G.M.’s Electric Lemon

New York Times ^ | July 29, 2010 | EDWARD NIEDERMEYER

[Hojczyk]

GENERAL MOTORS introduced America to the Chevrolet Volt at the 2007 Detroit Auto Show as a low-slung concept car that would someday be the future of motorized transportation.

[stephenjohnbanker]

Why buy a 41,000 Lexus, when you can buy a 41,000 Malibu?

I ax you??

[gulfcoast6]

THIS is one reason oil drilling is leaving the gulf. Need I say more???

[MozarkDawg]

[alecqss]

Not Malibu - Chevy Obummer.

[I see my hands]

Anyone driving or being driven in one of these is a thief and should be held accountable.

[Tzimisce]

Well they just need a law requiring Americans to buy them.....

[GonzoGOP]

I got into a fight with a EV supporter on another thread yesterday. So I ran the numbers and this is what I came up with.

The question must stand, Is the Chevy Volt economically viable without the use of force and coercion. And if you need to use taxpayer money you are in fact using force and coercion. Don’t believe me, try not paying your taxes. IRS shows up with guns, throws you in jail and takes your stuff. See, force and coercion.

You need a car for a commute to and from work. You use a different car for long trips. This is the ideal environment for the Volt as it gains the most benefit when operating on battery alone. Without the use of taxpayer money the Volt costs $41,000. You could buy the volt or a Mazda M6 with a high mileage four cylinder engine. For $19,470. Now if you buy the Volt you will need to put a 220 outlet in your garage. So that mean hiring an electrician to put in the 220 outlet and a new electrical box, since most don’t have a spare 220 line and breaker available. I got a quote and it will be around $960 bucks. A lot less if you can do it yourself as it was the cost of the electrician and helper that ran the cost up that high. So the starting drive away cost (absent taxes) is 41,960 for the Volt and 19,470 for the M6. The Mazda starts out 22,490 ahead before the first mile is driven.

Now once you start driving the Chevy is supposed to come into its own. According to a 2010 ABC news poll the average commute is 16 miles one way. So our hypothetical average commuter drives 32 miles per day. Well within the 40 mile electric only range on the Volt. The volt takes 8 kilowatt hours of electricity to drive that 40 miles so the rate works out to a nice even 5 miles/kwh. The Volt will use 6.4 kwh to drive 32 miles. This assumes no loss of electricity in the charging process. That is of course against the second law of thermodynamics, but since when do liberals and environmentalists worry about laws. The Mazda gets 20 city and 29 highway. Call the commute half and half and it gets 24.5 mpg average. The M6 uses 1.306 gallons of fuel per day. Here in Illinois gas costs $2.84 per gallon and off peak residential electricity .0795 per kwh. So the variable cost per day is around $3.71 for the M6 and $0.51 for the Volt. (I rounded to the penny). This looks good for the volt, but not so fast. Remember the comparison stipulated that the car is used only for commuting. So there are only 260 commuting days in a year, not 365. So the Volt saves $834.44 per year.

Now comes the killer. Not engineering fundamentals, but accounting fundamentals. TIME VALUE OF MONEY. That 22,490 saved when buying the M6 doesn’t go into a can in the back yard. If it goes into a CD with a 1.49% APY it earns $335.10 interest the first year. Since the amount available to invest goes down every year due to gas expenses the interest earnings drop each year. However unlike the gas savings, that only take place 260 days a year, interest takes place 365 days a year. Figuring in the time value of money drastically changes the payback time.

Now the Chevy’s $10,000 battery has a warrantee for 10 years and Chevy says it will need to be replaced at least one during that ten year period. With a cost that high lets just assume that if the Volt hasn’t broken even by year 10 it never will due to the cost of battery replacement. For the numbers give above the cost breakdown is as follows.

