I have long repeated in conversations with my friends that my next car will work “off of electric outlet”. Let’s get down to earth however and examine what financial benefits the plug-in hybrid (PHEV) actually offers besides the cool factor of investing into green technology and saving environment. Are we bargain hunters or what? ;-)
I will use GM Volt as the basis
GM is probably closer than any other US automaker to delivering their version of PHEV, the Volt. And so I will base my calculations off of the numbers I dug out for this car.
Volt is claimed to be capable of going up to 40 miles on electric charge. Assuming average electricity rates these first 40 miles will cost you around $0.85 (source). If you don’t recharge it, the car will yield around 50 mpg for the rest of the trip (going on gasoline).
Annual savings of owning PHEV
I used the numbers above and compiled a table of annual savings of driving Volt compared to a gasoline car with fuel efficiency of 30 MPG (want to know how? Here is the excel spreadsheet. Feel free to tweak it). For simplicity I assumed that you use the car for 250 work days in a year. Savings will be 20-40% more if you drive it more often (on weekends as well).
|Gas price||Daily commute (miles)|
Where do I stand on this table?
I live around 15 miles from work (30 miles daily commute) and gas prices in the area are currently at $3 per gallon. This brings me to the top left corner of the table with annual savings of $590.63.
If GM sets the price for Volt at around $30,000 (as they say they might) it will mean that I will have to own my Volt for over 10 years before it recoups approximately $8,000 premium I will have to cash out for it compared to a regular car. I am not even sure Volts are designed to last that long…
Is plug-in hybrid really worth it?
Financially… Not at gas prices of $3. For my commute (30 miles) the breaking point will probably be $5 per gallon. I will then know for sure that I will be able to recoup the premium I pay for PHEV in approximately 5 years. If gasoline prices go up then I will start saving sooner.
Do you plan to buy PHEV when they become available? What is your breaking point? Please take this poll and let me know.