‘Chevy Volt arithmetic – why I won’t be buying one’

The following was posted by a long-time member of the website Democratic Underground.

Chevy Volt arithmetic – why I won’t be buying one

I drive an SUV (don’t worry – Gaia was my co-signer) that is paid off, free and clear. It is worth aboput $10,000 in resale.  I get about 15mpg.

A Volt costs $40,000 (I will use round numbers). Let us assume the net asset cost of a Volt to me is $30,000. I will need to find $30,000 in fuel cost savings on a net present value basis to justify buying a Volt. This assumes that I don’t finance the vehicle, ie, I have $30K in cash just laying around.

Let us suppose for exposition that the Volt gets 60mpg of actual gas purchased (it runs on gas and electricity). Gas is $4/gal, and I drive 15,000 miles per year.

I use 1,000 gallons of gas per year at an expense of $4,000; with a Volt I would use 250 gallons and spend $1,000. That’s an annual gas expense savings of $3,000.

Assuming that the electricity to feed the car is free to me (a horrible assumption), and there is no time value of money, it would take 10 years to recoup the expense of the vehicle relative to the one I currently own.  In that 10 years, the battery will likely need to be replaced at least once, the expense of which I will call a wash due to likely upkeep expense for my current vehicle.

The more likely scenario is that I finance the vehicle, and electricity is nowhere near free, both of which imply that the  real time to recoup the expense is more like 12-15 years.

Not worth it.

He’s not the only one coming to that conclusion.  “Chevy is not pleased with its sales.  321 units sold in January and 281 in February – out of 30,000 cars made for 2011, and a planned 45,000 to be made in 2012,” the White Mountain Independent reports.

“General Motors (GM) is lobbying for the passage of legislation by Michigan Senator Debbie Stabenow that would turn a $7,500 electric vehicle tax credit into a rebate that will be available to all consumers at the point of sale. It’s been dubbed ‘Cash for Clunkers II,’” the Independent reports, the latest form of government handout Gang Green hopes will somehow make people buy a product they don’t want.