Year	Balance	Fuel Savings	Interest	Total
1	(22,490.00)	834.44	(335.10)	(21,990.66)
2	(21,990.66)	834.44	(327.66)	(21,483.88)
3	(21,483.88)	834.44	(320.11)	(20,969.55)
4	(20,969.55)	834.44	(312.45)	(20,447.56)
5	(20,447.56)	834.44	(304.67)	(19,917.79)
6	(19,917.79)	834.44	(296.78)	(19,380.13)
7	(19,380.13)	834.44	(288.76)	(18,834.45)
8	(18,834.45)	834.44	(280.63)	(18,280.65)
9	(18,280.65)	834.44	(272.38)	(17,718.59)
10	(17,718.59)	834.44	(264.01)	(17,148.16)

At the end of ten years I am still $17,148.16 better off buying the M6 than I am buying the Volt. But you say what if gas prices go up. Of course electricity prices are likely to go up as well, but lets say that the gas price goes up to $8.00 per gallon and electricity doesn’t change at all for the next ten years. Youi would be $1,649 better off buying the Volt, assuming that you don’t get into an accident or trade in the car before then. Rather a big if.

According to the U.S. Department of Transportation the average person sells or trades in their car in 4.5 years and 41,000 miles. Since this is a commute only car it is going to hit the years way before the miles. How high would gas have to get, without any increase in electricity prices for the Volt to make economic sense in 4 years. A whopping $24.00 per gallon. So unless you expect to see $24.00 a gallon gas at the pump by next year the volt will make as much economic sense as a Ferrari. Both may be engineerign triumphs but you buy them for status, not for economic value.

Year	Balance	Fuel Savings	Interest	Total
1	(22,490.00)	8,039.94	(335.10)	(14,785.16)
2	(14,785.16)	8,039.94	(220.30)	(6,965.51)
3	(6,965.51)	8,039.	(103.79)	970.64
4	970.64	8,039.94	14.46	9,025.05

[Nip]

The most important thing to remember about “concept cars” displayed at auto shows - they are one off, hand made products that have no relationship to the production models that are actually built, displayed, sold, and driven. In short a dream verses reality.

A dream verses reality.

perhaps that is why BHOI is pushing it so hard.

[DCBryan1]

Hell, buy a loaded VW Jetta TDI off a 1 or 2 year lease, pocket the 25,000 difference, buy a municipal bond that pays monthly, and use that for your gas prices.

[Secret Agent Man]

THe Obama Volt should be renamed the Obama Short Circuit. Hell 40 miles on a charge that requires charging 8 hours overnight.

The transformers in the average neighborhood are not going to take charging overnight. They are generally undersized and the power companies depend on lower usages at night so they can cool down. With cars charging overnight these things will never get cool and will overheat and break down.

[goseminoles]

Good breakdown. Thanks.

[equalitybeforethelaw]

Plug a butt ugly Hyundai into this calculation and you will save even more. Hell, you probably could own 2 Hyundais and still have money to deposit versus the bolt.

[kevao]

The only people who can afford a car this expensive are the very people Obama plans to tax into oblivion.

[NavyCanDo]

I heard a Chevy Dealer salesman from the NE who wanted to remain anonymous called a radio show, and he said this car is far from being ready to be sold. He says there are still way too many problems with it, mainly the batteries and the back-up gas engine. He predicted recalls on this like you have never seen before.
He also says there is so far NO interest from the walk-in public. Yet – they have a quota handed down from the government on how many of these they have to sale, and if they don’t their dealership is in jeopardy.

[GonzoGOP]

Don't forget the other costs like having to run a 220 circuit into your garage. Also you still have a IC engine in addition to a generator, electric motors, and electrical control components. The more parts, the more maintenance. Even if it is covered under warranty, and who knows if GM will be around to honor their 10 year warranty on the $10,000 battery, you still have time lost while you take it in to be worked on.

I'm not against EV or Hybrid vehicles in principle or for technical purposes. I just think that for now they are not cost justified.

[Menehune56]

Wow, hard to believe an article this critical of the Obama regime was published in the NY Times. The cartoon showing the taxpayer money used to produce the Volt is very damning.

[Boiler Plate]

EPA is going to issue new “Lemon Law” regulations that will require everyone to buy an Obama Motors Electric Lemon (aka the Volt).

[Humble Servant]

Thanks for all the work!

[Lexington Green]

... what if we won’t eat the dog food?