How much does cost matter in first wave of EVs?
The Chevy Volt races to market.
(Credit: GM)For the price of the Volt, you could buy almost two hybrids from competitors. But in these early days of electric vehicles, a cold economic analysis doesn't really apply.
Ending years of speculation, General Motors on Tuesday said the Chevy Volt will cost $41,000 or can be leased for $350 a month over three years with a $2,500 payment.
The price tag appeared to have surprised many people who wondered how a car with that price can be aimed at mainstream consumers, which is GM's intention in making an electric-gas hybrid with a longer range than all-electric cars.
Cars powered by electricity are going to be cheaper to run per mile than gasoline cars, which provides some comfort to electric vehicle buyers. Also, there is a federal tax credit of up to $7,500 for battery-powered cars and an energy bill unveiled on Tuesday could bring more incentives for charging infrastructure and manufacturing.
But in the short term, there's much more emotion at play than number crunching. Much like hybrid buyers, who rarely calculate a precise return on investment, initial purchases for electric vehicles are driven by peoples' desire to cut oil use, help jump-start a new high-tech manufacturing industry, or experience a different driving experience.
"The pent-up demand from early adopters is very high," said auto analyst Oliver Hazimeh, who is director of the global E-Mobility practice at consulting company PRTM. "All indications are that these cars are over-subscribed. When you add in the state and federal incentives, add the buzz and the hype, I think they will be a success."
GM expects to sell out its first year's production of 10,000 Volts and Nissan said that it already has a long waiting list for its electric Leaf, which runs entirely on batteries.
The key question for the auto industry is what happens in a few years after the early adopters, the people willing to pay more for new technology and a greener ride, already have their EVs. Here, the economics of fueling and daily driving patterns loom much larger in the decision.
Pulling out the calculator
Although there are many factors at play, in general, electric cars cost more upfront but have lower operating costs.
With the average gasoline price in the U.S. now at $2.75 and average fuel efficiency for new passenger cars at 32 miles per gallon, it costs 8.4 cents per mile to drive on gasoline.
But the price of oil is perennially volatile. A New York Times calculator from 2006 shows that with gas at almost $3 a gallon, the cost per mile could be as much as 11 cents and as low as 6 cents. With $4-per-gallon gas and 20 mpg, it's 20 cents per mile.
Battery-electric vehicles, such as the Leaf, cost less to operate. The 24 kilowatt-hour battery of the Leaf can take it about 100 miles. Using that as a crude approximation of economy, that's 2.8 cents per mile if you use the average U.S. retail electricity rate of 11.7 cents per kilowatt-hour.
An estimate for the kilowatt-hours per 100 miles done for the all-electric Mini-E was substantially better, meaning even lower cost. GM figures that if you drive within the Volt's 40-mile battery range, it will cost $1.50 a day to drive, compared to about $3.50 per day for a 30 mpg sedan.
Also, automakers anticipate that electric vehicles will be cheaper to maintain since there are fewer moving parts and, for battery electrics, no need for oil changes.
A consumer could estimate the cost of driving, figure in government subsidies, and calculate the payoff from the higher initial cost of electric vehicles, much of which is tied up in the giant batteries that move them.
The problem is consumers simply aren't accustomed to buying goods based on the total cost of ownership. Auto dealers, too, sell the purchase price and financing options. That's why automakers expect fleet operators to be more likely buyers for new auto technologies.
On top of that, electric vehicles require consumers to understand the differences in the technologies offered by automakers.
"Conceptually, at the 100,000-foot level, electrification sounds good. But when it comes to putting real money down on the table and making a commitment and possibly changing behavior if it's a plug-in, that's a huge amount of change," said Nancy Gioia, director of global electrification at Ford. "That's why we view one of the key elements is customer education and awareness."
Even when drivers have a good idea of how many miles they drive, many other factors will affect the fuel economy and range of battery-powered cars, including the temperature, driving habits, and things as mundane as hilly terrain. Electricity rates vary regionally more than gasoline, too, which significantly affects charging costs.
Price convergence?
