Cheap Money….to buy a Volt

What’s the payoff for investing in a Volt? Let’s run the numbers.

First, some assumptions: For most people, a typical day involves 33 miles of driving, 12,000 miles of routine trips each year. An occasional longer jaunt might bring the total added to the odometer to 15,000. The Volt can go 40 miles on electricity alone, so we’ll assume local driving will be on the battery. Charging would likely be with cheap electricity from the wall outlet at home and maybe some free electricity from charging stations located in public places. Let’s assume this mix of cheap and free electricity costs 10 cents a kilowatt-hour on average.

The Volt will travel between 3 and 4 miles on a kWh. Let’s use 3. For 12,000 miles the car will consume 4,000 kWh. At 10 cents, that’s $400 for electricity.

In terms of performance, the Volt really isn’t an “economy” car. It will “get out of its own way.” A similar gasoline only car (200-250 hp) might get 25 mpg in typical short trip operation. For our 12,000 miles on electricity, count 480 gallons of gasoline not purchased. At $3.50 a gallon, that’s $1,680 a year. At $4.50 it would be $2,160 a year.

There is an upfront premium for electric drive. Manufacturers don’t seem to be very interested in telling us how much that is, but we can guess. Let’s guess $12,000. Let’s also guess gasoline will average $4.00 a gallon over the next 10 years. If our guesses are right, we’ll save $1,920 a year on gasoline but pay $400 more for electricity. The net is $1,520 a year or $15,200 over the full period. Not spectacular, but not bad. Payback is less than 8 years. Return on investment is 4.5%. Sure beats a passbook!

There are two more pieces to consider. $4/gal. for gasoline as an average over the next ten years is probably a pretty low estimate. Care to bet against $6 by 2022? If that comes to pass and prices are still rising, what will be the resale value of efficient cars like the Volt compared to their similar sized gas guzzling cousins of the same vintage? If it’s a couple thousand more, the return on investment looks more like six and a half percent. Not too shabby.


About wattnextblog

I'm Bill Ferree, a chief officer of WattNext, Inc.
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2 Responses to Cheap Money….to buy a Volt

  1. EV driver says:

    Great article on the VOLT! Good to see many new electric cars on the market including the very affordable Mitsubishi “i”. They really do make sense for a lot of commuters or households with 2 cars that want to minimize their gasoline, oil changes, and car repair bills. I enjoyed seeing you in the new film in front of your WattNext solar car charging station!

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