Cars Blog

Finance Blogs » Cars Blog » Do pure electric cars make financial sense?

Do pure electric cars make financial sense?

By Claes Bell ·
Tuesday, May 18, 2010
Posted: 2 pm ET

Volkswagen recently unveiled a plug-in electric car version of their Golf compact, which it plans to roll out in the U.S. market by 2013. Like Nissan's LEAF, the Golf Blue-E-Motion will be a pure electric car, in contrast to GM's much-touted gas-electric hybrid Volt.

If you're considering a pure electric, you've probably already made peace with a range that will be limited to about 100 miles, fine for most commutes. The question for consumers here is whether electric cars make real economic sense. While Volkswagen hasn't announced pricing on its Blue-E-Motion yet, Nissan's LEAF will start at $32,780 for a car that's about the size of a five-door Mazda 3. From there, you can subtract a $7,500 federal tax credit the car will be eligible for, and you get a total outlay of $25,280.

Volkswagen Golf Blue e-motion

Volkswagen Golf Blue-E-motion. Photo courtesy: Volkswagen.

That may seem steep for a compact car that's about the size of Nissan's down-market Versa, but it's not entirely without precedent. While there are plenty of compact hatchbacks that start much lower, including the Versa ($13,350 for the base hatchback), European brands such as Audi and Volvo have begun importing luxury hatchbacks from Europe that are comparable in price, such as the Volvo C30 ($24,600) and the Audi A3 ($27,270). Even a Mazda 3 decked out with the same goodies that look to be standard on a LEAF comes in at $23,695.

Sure, pure electric cars won't be burners like some of these pricier "hot hatches" (the LEAF tops out at 90 mph), but if you care more about the environment, or even the cost per mile to operate, and if automakers can keep their prices at around LEAF levels, I don't think pure electrics will be a bad value proposition, especially when you figure a similarly kitted-out Prius will cost you the same or possibly more. And because buying power from a utility company is much cheaper than buying the equivalent amount of energy in gasoline form, the cost per mile savings is substantial. Wired Magazine puts the cost per mile at 4 cents for the LEAF, compared with 13 cents per mile in a conventional car that gets 30 mpg. If you drive 15,000 miles a year, that's $1,350 in savings.

Nissan LEAF

The Nissan LEAF. Photo courtesy of Nissan.

The real test will come a few years down the road, when the LEAF's lithium-ion batteries start to age and wear down. Like your sad old second-generation iPod that will barely get you through a whole plane flight now, the LEAF will probably start to lose range and power as time goes on. The LEAF's batteries cost about $9,000 to build, and good luck getting replacement batteries for that price from a Nissan dealer. Aside from the obvious benefits to the planet in terms of having no tailpipe from which to spew carbon emissions, how long those batteries last is the X-factor that will determine whether the cost of ownership makes owning a pure-electric economically attractive.

Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
curt e.
May 30, 2010 at 9:36 pm

I'm patiently waiting for my Leaf. On the list and hope to get it at the end of the year. Can't wait to dump my 17 yr old Dodge that only manages 24mpg. Nissan is going great guns on this and they appear to be leapfrogging Tesla (better value). I figure that this will be the last car to get in my lifetime. Hopefully, after I get the car I'm going solar at the home, so when these batteries hit 70% I can use them for house storage. Hope the solar companies are looking into this.

Several reasons EV is the way to go:
1) The range limit is a good thing and forces people to drive more conservatively (in the end with more EVs on the road it will be a safer all around).
2) Change of drive attitude. I'm thinking gaming. How much more efficient can I drive to max my EV's potential and reduce the battery recharge frequency.
3) Stick it to Big Oil - With the BP mess, I think I'm converting over at the right time. All the tax incentives in addition sure don't hurt.
4) Whole lot less maintenance. The Leaf's first maintenance interval is 5 years. Like to see a petrol car match that.
5) Overall simplicity of the drive train and many fewer moving parts is the way to go. Hybrids are worst, you have to maintain 2 difference power systems, why complicate it. Go all the way.
6) Hope gas goes up to $5/gallon soon, so I can chuckle at all the SUV gas pigs squealing at the pumps with their over $100 fill-ups. Time for the gov't to start taxing gas and petrol autos more to move us off last century technology.

Bill Sadler
May 26, 2010 at 4:21 pm

Recycling will be important. If the exchange of the 20% depleted battery reduces the new battery cost by a significant amount, that could be a game changer. In any case, cost per mile driven will be close, and only get better over time.

May 22, 2010 at 8:30 pm

Also to consider: if enough people decided to make the possibly uneconomical decision to adopt true electrics, it would provide even better incentive to produce better energy storage technology.

Chris O
May 22, 2010 at 2:31 am

True, having to replace the battery may be pretty expensive, but like the article stated it's also an investment in gas expenses you won't have to do anymore. So if you recoup the cost of the battery replacement in gasoline savings what's the big deal? Also, a battery that needs replacing is far from dead. It just lost about 20% of it's original capacity but is still a very valuable energy storage device for the 80% capacity that's left, albeit not for use in EV's anymore. So expect a substantial residual value. One more thing is that Nissan is working on new battery technology that will double the range by 2015. So replacing the battery actually means you end up with a much better car.