Earlier today a reader commented on a blog post on the Nissan Leaf electric car questioning the economic viability of Leaf and the Chevy Volt.  He said,

What is the economic practicality of fully electric cars like the Leaf or the Chevy Volt? I don’t have the detailed specs on the Leaf but I do for the Volt so here is my analysis.

Assume that the Volt actually sells for its predicted $40,000 price and gets 40 miles on a single charge of its 16 KW hour battery. I live in northern Westchester and work in White Plains. If I use the Volt to commute the 20 miles to work each day, I will just about exhaust the battery on a round trip. In a year I will have commuted 10,000 miles (200 miles per week, 50 weeks a year). At my current Con Edison rate, each KW hour costs me nearly $0.21. Over a year I will use 4000 KWH at a cost of $840.

The CU Auto issue describes a number of automobiles suitable for the same commute in the $20,000 price range. Most of these get at least 25 mpg on regular gasoline. With one of these cars, the yearly commute will consume 400 gallons. At the current gas price in this area of $3 per gallon, the annual cost is $1200. The Volt will save $360 per year in fuel cost over a conventional car. However the Volt costs $20,000 more. It will take 55 years of driving to make up the difference. But the finance cost of the additional $20,000 at 3% per year comes to $600. Running the Volt, even in fully electric mode will cost $240 MORE per year than an average gasoline fueled compact.

In addition, the electricity “fuel” for the Volt does not come pollution free. In the northeast electricity is generated largely from coal or oil fired power stations which emit CO2 or from atomic energy installations that produce radioactive waste.

So why would anyone buy the Volt other than to establish dubious green credentials or stick it to the Arabs.

OK, I can see the practicality if gasoline rises to $10/gallon and electric charges drop or stay the same. But neither scenario is likely in the near future. So who will buy the Volt?
What am I missing here?

And I think he has some excellent points and has done a good analysis.  But I think he is approaching it from the wrong angle.  The first Leaf/Volt buyers will not be buying their car because it is going to save them money at the gas pump.  They will be buying the Leaf/Volt because they want an electric car.

Look at it this way: What is the economic practicality of a Lexus, which is just a souped up Toyota.  Why spend the extra money on a Lexus when it will never pay for itself over the regular Toyota?

People don't buy Lexus because it saves them money.  They buy Lexus because they want heated leather seats, and wood-grain, and xenon headlights, and nice sound systems, and navigation, and etc. etc. etc.  The first electric car buyers aren't simply buying them to save money; they are buying an electric car because they value having a car that uses less gas for the way it makes them feel.  They view an electric car or plug-in hybrid as a luxury; just like some people see chrome wheels as a luxury.

I dont just want an electric car because I know I will be helping America break our dependence on foreign oil and hopefully help reduce gulf oil spills; I also want an electric car to show off!

It's the same reason I would like Solar PV Panels.  Because I live right across for a coal power plant  I can see the pollution coming out of the smoke stack.  For me, putting solar panels on my home is not just worth the electricity those panels produce, it is worth knowing that I would help forge a future that was less reliant on coal and other fossil fuels.  I would smile when I looked up at my panels and be proud that I am less reliant on a the utility.  And I would take pride in knowing I am creating a cleaner future for future generations.

Yes, I know at first our electric cars will be powered by fossil fuel plants....but what are we supposed to do?   Wait until we have clean power plants before we buy clean cars?  Or do we work on them both and attack the problem from different ends?  Every new technology needs early adopters to help bring down costs and establish the technology.

I wrote along the same lines in my post on Clean Energy Payback:

The same goes for many residential users (regarding their lack of concern over environmental impact).  They really could care less about mountain-top coal removal, coal sludge spills, or climate change (which they probably don’t believe is caused by man).  They too find pleasure only in saving money, not improving the environment around them.  They aren’t interested in teaching their kids the importance of saving energy, a lesson that gets more important with an exponentially rising human population.

But then there are others.  There are those of us who strive to save energy because it makes us happy to know that we are putting money in our wallets AND helping our environment and future generations.  We save energy and install energy monitors because saving energy is a hobby.  It becomes a game for us.  We enjoy talking about how efficient our homes are to our neighbors and co-workers.

We don’t look at solar panels and just see silicon and wires; we see self-reliance and clean electrons.  We look at wind turbines and take pleasure in what we don’t see – a smokestack.

And finally: A clean energy project doesn’t always have to payback in an “acceptable” time frame.  Sometimes it’s just the right thing to do.

Sure, it's a little melodramatic, but the point is that cleaner technologies arent just worth the value of the energy they displace.

They are worth to you what you make them worth.

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Comments

Now do the math for a Nissan LEAF, for those of us in the Northwest with clean, cheap hydro power. The numbers look entirely different, with next to zero emissions. $25,000 Nissan LEAF, and $0.08 a kWh electricity. 10,000 miles a year comes at a annual cost of $192 a year. That's $1,008 cheaper in fuel costs than a 25 mpg car. Don't forget the reduced operating costs from not needing regular oil changes, radiator flushes, spark plugs, etc.
Great point Steve. I need to come up with a calculator that takes into account the electricity price and clean energy content of where people live vs. the gas price where they live.
Maintenance costs for an electric engine will indeed be much lower than for a gasoline engine ... so that should help the economic story for the electric car. On the downside for it will be battery replacement. How many charge cycles do the types of batteries in electric cars support? How much will it cost to replace (parts & labor) the batteries in a Nissan Leaf?
I put my $99 down the first day the Leaf accepted reservations. It is the right thing to do since oil will inevitably go up as it becomes more rare. I live in Iowa where between 10% and 20% kWh now come from wind. My price is about 0.12 $/kWh. At today's $2.65/gal gas I figure my 32 miles/day will save around $2/day in fuel costs with a LEAF. I think maintenance will be also be better. I have to wait another 18 months before the LEAF is available here.
While the analysis of the Volt versus a 25 mpg compact is fairly good it has some faults: 1- A 16kWh battery pack will not be completely depleted nor will it charge to 100% so it will not take 16kWh to recharge it. (The battery pack on a Prius will only operate from 40% - 80% state of charge) 2- Electricity rates vary. I pay ~$0.12/kWh. 3- During the life of the car, gas prices will most likely rise. 4- Many people get their electricity from clean sources. Mine comes from my solar panels. 5- Currently, most alternative energy products, including vehicles, will not pay for themselves. People will buy them to show their viability, reduce carbon emissions, reduce reliance on foreign oil, etc...

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