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Thread: Plug in - and pay up?

  1. #1
    Vulture of The Western World Eric's Avatar
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    Plug in - and pay up?

    Will plug-in hybrids save us from $4 per gallon fill-ups - or at least, ease the pain a little?

    The hype about these vehicles - which differ from the current crop of gas-electric hybrids in that they can run on pure battery power for longer and, when their batteries run down, can draw power from a household outlet instead of an internal combustion engine - is that they have the potential to lower fuel consumption by as much as 20-40 percent over what the best conventional hybrid cars (like the Toyota Prius) can deliver.

    But, there's a catch. Several, actually.

    The first is that while it's true a plug-in hybrid (such as the soon-to-be-here GM Volt) can deliver impressive fuel efficiency, it's important to keep one's eye on the total operating costs of the vehicle - including its purchase price. GM has indicated that the MSRP sticker price of the forthcoming Volt will be in the $40,000-$45,000 range. That is about ten to fifteen thousand dollars more than the cost of the Toyota Prius - which is otherwise similar to the Volt in terms of its physical size, layout and passenger-carrying capacity. It is also in the same ballpark, price-wise, as a typical mid-level luxury sedan such as a Mercedes E-Class or BMW 5-Series.

    In other words, serious coin.

    And there's the Catch-22. People who are worried - really worried - about the cost of fuel are necessarily worried about the cost of everything. And if you are having trouble paying an extra $15-$20 to fill-up (this year's prices vs. prices of say two years ago) then, surely, you'd be at least as leery about buying a new car that costs $40,000 or more - no matter how "efficient" it may be. You still have to make those payments - up front and every month - no matter how much you're "saving" on fuel. And the payment on a $40,000 car is probably going to run you around $500 per month, for four or five years.Maybe six.

    But you'll make it up in reduced fuel costs - right? Well, you might. But to get there, you'll first have to spend a huge amount of money (huge for the average American, at any rate). Money spent is money spent - whether it's for fuel, or to buy a fuel efficient (but massively expensive) new car.

    Even if gas gets to $5 per - and it very well may - $40,000 buys a lot of it. Do the math. Five bucks per times, say, 15 gallons (the typical capacity of a current-year small car). Ok. That is $75 for a full tank. Assume a tank lasts one week. That means a monthly fuel bill of $300 - or about $3,600 annually. Let's round it off to $4,000 per year. That means (roughly) you'd need to drive the Volt for about three years before reaching the "break even" point relative to a new Prius. That is a long time to wait for a return on your "investment" (and don't forget that the huge money you sank into the Volt could have been used to finance a real investment - one that appreciates in value - like a 401k, purchase a CD - etc.).

    But after three years, hey, I'm in the black at last ... right? Yes - if you begin with the assumption that you have spent at least Prius-equivalent money on a new car. If instead you bought a two or three year old standard (non-hybrid) economy compact - something like a Toyota Yaris or Corolla, a Honda Fit or Chevy Aveo, etc. - the numbers are not with you. Cars such as the foregoing can be purchased for under $10,000 with very low mileage and in near-new condition, with a good portion of their original warranty still in effect. Buy such a car and you have spent only about a fourth as much as you'd have spent on a new Volt (and about half the amount you'd have spent on a new Prius). How many years will it take the Volt owner to make up the $30,000 (and up) price differential?

    Well, you get the point.

    If the object of the exercise is to save money vs. saving gas then it is hard to see the sense in buying a new hybrid, plug-in or otherwise. A low cost - and better yet, paid-for - car of any type is hard to beat, even if it doesn't get the world's best gas mileage.

    There's another issue with plug-ins, though.

    It is simply that electricity isn't free. You may not be paying at the pump, but unless you've got a solar array, count on getting a bill from your utility provider. Juicing up a plug-in hybrid is like running any other appliance - it costs money. You'd be crazy not to factor this into the total operating expenses of owning a plug-in hybrid (including the cost of charging it up) vs. keeping and driving whatever you're driving now (or driving a low cost/decent mileage "beater").