With the Volt, GM appears to be nudging potential drivers toward leasing. The purchase price of the Volt is $8,000 more than the Leaf, but the leases are almost the same. "We find that most consumers want to hear monthly payment," said Joel Ewanick, vice president of marketing at GM on Tuesday.
GM's technology gambit is that appeasing "range anxiety" among consumers with an extended range electric vehicle will pay off for it in the long term. Batteries will take the car 40 miles on its 16 kilowatt-hour battery and then a gasoline engine runs a generator to sustain the charge, delivering a 340 mile range. That compares with about 100 miles for the Leaf and other battery electric cars.
In the coming years, the key to bringing down electric vehicle costs isn't so much a technological breakthrough as manufacturing scale and commoditization. Right now, many components such as battery packs are "one-offs," but the auto industry needs to standardize, much as it did with internal combustion engines, said Hazimeh.
With greater scale, the total cost--which combines the purchase price and operating costs--of electric vehicles and gasoline sedans could be about the same by 2018, said Hazimeh. But it's still not clear that mainstream buyers will buy based on total cost.
Having well known automakers, including Toyota and Honda, enter the electric vehicle market helps customer acceptance and familiarity. But most auto analysts estimate that electric vehicles and plug-in hybrids will be a relatively small percentage of overall auto sales, representing between a few percent or 10 percent by 2020.
So in the near term, the most accessible form of electrification will be traditional hybrids, which represent some of the most fuel-efficient vehicles available. But when it comes to plug-ins, people will be paying for the pleasure of going green and driving electric for some time.
The experience of the early EV drivers and the overall economic situation will play a big role on how these cars are accepted by the "wave of people after early adopters," said Joel Pointon, the plug-in electric vehicle program manager from San Diego Gas & Electric.
He noted that the purchase price of electric vehicles and home charging infrastructure can be knocked down very substantially from federal and state rebates and credits. San Diego, which is participating in a DOE-funded project for public charging stations, will have thousands of electric vehicles in two years and tens of thousands after that.
"The incentives we need are in place and there are more possible incentives on the horizon," Pointon said. "If things go very well with the early adopters, there's a very good chance of seeing a very robust market."
Martin LaMonica is a senior writer for CNET's Green Tech blog. He started at CNET News in 2002, covering IT and Web development. Before that, he was executive editor at IT publication InfoWorld. E-mail Martin. 
I'm looking forward to see what Tesla and Toyota come up with.
I don't like the result when we were teased with the concept car, but there are realities that we simply have to accept.
On top of that I own a 7 year old Malibu and I think it looks nice for a sedan. I like the new Malibus as well. The generalization that all GM products look bad is just B.S.
You know, I might almost buy that argument if it actually seemed to apply across the board. GM has, historically, been the automaker to offer up sexy concepts and then totally screw up the production execution. Most of the other automakers produce retail vehicles that significantly resemble what the concept versions of their cars looked like. GM needs to get in the habit of either keeping concept cars named different from production or go more along the route that the other auto-makers do: make production look significantly similar to concept.
If I come home and forget to plug in to the charger, how long does it take to recharge before I can go to work? If I forget to fill up on the way home, in my gas powered car - I can pull in to Gas-n-Go and be on the road again for 350 miles in 5 min.
Volt had better get this right the first time, because if it is not ready and consumers revolt, it will be "game over".
The real "cost" will be, how much is time and convenience worth? While my average daily >commute< may be less than 40 miles - there are days when I must do errands after work. Driving a $41K beta test version of a car that I can only drive up to 40 miles in perfect conditions for the sake of saving a buck fifty on my commute, just isn't worth it. I can save that much by taking the bus ... but with the bus comes constraint, which could also be the case with the Volt and other EVs.
No change in that ability for the Volt. You still can fuel up like normal.
For my daily needs, this car could easily cut my monthly fuel bill by $200+. That suddenly makes such a vehicle VERY affordable.
Out fuel bills add onto this a distribution charge, as well as state/fed taxes and fees, bringing the cost of the energy to the consumer to be at least double that if not much more.
These distribution, fees and taxes are already included in the 2.70 per gallon average.
"You're average of 11 cents per kwh is unrealistic, as it only takes into account the price of the energy."
