you buy an economy car for $15,000 that gets 25 miles per gallon (is that an economy care anymore) and drive that same 230 miles per week. Total gas cost for the year is $2,400 or an increase of $2,140 over the Volt. This time it will take you 13 years to get your money back BUT you will have to swap out the batteries in the Volt at some time in that period.

It takes about 7 years to get your money back if you compare the economy car with the Prius.

These electric vehicles certainly save gasoline but are not necessarily economical. However, being economical is not necessarily the reason you but a Volt.