Columnist Charles Lane argued in a column that hit newspapers across the country today that:
Unless and until gas prices shoot up, you'd be crazy to buy one of these much-ballyhooed vehicles, which will run 40 miles on a single charge if GM can overcome difficult battery-engineering issues.
Does the source he cites support his conclusion? Not really.
The study's text lacks basic details needed to evaluate its claims and assumptions. What we are told, that the pricing is based upon total cost of ownership over five years, rather than over the life of the car, discredits the study. Re-examining the facts from scratch makes a good case for the viability of the Chevy Volt.
Let's re-examine the fact from scratch. The issue should be: Does a Chevy Volt have a total cost of ownership over the life of the car comparable to that of a comparably sized conventional car?
The fuel use details for the Volt are as follows:
The Volt uses electricity to move the wheels at all times and speeds. For trips up to 40 miles, the Volt is powered only by electricity stored in its 16-kWh, lithium-ion battery. When the battery's energy is depleted, a gasoline/E85-powered engine generator seamlessly provides electricity to power the Volt's electric drive unit while simultaneously sustaining the charge of the battery.
The Chevrolet Volt can be plugged either into a standard household 120v outlet or use 240v for charging. The vehicle's intelligent charging technology enables the Volt's battery to be charged in less than three hours on a 240v outlet or about eight hours on a 120v outlet. Charge times are reduced, if the battery has not been fully depleted. Charging the Volt about once daily will consume less electric energy annually than the average home's refrigerator and freezer units.
More than 220 lithium-ion cells contained within the Volt's battery pack provide ample power. The Volt's electric drive unit delivers the equivalent of 150 horsepower, 273 lb-ft. (370 Nm) of instant torque, and a top speed of 100 miles per hour.
GM estimates that the Volt will cost about two cents per mile to drive while under battery power compared to 12 cents per mile using gasoline priced at $3.60 per gallon. For an average driver who drives 40 miles per day (or 15,000 miles per year), this amounts to a cost savings of $1,500 annually. Using peak electric rates, GM estimates that an electrically driven mile in a Chevy Volt will be about one-sixth of the cost of a conventional gasoline-powered vehicle. The cost savings are even greater when charging during off-peak hours, when electric rates are cheaper.
Thus, a driver who driver's the Volt in fully electric mode is expected to need about $2,000 of electricity during a 100,000 mile vehicle life.
The Chevy Volt's dimensions are as follows:
Length [in.]: 177.0
Width [in.]: 70.8
Height [in.]: 56.3
Wheelbase [in.]: 105.7
Seating Capacity: 4
Cargo Cap. [cu-ft]: 10.6
The most comparable Chevy in the lineup, which still seems to have a bit more passenger and cargo room is the Chevy Cobalt. It also seems comparable in size to the Honda Civic and Toyota Corolla.
A Chevy Cobalt gets 22 miles to the gallon by EPA measures in the city, where one would drive an electric car in electric mode. Over 100,000 miles it would use 4,545 gallons of gas (and realistically, given the inaccuracy of EPA estimates, closer to 5,000 gallons of gas).
The MSRP for a Chevy Cobalt Sedan LT 2LT (the most basic model with automatic transmission) is $18,860. The estimated price for a Chevy Volt is said to be about $30,000.
So, the acquisition and fuel cost over the life of the vehicle for a Chevy Volt would be about $32,000, while the acquisition cost for the Chevy Cobalt would be about $18,860 (I assume that the savings from MSRP on each of the vehicles is identical).
The question is then, at what price of gasoline does the fuel cost of gasoline for the Chevy Cobalt make the Chevy Volt a better deal?
The lifetime number needs to be $13,140, which is $2.89 per gallon at 22 mpg, and is $2.63 per gallon at 20 mpg. Gas is currently selling at close to $2 a gallon, but reached a high point of $4 per gallon not long ago, and is expected to rise in the long run at a rate much faster than the rate of increase in electricity prices due to peak oil concerns.
At a $2 a gallon and 20 mpg for the Cobalt, the Volt needs a subsidy of about $3,140 to be competitive with the Volt, about 10% of the purchase price. In Europe and Japan, where gasoline prices are closer to $4 a barrel, and the consumer market is more strongly tilted towards compact cars for a variety of reasons, like small roads, shorter trips and smaller parking spaces, the Chevy Volt is easily competitive, even without consumer purchase subsidies, saving buyers about $6,860 over the life of the vehicle compare to a Chevy Cobalt.
The environmental benefits of the Chevy Volt are greatest in places like California and France, which power their grids with fuels that produce relatively few greenhouse gases per kilowatt-hour, compared to much of middle America, where electricity is predominantly produced with greenhouse gas heavy coal.
The Chevy Volt's design also alleviates concerns that have kept competitors off the market -- limited range. It's 40 mile range on battery power is sufficient for a typical urban driver. But, the gasoline back up generator that kicks in when the Volt's battery is exhausted, takes away the concern that the car will die during an atypical long trip, or a night when the user forget to recharge the car as usual.
The Volt won't change the automobile market by itself. Compact cars are a fairly small part of the total market. Moreover, cars like the Toyota Prius Hybrid and Toyota Yaris, which offer small cars with high fuel efficiency in different ways without being plug in electrics, offer real competition to the Volt.
For example, a 40 mpg in the city conventional gasoline powered vehicle uses 2,500 gallons over its lifetime, and is competitive with the Chevy Volt even if it costs $22,000 to buy one at $4 per gallon. A 60 mpg in the city hybrid, lie the Prius uses 1,667 gallons over its lifetime, and is competitive with the Chevy Volt even if it costs $25,333 to buy one at $4 per gallon.
But, for the Volt to change the market, people must expect gas prices of a little less than three dollars a gallon on average over the life of the car, and it must be available and similarly economically competitive over a wide range of vehicle types, not just compact sedans.
Also, GM needs to be able to make a profit selling a Chevy Volt at $30,000 each, and the maintenance costs of a Chevy Volt need to be not appreciably greater than those of a comparable conventional vehicle. None of this is proven yet, but it is far less far fetched than Charles Lane suggests in his op-ed article today.