I disagree. Here in NC we pay 8.9 cents per kwh regardless of time of day. I don't know what "out fuel bills" are but I do know that taxes aren't 100%, here or anywhere else, so I'm not sure how that would double the price of the kwh.
Unless we wind up with $8 per gallon gasoline I don't see the electric car doing very well, which is why I believe that Tesla will fail, unless they can sell out to a large automaker who wants the technology and is willing to pay handsomely for it. Perhaps the electrics will do better in Europe where gasoline IS more expensive, but at the prices attached to the cars I am still skeptical.
Some of the other electric car concepts that haven't hit the market yet use this, the Aptiva was one that comes to mind.
For instance, if I have a Suburban and I want to own a Leaf, I still need to keep the Suburban in the event I want to drive further than 100 miles. What's the point of having a car that saves me on my gas bill if I can't use it on the trips that would use the most gas in the first place?
With Volt, I could replace my Suburban because I can drive further than 100 miles. (Now I wouldn't because I actually use my Suburban, but you get the idea).
A Volt owner potentially only needs the Volt as their only car. A Leaf driver needs another car. Because no matter what everyone ends up driving over 100 miles every now or then.
And in my specific situation, I have a 100+ mile round trip commute every day. Pair that with the Leaf's 10+ hour (and that's with a 220 volt line) battery charge, and I'd only be able to use it every other day. And what happens if there's a power outage at night. I've at times woken up to a blinking alarm clock due to a power outage in the early morning hours. That could ruin someones day really quick.lol
This car does not have a 40 mile range.
It's 340 miles, 40 miles until the generator kicks in to keep charging the batteries. The generator is IN THE CAR, thus 340 miles.
So, 40 miles, battery only. After 40, you're burning gas, but can still drive the car until the tank is depleted, just like a regular car. Not sure why this concept is so difficult to grasp (as it's been stated in every article regarding the Volt since it was in pre-production.)
So they overlook everything and hope no one notices.
But still if the battery is empty, I have driven further than 40 miles, with a Volt how far will 1 gallon of gas get me. It is the same concept as always MPG. Is the generator and electric motor my efficent than the current hybrids, my guess is not or GM would be promoting that number everywhere, just as they did with that fake 290 MPG rate. Also other manufactures would have used the locomotive concept, but they all have went dual power sources.
So it would appear that despite being targeted at urban types with short commutes - there is not going to be the infrastructure in place to support these EVs in a typical urban environment.
The switch to any new technology will of course come with it's own set of obstacles. Back in the days when the horse and buggy was still prevalent, there wasn't a gas station on every corner. It took time. So it will go with electric vehicles. But I have no doubt that with American ingenuity and determination, we can build out the recharging infrastructure.
Personally, an EV is way too expensive for me to drive -- for now. But I could see them in 10 - 15 years becoming an affordable alternative to the ICE. For now, they're for the early adopters with deep pockets, and that's fine. I honestly hope they work out the kinks, build up the infrastructure and quality, because I would love to see us move away from our dependence on foreign oil. Even if that means using more coal-fired electricity in the short term. BFar easier to clean emissions from 1 coal fired plant than from millions of vehicles on the road.
It's a 1st gen product. They're only making limited numbers - and I bet they'll easily sell them all.
Why are people so eager to see this fail?
Sure, it's frickin' expensive. I bet the first combustion engine that didn't run on steam was, too - and that people were saying the same thing - it'll never take off.
While I certainly don't expect YOU to buy one (or heck, even myself) - you have to start somewhere if the intent is to have a shift in power distribution - and I wouldn't look at this vehicle in any other way.
There are no other cars in the market that does what the Volt does. There are no other gas electric hybrids like this offered from any other manufacturer currently. The Priius runs a gas engine and electric motor inline. That's the closest and it still doesn't compare close enough.
It's a bit early to call it a failure before it hits the streets.
I by the way own a Honda Civic Hybrid which is only $24k fully loaded and gets an average of 35/mpg city.. heck I got 55/mpg on a road trip last summer!
I remember two years ago I looked at the Ford Hybrids.. what a joke.. 35-40k for an ugly sedan that got what 18/mpg city and oh boy 35/mpg highway. And the 35-40k price was for the base model, do you want a cd-player and power windows? Well that is 10k more...
