Is the time finally right to buy an electric vehicle? Gas prices have risen quickly over the past few months. Meanwhile, several new mainstream electric vehicles options are available. The two most recognizable are the Chevy Volt and the Nissan LEAF. In order to determine whether current gas prices suggest that electric vehicles are ripe for purchase, we need to compare them to a similar gasoline option and do a little math.
So that's what I've done in the chart below. I compared the Volt and LEAF to the Hyundai Elantra. The assumptions I made are at the bottom of the post. I tried to use generous assumptions to benefit the electric cars as well. I don't, for example, consider battery replacement costs. I even consider the Volt's fuel efficiency only in terms of its electric capacity, so gas doesn't even come into play. I got the statistics I used from the automakers' websites.
As you can see, at $4 per gallon, these vehicles still aren't very good deals for most Americans. At that price, you'd have to drive the LEAF over 140,000 miles to break even compared to the Elantra. You'd have to drive the Volt over 245,000 miles.
But when gas hits $5 per gallon, the LEAF begins to look more attractive. Then, you just need to drive a hair over 100,000 miles to break even, which isn't so outlandish for many Americans. But even at $5 per gallon, you'd need to drive the Volt more than 175,000 miles to justify its purchase over the Elantra. In fact, if you only plan on driving the Volt a little over 100,000 miles, its electric capability doesn't justify its price tag until gas nears $8 per gallon.
There are a few more things to point out about this analysis, however. First, this actually assumes the average price of gas over the life of the car. So really, $5 might be conservative if you're thinking of owning the car five to seven years. By 2018, gas could far exceed that price. Yet this analysis does not consider that electricity prices will also rise as gas prices increase. Electricity prices may rise slower than gas prices, but some of the savings that this chart shows won't really be there if electricity gets more expensive.
In a New York Times op-ed today, Popular Science editor Seth Fletcher writes that rising gas prices could transform the nation's auto fleet to favor electric vehicles. From the chart above, it looks like gas prices aren't quite there yet. After all, if the government credit wasn't in place, then gas prices would have to be much higher to justify electric vehicles on the basis of saving money on gas. The technology remains very expensive.
Elantra Price: $14,830
MPG: 34.5 (averaged 29 city, 40 highway)
Volt Price: $32,780 ($40,280 less $7,500 government credit)
Cost per mile: 4.286 cents ($1.50 per charge gets you 35 miles)
LEAF Price: $27,280 ($32,780 less $7,500 government credit plus $2,000 charging station)
Cost per mile: 2.75 cents ($2.75 per charge gets you 100 miles)
I'm getting a lot of comments/e-mails complaining that the Elantra isn't comparable to these vehicles for a few reasons. A common one cited is manual vs automatic. My response there is that, for the price conscious consumer, the option of automatic might not be worth the cost. So if we're really talking about value here, then it's an advantage of the gas-powered vehicles that they come as a lower-priced manual option, which is why it's fair to use that model as a comparison.
With that said, however, according to the Hyundai website, adding automatic only adds $2,250, which would help the calculus of the EVs a little, but isn't a game changer. I won't include the entire chart, but it essentially means the $4 breakeven is at 115,000 and 215,000 miles for the LEAF and Volt, respectively. You'd still need gas to average about $7 per gallon for Volt breakeven if you intend to only drive the vehicle about 100,000 miles.
As for other "extras" that might come standard on the EV, I have the same response as I did with manual transmission. They're extras, which the price conscious consumer might not be crazy about paying extra for. For example, if you already own a good stand-alone GPS, then navigation probably won't excite you much. So again, I do not think the analysis needs to take this into account. Frankly, it's a deficiency on the part of the EVs that they don't have more affordable, stripped down models for price conscious consumers.