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October 15, 2011

Is it ultimately cheaper to own an electric car?

Last week, CelloMom pondered the carbon issue around electric cars. Now it's time to look at the cost issue. The Nissan Leaf costs less than 3 cents/mile to drive, compared to 7¢/mile for the Toyota Prius. But the Leaf has a much higher sticker price.

The table below compares the same cars that were highlighted in the post on carbon-equivalent MPG-c, in terms of fuel efficiency, cost to drive 100 miles, and purchase price. The carbon emissions are thrown in once more just to keep the numbers handy.

The real-life fuel economy is copied from the tables on the MPG-c post, as is the CO2 emission. As usual, MSRP is the "from" price without the bells and whistles offered separately by the automakers. The MSRP for the Nissan Leaf does not include the $7500 tax break currently offered; CelloMom is not optimistic that this tax break will be around for long: We can't afford it, unless it is offset by an aggressive gas guzzler tax.

For the per-mile cost to drive the electric Nissan Leaf, CelloMom used the average price of electricity in the US in September 2011, which was $0.11/kWh. The range is $0.08-$0.18, depending on where you live. For the other cars, the average fuel price at the pump used is $3.51/gallon gasoline and $3.79/gallon diesel.

 

Fuel Economy, Carbon Emission, Cost; all averages.

Make/model Real-life
Fuel Economy
CO2
lbs/mi

Cost /
100mi

MSRP
         
Nissan Leaf 25 kWh/100mi 0.338 $ 2.75 $35,200
Toyota Prius 50 mpg 0.47 $ 7.02 $23,520
Honda Fit 35 mpg 0.67 $10.03 $15,100
Honda Jazz 40 mpg 0.58 $ 8.78 €10,820
VW Polo diesel 57 mpg 0.47 $ 6.64 €10,800
VW Golf (2001) 20 mpg 1.17 $17.55 $17,800

 

Suppose that you keep your next car for 12 years, and drive it 100,000 miles. For simplicity, just to get our head around the numbers, suppose for a moment that you can forego financing, so the purchase cost of the car is pretty much the MSRP plus the local sales tax. In the following, we are going to ignore the cost of insurance, which you need to have for any car, and the cost of repairs, which is completely unpredictable. We even ignore the possibility of having to replace the battery in the electric car before the 100,000 miles are up. We consider only the purchase price and the per-mile operating cost.

Buying a Nissan Leaf and driving it 100,000 miles would cost $35,200 for the purchase, plus $2750 for the fuel, or $37,950 together.
The corresponding cost for the Honda Fit would be $24,180 (that's $15,100 for the purchase and $9080 for 2857 gallons of gas). So the Honda Fit is cheaper to own, at today's gas prices around $3.50/gal.

But now let's turn it around, and ask: at what gas price does it make more sense to buy a Leaf? Assuming the cost of electricity stays the same, the cost to buy and drive the Nissan would remain $37,950. Subtract the MSRP for the Fit to get your fuel budget: $37,950 - $15,100 = $22,850. Since you need 2857 gallons to drive the Fit for 100,000 miles, a gas price of $22,850 / 2857 gallons = $8.00/gal would get you to the break-even point, where owning the Fit would cost as much as owning the Leaf with its much higher purchase price but much lower per-mile cost. Above $8.00/gal, it would make more dollar sense to buy the Leaf.

For the more frugal VW Polo (assume purchase price of $16,000) the break-even point would be at around $12/gallon diesel. Don't laugh, and don't cry. $10/gal is what Europeans are paying now for their gasoline, and if you believe the Peak Oil numbers, $15/gal is not outside the realm of possibilities, even for the US.

For your own purposes, adjust the purchase price as appropriate. For instance, subtracting $7500 for the electric-vehicle tax break shifts the Fit/Leaf breakeven point to a gas price of $5.37/gal (this is a serious incentive!). Add your state tax, if any. Add any financing expenses. Adjust the fuel costs to reflect your particular situation. And make a guess (and this is anyone's guess) as to the price of both gasoline and electricity for the next 10 years or so.

CelloMom's 2001 VW Golf has so far been reasonably trusty; but quite apart from its oversized carbon footprint, it costs 18 cents a mile to make it move, more than twice the per-mile cost of a Prius and more than 6 times as much as that of a Leaf. From a cost consideration, we will have to say goodbye to it if the price of gas keeps rising. But then there's the carbon footprint of manufacturing a new vehicle. CelloMom will have to look into that next.

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