Totally not competitive to imports and a total fail.
(Originally Posted by Turbiodiesel! on thecarlounge.net)
So the thing that always bugs me in these threads is the endless nattering over payback times, inevitable mentions of TDIs and other less efficient but less expensive alternatives, and suspicions of the technology "not being there yet." Central to all these objections is a sort of right-brained, purely economic sort of sensibility - how much does it cost, how quickly will it pay me back.
And I freely admit: a Volt may not be cheaper, in the final financial estimation, than a Prius or a Jetta TDI or whatever. But where you all lose me is applying this sort of ruthless dollars-and-cents logic to hybrids or PHEVs...and nothing else. There will always be a cheaper financial proposition. If all you care about is maximum savings, a 1991 Geo Metro with the back seats removed trumps just about everything else, including a TDI - so are you really ready to take your logic to its inevitable conclusion?
The Volt is, admittedly, expensive and carries with it several potential or real flaws. Cold weather will ding its range significantly. Its batteries will eventually demand replacement. It's heavy. At its current price, it's a luxury for fairly wealthy people who can afford to pay to back up their convictions. And yes, cheaper, more economically sound alternatives exist, even if they're not as outright energy efficient.
But, y'know what? People are gonna buy it anyway. They may be environmentalists. They may be tech nerds. They may be first adopters addicted to the next big thing. They may be dippy Hollywood stars. But they'll buy it.
And they will for the same reason I bought an iPad a few months back. Yes, my iPad is significantly flawed - no Flash, expensive as hell, closed platform, loads web pages slowly. But it's also sleek, fun to use, makes it possible to read blogs and webcomics in bed, small and nice to travel with, and useful in ways my laptop (which was about 60% the price) is not. Yes, I could have just bought a laptop. But I didn't want a laptop, I wanted a sexy little entertainment tablet that was nice to travel and commute with. And I was willing to pay for it. Your mileage may vary; you may have zero interest in an iPad and think I'm a gullible dip**** for buying one. So it goes. I buy doiwn jackets at Patagonia and shirts at Territory Ahead, too - though the ones from Wal-Mart are more economical.
And people buy cars with their hearts just as much as their minds. Why buy a $24k GTI over a $19k base Golf? Why buy a 5-series over a Genesis? Why buy a Jetta over an Optima? Why go with the Mustang GT over the V6? Why buy any of the above over a 1991 Geo Metro? Fact is, we're all willing to pay for what we want when it comes to cars, and other consumer purchases. We all shell out for bigger engines, stiffer suspensions, more strokable dashes, niftier telematics, higher reliability, or whatever it is we value in a car.
So why should efficiency and environmental soundness be any different? I'd spend more for a more efficient car, because I'm an environmental scientist and I value efficiency and I think hybrids and EVs and diesels are sweet. Yeah, I could save more money with a Jetta TDI over a Volt, or a 1991 Geo Metro, but that's not the entire point for me. I'm not scrimping for beer money. I'm buying what I want. So are Volt buyers.
I agree with @borisf98.
And it matters even more when there is 10% unemployment.
Interesting thought, hmm?
Economy of scale will bring the price down, eventually.
I'll instead get the 2011 Camaro I've wanted and enjoy the ride.
If it's your thing, great.
I'll leave you alone if you leave me alone :)
If the gov wants to really quit oil dependency.. they should say hey! this car is 40,000 grand! hmmm... none is gona buy it.
I got a great idea!
What about auto makers make an electric car just like this one at: $23,000 or even better $18,000.
of course we are going to have to wait for the Koreans or the Japanese make an affordable electric car. Sad.
I've seen the other day a pretty cool electric prototype called the land glider.
- by AndroidFTW July 28, 2010 6:41 PM PDT
- It ultimately runs on coal. This solves nothing.
- Like this Reply to this comment 1 person likes this comment
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Showing 1 of 2 pages (62 Comments)Diesels will be around at the end of time.
Diesels , even if all fossil fuels ran out can run on many plant/algae based solutions.
Without diesels , the world economy would grind to a halt.
Diesels also last a lot longer and compared to these type of cars , cost a lot less.