A quick look at Total Cost of Ownership.

The argument is often cited that it takes years to recoup the additional cost of an electric vehicle.  While there is some truth to this, that truth is incomplete and misleading, as savings start immediately, and the monthly costs are very affordable when you look at the total cost of ownership.  Let me give you a few scenarios, of a very basic TCO (doesnt include depreciation, maintenance).  You could argue that this is a 'Not so Total Cost of Ownership,' but taking stabs at maintenance is really an unknown factor, as well is depreciation.  According to recent data, the Chevy Volt and Nissan Leafs have the highest resale amongst all cars, and the very limited maintenance that resides outside of the 100k/10 year electronic component warranty is likely to be VERY small. 


Below I am only examining the electric only miles I am putting on the Volt.  You might say, "but you are unlikely to go 100% electric".   But here is why I don't include them...  The Volt gets close to 40 MPG when in extended range mode, so for the vast majority of cars you can compare it to, running on gas is still saving money.  So I don't have to complicate the information below, just assume that I am comparing the electric only range of the Volt to the same miles using gas on another car, and not even looking at the likely increased savings the Volt will get you in gas miles beyond that.  For the few cars that will do better on gas, since most Volt owners are using 75% electric miles (I am 95%), the amount of savings lost to the 25% gas won't be all that much.

Also important is that I am ignoring the lease option.  Leasing the volt is CHEAP compared to owning.  If I ran some of my numbers with leasing prices, you would be very surprised.  Take $320 as the monthly payment estimate for a 15k mile a year lease for 3 years below if you want to run your own numbers.

The Volt bottom price after subsidy is ~$32,500 (base price ~$40k). 

If you take a 5 year loan on a Volt at 32,500, your monthly payment is going to be ~ $600 a month.
If you drive 15,000 miles a year electric, using the nationwide average per kwH (12 cents), your cost of energy per month is going to be $53 in electricity.  In many locations that rate would be a lot lower (I spend about half that in my location).

But we are looking at averages.  So far:

$600 (loan) + $53 (electricity) = $653

Now, instead of looking at any particular car, let's look at an average car in the 25k price range.  If you financed a 25k car over 5 years, your monthly cost would be about $460 a month.  Assuming this car gets reasonable gas mileage, lets assume 30, your fuel costs are going to be $145 a month at $3.50 a gallon.

$460 (loan) + $145 (fuel) = $605

Lets see what it looks like with fuel being $4 a gallon

$460 (loan) + $167 (fuel) = $627

Now lets assume you are like me, and you drive a lot more.  I average about 22,000 miles a year.  I drive about 95% electric, but we'll assume it is 100% to make the example more simple (doesnt really affect the outcome).

$600 (loan) + $77 (electricity) = $677

Lets look at the same 25k car with various inputs

25k car, at 22k miles, @30 MPG with fuel at $3.50
$460 (loan) + $213 (fuel) = $673

25k car, at 22k miles, @30 MPG with fuel costs at $4.00
$460 (loan) + $244 (fuel) = $704

Let's look at my situation specifically.  I pay only 6 cents per kilowatt hour average with my meter in North Carolina (TOU-D rider).  I am also more efficient in driving my vehicle than published (I average about 34 kwH per 100 miles).  This is how the situation looks for me at 22k miles a year compared to an efficient 25k car:

My Situation:
$600 (loan) + $37 (electricity) = $637

Compared to the fuel price right now ($3.73) for the 25k car:
$460 (loan) + $227 (fuel) = $687

So, right now, the Volt is SAVING me $50 a month over the internal combustion.  I don't have to worry about the variability of my fuel source.  It stays relatively constant over time, and when it increases, it is very small.

Once the cars are paid off (after 5 years), the Volt will win in savings EVERY MONTH over any other car you drive.  So, if you keep it past the time when your loan is paid off, the car will be paying you back every month.

Conclusion:  Even when batteries are still very expensive component to the initial cost of an EV, a total cost analysis can make the Volt very attractive.  It is competitive even at current fuel levels, and as gas increases beyond $4 a gallon, the Volt will become a net saver of money compared to many other cars.  As battery technology and mass production bring down the price per kWh, it won't be long before electric will be far cheaper than internal combustion in total operating costs.

The great thing about an electric car, for the most part, is you know what your total cost of ownership is going to be pretty much through 5 years of life.  You don't have that luxury with an internal combustion vehicle.  Your TCO could be MUCH higher if oil prices spike.  From my experience, Americans do NOT like variability, especially with something severely affecting their bottom line like monthly fuel costs.