What's the TRUE Cost of Your ICE Age Automobile?

By Bill Moore

Posted: 08 Apr 2012

Let's get something straight, right up front. If you're buying an electric drive car to save money, then you're approaching the purchase from the wrong perspective, my friend.

Most electrics, and many hybrids, for that matter, aren't about saving money, not really. Not yet(1). They are about using less gasoline, a lot less in some case, and producing far fewer greenhouse gas emissions. And for the time being, enjoying those two benefits will cost you a bit extra for some models, or a lot more for others.

Okay, so some study says gasoline prices will have to go to $8 a gallon in the United Sates (it's already pretty close to that in Europe, folks) before, we're assured, those hybrids and electric cars will payoff, meaning, supposedly, the savings on gasoline will pay for the difference in the price between a comparable non-hybrid, or what I like to refer to as ICE age (internal combustion engine) cars, and modern electric drive models: hybrids, plug-in hybrids, all-electric.

I am not going to quibble with their math. Any fool can figure out that a Chevy Cruze costs half as much as a Chevy Volt; man what's the Return on Investment (ROI) on that?

(Actually I have a Apple Keynote presentation that does, in fact, compare the two and the Volt comes out -- at the ten year ownership mark -- beating the Cruze in total cost of ownership, but since this discussions focuses on the first five years, I'll leave it out.)

To which I ask, So frigging what? Who walks into a dealership show room looking for a new automobile or truck and asks salesman, or themselves for that matter, What's the ROI?

Seriously? It's a bloody car we're talking about here, mate! Not an annuity. Regardless of the make and model car you buy: Mercedes or Mazda, it immediately, within milliseconds, depreciates something like $1,500 the instant you drive it off the dealer lot. And it steadily loses value thereafter. Talking pay off and return on investment when talking about an automobile is just plain nuts unless you're buying a collectible car… or a Prius in times when the price at the pump is soaring through the $4 point. Back in the2007, 2008 time frame, when oil prices spiked to $140 a barrel, some Prius owners were being tempted by both dealers and private buyers with offers for their cars at more than they paid for them. Now that's ROI, but admittedly rare.

My point is that our crazy upside-down economic system assigns no value or provides few if any incentives for helping the country reduce its oil imports, to say nothing of generating less pollution and fewer greenhouse gases. Surely doing those things has to have a beneficial impact on the overall economy. The less dependent we are on oil, especially imported from regions of political repression and religious intolerance, the less men, women and material we have to spend militarily. The less pollution we're creating, the better our health will be, resulting in fewer the hospital visits, less medication and,theoretically, the lower our medical costs. Additionally, fewer sequestered carbon atoms we're releasing into the atmosphere and oceans, the less radical climate change likely will be with untold economic, military, and health consequences. Put another way, our doing less of a bad thing is good for us.

So, instead of talking about "hybrid premiums," we should be talking about "ICE age surcharges," where those who want the right to pollute, compelling the importation of petroleum from abroad -- which negatively impacts the national deficit -- should be required to pay for that privilege, while those who are willing to pay the so called 'hybrid premium,' are rewarded by not being penalized. Think of it as leveling the playing field for everyone.

Let me explain it this way. Say you walk into a Nissan or Ford dealership and there sits an all electric LEAF, which in the next few years will be built in Tennessee, and a Versa, nearly identical cars, or in the Ford showroom, a Focus Electric and a regular Focus. With a 'level playing field' that takes into account all the 'externalities,' the ICE age models would have a federal sticker that says these cars will be charged a national security surcharge of $2100 a year. There is no comparable surcharge on the electric models.

Why $2,100? Easy. Years of Pentagon analysis says that if we Americans were paying the real cost of protecting the oil flowing through the Straits of Hormuz, the price of a gallon of gasoline would be somewhere north of $10. Assume you drive a car 12,500 miles annually and get 30 mpg. That's 416 gallons of gasoline: half of it from outside the country, hence the surcharge. The "fuel" to operate the Leaf and Focus Electric comes from indigenous energy sources, most of it from off-peak power generation; electricity that has to be literally sent to ground unused, wasted. Charging EVs overnight would end the waste. At its most basic level, carbon that is presently being thrown away now displaces carbon that is imported from somewhere else at huge socio-economic and environmental costs. Better yet, the ratio of carbon to energy work being done can continue to decline as more carbon-free wind, solar, geothermal, as well as natural gas are brought on line, replacing coal.

Under this more enlightened schema, what's the ROI look like? Every year you drive your ICE age vehicle, it costs you $1,664 for fuel at $4/gal. Now add on top of the $1,600 the national security surcharge of $2,100 annually and suddenly the economics turn a complete different shade: from black to red. Drive the car five years and you pay $18,820 in fuel and surcharges. The same 12,500 miles in a the LEAF, the Focus Electric, the Mitsubishi i, etc. will run $500 at 12¢/kWh of electricity. That's all. There is no national security surchage. Suddenly the Volt and Leaf and Focus Electric don't look all that bad economically.

Of course, we're never, ever going pass such a surcharge, it's pure fantasy on my part, though we really should for the sake of the future. After all, what's it worth to you and your grandchildren to not be fighting wars over oil or pumping poisonous tar sand slurry across our prairies and farmlands, as well as our precious streams, rivers and irreplaceable aquifers?

In short, my fellow Americans, what's the ROI on a cleaner, greener, safer planet for us all? Figure out how to write that into the tax code and GDP and we might just turn this little fantasy into the 'Future in Motion.'

(1) An annual study by the British Columbia Automobile Association found in 2011 that four hybrids did, in fact, economically best our their ICE age counterparts over a five year period: Lexus CT 200h, Mercedes-Benz S400 Hybrid, Lincoln MKZ Hybrid, Infiniti M35h.

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