Thoughts about Chevy Volt cost-effectiveness, or lack of
At least based on Volt data according to Consumer Reports
Just going over some more data regarding hybrid and plug-in cost-effectiveness, and it just amazes me how no two studies ever find the same results. Why? Is it all just about advertising? Anyway, check out Hybrid and plug-in cars that make the least financial sense for more on that angle.
Anyway, according to Consumer Reports, the Chevy Volt is cost-ineffective, taking at least 6 years — after the federal tax credit is deducted — before the Volt makes up its plug-in premium compared to the Chevy Cruze. But that could be a worst case scenario.
Most interesting, Consumer Reports gives the Volt just 61 mpg, a number I won’t contend is wrong. I get what Consumer Reports is going after. Basically more mainstream, general buyers that’ll probably use gasoline around a 20 – 30 percent of the time. And that’s OK. It’s a good reference point for general buyers. Over-selling and under-delivering is not the path to mainstream plug-in success.
However, for those that do use electric mode more often, long term the Volt actually offers even better cost-effectiveness — assuming the battery is reliable for at least 10 years. Furthermore, for those committed to ending their personal foreign oil dependence, 6 years for payback isn’t bad. Even in a worst case scenario, you’re probably coming out even, while ending your foreign oil dependence. That’s not a bad economic case for those willing to take a stand. Plus, a few gasoline spikes might make these economics even better.
Still, a Volt purchase does require a pretty hefty, extra upfront premium, which means higher financing costs as well. That is certain to keep the Volt out of most mainstream hands. And what happens when the tax credit is gone?
That makes me wonder, is the Chevy Volt still being sold at cost? If so, then even if scale, etc. reduce costs to the level that the tax credit is now enabling, won’t much of this reduction be made up in terms of R&D efforts, necessary profit margins, etc? Don’t get me wrong, I love the statement the Volt enables committed energy independence hawks to make, but the Volt will never have much of an impact on US dependence until costs decline a good bit.
Chevy Volt cost-effectiveness still has some hurdles to jump before moving into the mainstream, and that’ll probably take time, but for those committed to foreign oil independence, tax credits make the Volt a cost-effective option — as long as long term battery costs don’t become a major issue.