Electric Vehicles: Payback and Potential

May 14, 2012
If we consider that electrically powered vehicles will reduce operating costs, perhaps we should be “OK” spending more for them upfront.  Alternatively, we can finance them to get around the first cost burden.

I received a very intriguing email regarding electric vehicles from a friend and just could not believe it. What he said was very impressive, and you will want to read his story, which has implications for evaluating the life cycle cost of vehicle for fleets as well as your personal car. If we consider that electrically powered vehicles will reduce operating costs, perhaps we should be “OK” spending more for them upfront.  Alternatively, we can finance them to get around the first cost burden.

Let me be more specific. If you commute about 20 miles to work (40 miles round-trip) in a conventional car (~25 miles per gallon), you will burn about 1.6 gallons each day.  At $3.50 per gallon, then your car’s burns about $5.60 per day.  The Volt in this case study costs about $1.12 per day (electric and gasoline costs).  From an economics standpoint, this is good to know.  In addition, an electric car offers other benefits such as the comfort of driving quietly and the Volt (as well as Prius) has an unlimited driving range because they have a “back-up plan” that involves gasoline.  The Prius has a gasoline fired engine, whereas the Volt has a gasoline powered generator.  In both of these “hybrids”, their operating carbon emissions are usually less than conventional gasoline powered vehicles, due to the electric utility’s ability to make kWh on a large scale.  Another choice to consider for fleets is using natural gas powered vehicle. At the current price of natural gas, those options can be very attractive if for fleets, and the number of Natural Gas refueling stations is growing quickly.  In a future article, I will discuss some success stories with bio diesel and other renewable technologies.

Fleeting Considerations

  • What light duty hybrid electric vehicles (HEVs), plug-in hybrid electric vehicles (PHEVs), and battery electric vehicles (BEVs) are coming in the next few years?
  • What are the key technologies used in hybrid vehicles?
  • What types of battery technology are being used and why are different technologies being pursued?
  • How do fleet managers decide if HEVs and PHEV will be cost effective for them?
  • How critical are carbon footprints for fleet managers and how do they calculate greenhouse gas emissions for the fleet?
  • How do fleet managers decide between traditional vehicles, HEVs and PHEVs when making fleet purchases?
View more at http://www.pikeresearch.com/research/hybrid-electric-vehicles-for-fleet-markets

The story below is from Gary Hogsett, who is the 2012 President of the Association of Energy Engineers.  Gary and his family live in Wichita, Kansas where electricity prices are about $0.10/kWh, although even at 20 cents per kWh, the electric vehicle would still be very attractive.  Gary has been involved with energy management for a long time, so I trust his engineering calculations and experience. I say this here because the story sounds too good to be true.

We bought our first electric car a couple months ago.  A lot of our curious friends and family said, “Let me know how it goes.” 

We acquired a Chevy Volt exactly two months ago.  The car is expensive, and it’s totally new and unproven technology, so we made the decision to lease the car.  We signed a 3-year lease, paid a $3,000 down payment, and will pay $399 a month for 36 months. 

Our initial impression: We love it.  And that’s a tremendous understatement - we fight every day over which of us gets to drive it.  It’s probably the most engineered car in history, possibly the quietest, and it’s not even a bad investment.

In two months we’ve driven 1,480 miles.  In that time, we’ve used 1.8 gallons of gasoline for an average of 822 miles per gallon.  We’ve reduced our gasoline purchases by $200 a month, which really makes that $399 lease payment look cheap.  Our electric bill has increased by only $20 a month.

Eric A. Woodroof, Ph.D., is the Chairman of the Board for the Certified Carbon Reduction Manager (CRM) program and he has been a board member of the Certified Energy Manager (CEM) Program since 1999. His clients include government agencies, airports, utilities, cities, universities and foreign governments. Private clients include IBM, Pepsi, GM, Verizon, Hertz, Visteon, JP Morgan-Chase, and Lockheed Martin.

The increased electric bill is due to the fact that the car is electric; it’s always driven by the electric motors.  At night before we go to bed, we plug in our car to charge.  Plugging in the car is no different than plugging in a cell phone; it plugs into the same type outlet.

The battery charges overnight so we have a full charge in the morning, which amounts to about 40 miles of driving.  If you drive further than 40 miles on any day, the small gasoline engine automatically kicks on and generates electricity for the electric motors.  If you never drove more than 40 miles in a day, you’d never burn any gasoline. 

But we often drive more than 40 miles in one day, as Annie’s commute is 18 miles each way, so we do burn some gasoline.  At the current rate of consumption of 0.9 gallon per month, it appears that we will buy gasoline only once a year.  Prior to purchasing this car, we’ve always had to fill up once a week.

What do we like best about the car?  Never having to stop for gas.  But the unbelievable silence of the car is almost as big a benefit. 

Since Gary sent this email to me about 2 months ago, he has purchased a second Volt car, which is quite a compelling statement.  Before reading Gary’s note, I had not even considered all the time we spend waiting for gas pumps, the annoying fumes, etc. I think I will go in this direction when we need our next car.

Have questions? Gary’s contact information is:

Gary Hogsett, P.E., CEM, LC, LEED-AP

CB Richard Ellis | Global Energy & Sustainability

[email protected] 

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