Toyota
Prius, Chevy Volt and some simple EV economics
Friday, April 3, 2009
Plain
and simple cost-effectiveness
Later this Spring Toyota will begin rolling out the much
anticipated 2010
Toyota Prius. At 50 mpg, the average Prius driver will
spend less then $600 per year on fuel. After 5 years
that's less than $3000. After 10 it's less than $6000.
So, let's say $22,000 for the base Prius + $6000 in fuel
costs after 10 years and that's $28,000.
The Chevy
Volt, on the other hand, is probably going to cost a
bit over $30,000, after the $7,500 tax credit. So, say the
Volt is $33,000 and it only uses electric power its entire
life, resulting in a $1000 fuel cost after 10 years. That
still makes the Volt $6,000 more expensive than the Prius.
So, it would take $4.00 gas to bring simple equality.
Unfortunately, the $7500 tax credit is not going to last
long relatively speaking. Most Volt buyers, if the Volt is
a success, won't qualify for any tax credit.
Moreover, I'd be willing to bet a hefty sum of money that
electric rates will go up significantly in the next few
decades, regardless of whether autos start tapping into
the grid in great numbers or not, but that's a different
story.
Finally, an econo EV, such as Nissan's electric EV based
off the Cube might cost between $20,000 - $30,000. If
these figures hold up, after a $7500 tax credit, the EV
might cost as much as a Prius, but offer far cheaper
refueling.
Of course, the Prius offers much more range and
functionality, but if you don't need that range or
functionality, Nissan's EV could be a hell of a bargain.
Again, however, that tax credit won't last long, and if
Nissan's EV is closer to $30,000, the Prius still matches
up well until gas prices rise towards $5.00 per gallon.
Still, a cheap EV with 100 mile range isn't going to
please everyone, however, adding range extended
functionality isn't a terribly cost-effective option.
Moreover, if you need the Volt because 100 miles of EV
range isn't effective, then the Volt becomes less
cost-effective compared to the Prius even if gas is $4.00
or $5.00.
So what will consumers
do?
Ultimately, Americans and most consumers are driven by
simple economics and simple needs, but not always simple
logic. Once tax credits for battery-powered vehicles are
expired, hybrid
vehicles such as the Prius, are going to continue to
make great sense to many Americans for a long time. Yet,
automakers like GM and Nissan, have no concrete plans to
produce small, cheap hybrids.
Toyota, however, isn't just going to produce the Prius and
even smaller, cheaper hybrid cars, but also plug-in
hybrids and EVs much like Nissan's Cube. This
diversity seems wise, especially when considering that
Americans desire to pay as little up front as possible
coupled with the fact that Americas aren't always logical
about their actual driving needs.
Thus, are too many automakers putting too many eggs in one
basket when it comes to fuel economy, much as most
automakers did with the SUVs?
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