    And there are real concerns about what may happen in the event large numbers of plug-in hybrids begin to tie into the grid. Our electrical generating capacity is already at or very near maximum capacity and unless we begin building new plants, pronto, we can expect two things to happen. The first is brownouts (or even blackouts) and/or restrictions on how much power we may use - and when. The next is higher electrical bills, the inevitable side effect of rapidly upticking demand that cannot be met by a commensurate increase in supply. The nut of it is, we may soon be paying a lot more for utilities each month. And, again - money spent is money spent. It doesn't matter, in the final analysis, what we spent it on. Only that it has been spent.

    I don't mean to savage plug-ins or hybrids; the technology is brilliant - and the intent is well-meant. However, I do believe people are getting caught up in the hype - and if they really mean to save money, there might be better ways of doing it.

    At least, for now.

    If we can figure out a way to produce large amounts of low-cost electricity, for example, then a plug-in hybrid would be a beautiful thing. And if the cost to buy these things can be reduced to at least somewhere close to the current cost of a standard compact sedan - in the low $20k range or so - then even better.

    But until one or both of these conditions is met, it's hard to make a dollars and cents case for hybrid cars, plug-in or otherwise.


  2. #2
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    Re: Plug in - and pay up?

    Don't overlook the possibility of time demand pricing for electricity. In some areas it is possible to get very good rates on middle-of-the-night power, the time that most would want to be charging up.


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    Re: Plug in - and pay up?

    Eric/JDM,

    Good accessments. As I mentioned in a previous post last week, the power grid structure is at least 30 years old and yet our population has seen large growth. For instance in 1980 the US population was 226,545,805 just recently we went over 300,000,000. Yet to my knowledge very few new powerplants were built in the last 30 years. So as the population continues to increase, and there is no addition to the power grid structure, the last thing we need is a bunch of electric cars draining the system.

    Though I like the idea of an electric car, I see your point the power structure will not be able to handle the demand if consumers start buying electric cars in large numbers.

  4. #4
    Vulture of The Western World Eric's Avatar
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    Re: Plug in - and pay up?

    Quote Originally Posted by Pete
    Eric/JDM,

    Good accessments. As I mentioned in a previous post last week, the power grid structure is at least 30 years old and yet our population has seen large growth. For instance in 1980 the US population was 226,545,805 just recently we went over 300,000,000. Yet to my knowledge very few new powerplants were built in the last 30 years. So as the population continues to increase, and there is no addition to the power grid structure, the last thing we need is a bunch of electric cars draining the system.

    Though I like the idea of an electric car, I see your point the power structure will not be able to handle the demand if consumers start buying electric cars in large numbers.
    Yes - and there's this: We're clearly entering a recession/"contractionary period" where people are generally reluctant to spend on big ticket items - especially if they require financing. That will make any $40k car an even harder sell - hybrid or not....


  5. #5
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    Re: Plug in - and pay up?

    If Exxon were smart, they'd take their profits and build a nuclear plant or two.

    Chip H.

    Former owner: 2012 Honda Civic LX, 2006 Honda Ridgeline RTL, 2000 Honda CR-V EX, 2003 MINI Cooper S, 1992 Honda Accord LX, 1999 Mercedes ML-320, 1995 VW Jetta GLX, 1991 Mercury Capri XR2, 1981 Mercury Zephyr, 1975 Chevrolet Impala

  6. #6
    Senior Member misterdecibel's Avatar
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    Re: Plug in - and pay up?

    The Volt, at that price, will be a halo car, something GM can gain experience with and attract people to the showroom. I imagine at first, even at $40K they will lose money on every sale.

    And it's bigger than a Prius, isn't it?

  7. #7
    Vulture of The Western World Eric's Avatar
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    Re: Plug in - and pay up?

    Quote Originally Posted by misterdecibel
    The Volt, at that price, will be a halo car, something GM can gain experience with and attract people to the showroom. I imagine at first, even at $40K they will lose money on every sale.

    And it's bigger than a Prius, isn't it?
    Yes, the price is subsidized. And I really doubt that a high-priced economy car will do much of anything for GM except cost it money. The price needs to be cut in half, for openers...

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    Re: Plug in - and pay up?

    Added this article to the main page with pics:




    http://www.ericpetersautos.com/home/...6&Itemid=10849

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