Electric cars revisited: Yeah, they’re a good deal
Last Friday, I set out to write a blog post that would answer the question, “With gasoline prices spiking, are electric cars really a good deal?” I learned two things from this exercise.
First, doing a cost/benefit analysis comparing vehicles is trickier than it seems, thanks to differing government incentive programs that can radically alter the cost equation. Second, readers are really, really passionate about this topic. After having been informed, repeatedly and in no uncertain terms, about my many failings on that post, I’ve decided to start over -- hopefully screw-up free this time, and with a new comparison among “green” cars.
The premise of Friday’s post was not rocket science. Using a very useful tool from the U.S. Department of Energy’s Alternative Fuels Data Center website, I compared the all-electric Nissan Leaf to seven other gas-powered vehicles, including the fuel-sipping Toyota Prius hybrid. On the site, you can compare up to eight vehicles side by side in terms of such factors as annual fuel cost, operating cost per mile and, most interestingly, cumulative cost of ownership.
Initially, I found that while the Leaf blew away every other model in terms of fuel cost, in terms of cumulative ownership cost its high upfront price was a big turnoff, and that made it a worse deal than gas-powered economy cars such as the Ford Focus. But I neglected to consider the federal tax credit of $7,500 for electric cars. I corrected that, but was informed that I still hadn’t added in California’s electric vehicle rebate. Also, I’d confused fuel cost per mile with operating cost per mile. Maybe I should have stayed home Friday.
Before running the numbers again, a word about government incentive programs. The two most important when it comes to alternative-fuel vehicles, at least if you live in California, are the state’s rebate program and the federal government’s tax credit program. California offers a direct rebate of $2,500 for purchases of all-electric vehicles such as the Leaf or the Toyota RAV4 EV; it also hands out a smaller, $1,500 rebate to buyers of plug-in hybrids such as the Chevy Volt or the new Toyota Prius plug-in. You can find out which vehicles are eligible, and for how much, at the Clean Vehicle Rebate Program’s website. The program is expected to pay out through 2015, and there’s still more than $15 million available to be handed out this fiscal year ending in June; if the money runs out before then, which isn’t likely, you’ll be placed on a waiting list to get a rebate next year. The federal government, meanwhile, offers a tax credit of up to $7,500 for plug-in electric cars, including the Volt. To see which models are eligible and for how much, you can check the IRS website.
So I redid Friday’s comparison among the same eight models (the Nissan Leaf, BMW 328i, Ford Focus, Honda Civic, Honda CR-V crossover, Mini Cooper base model, Toyota Camry and Toyota Prius), only this time I cut the upfront price of the Leaf by $10,000, to account for both the state rebate and the federal tax credit. Note that I didn’t subtract anything for the Prius because there aren’t any credits for gas-powered hybrids. But the incentives add up to a huge bonus for EV buyers. This time I plugged in the price of gasoline at $4.50 a gallon instead of $4.75, because pump prices seem to be heading downward. Here’s what I learned:
The annual fuel cost comes to just $524 for the Leaf, based on L.A. electricity prices (note that this does’t take into consideration the incentive programs offered by some utilities, nor the fact that some EV owners have installed solar panels on their roofs). That’s half as much as the Prius, at $1,089, and less than a quarter the price of my list’s biggest loser, the 328i, at $2,390. Meanwhile, in terms of cumulative ownership costs, the Leaf is pretty much even with the Mini, Focus, Prius and Civic until after five years, when it starts to surpass them all. After 10 years, the Leaf’s cumulative ownership cost is roughly $5,000 less than the Prius’.
Now that I have become an international authority on fooling around with this DOE website, I decided to try another comparison, this time only looking at “green” cars. I kept the Leaf and the Prius on my list but compared them to the Chevy Volt, the Chinese-made CODA electric car, the EV version of the Ford Focus, the Ford Fusion hybrid, the Ford Escape hybrid and the Lexus CT 200h hybrid. Sorry to sound like a Nissan commercial, but the winner is, again, the Leaf.
The Focus EV actually came out cheapest on annual fuel cost, apparently because it uses the least electricity, with the Leaf coming in second cheapest. Running third was the CODA, followed by the Volt; unsurprisingly, the Escape was the most expensive to fuel (yeah, I cheated by throwing a hybrid SUV into the mix). On cumulative ownership cost, though, the Leaf is still the cheapest, followed by the Focus, CODA and Prius. The Volt is right in the middle on ownership cost, and the Fusion is second worst after the Escape. Fortunately for Ford, its 2013 Fusion hybrid gets better mileage, which will lower its overall cost equation -- I used 2012 models for each car on the list.
None of this is to say that you should run out and buy a Leaf; this analysis doesn’t factor in the many preferences people have when buying a new car, such as ride quality, roominess, safety, reliability, etc., and a lot of the more expensive cars on the list may beat the Leaf on most or all of these qualities.
So in review, what have we learned?
Electric cars, after you factor in government incentives, make as much economic sense as environmental sense. If those incentives go away -- and I have grave concerns about what would happen under a Romney administration and a Republican Congress -- that would change dramatically.
Nissan makes a very economical EV.
You should never write blog posts about electric vehicles unless you’re wearing asbestos undershorts. Flamers, fire away.
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