Mileage Math Mania--Unplug the hype, and how much car is left?

Pajamas Media ^ | June 30, 2011 | Claton E. Cramer

[jazusamo]

Everywhere I look, I see hybrids. Chevrolet’s new Volt, a “plug-in hybrid,” is in sufficient demand that some dealers are adding a $4,300 “market availability adjustment” charge, bringing these cars up to $49,000. Can’t anyone do math?

I like the idea of an electric car — and I especially like the idea of the Chevy Volt. It is mechanically simpler than the Toyota Prius. Recharging from house current is very economical for those who are going to primarily use the Volt for commuting. But there is no economic sense to these cars.

Buy a Chevy Volt at the suggested retail price of $40,280. If you only use it in electric mode (plug it in every night, and keep your total driving down to about 40 miles per day or less), yes, you will get what the EPA considers the equivalent of 95 miles/gallon in the city. That’s pretty impressive — but there’s a popular misconception about mileage that makes this sound better than it is.

Drive a gas-guzzling SUV that gets 10 mpg 15,000 miles a year; that’s 1,500 gallons a year. Get a more efficient SUV or midsized sedan at 20 mpg. That same 15,000 miles a year consumes 750 gallons. Double the gas mileage, and you cut your gasoline cost in half. If you triple your mileage, your annual consumption is 500 gallons. That’s better than 750 gallons, obviously, but not as dramatic a gain as going from 10 mpg to 20 mpg. A 60 mpg car would burn 250 gallons. Each 10 mpg improvement in gas mileage gives a progressively smaller savings in fuel costs — an asymptotically declining improvement.

Obviously, getting 50 mpg is better than getting 10 mpg. But the capital cost of that improvement is dramatic. Even at the suggested retail price of just over $40,000 for the Volt — even after you get the benefit of the $7,500 federal tax credit for buying a hybrid — you are still paying far more for a Volt than a more conventional automobile. If you are really concerned about gas mileage, the Chevrolet Aveo has a suggested retail price of $11,965, and the EPA city fuel economy estimate is 27 mpg. How much gasoline can you buy for the difference in price?

At $4 per gallon, you can drive 142,998 miles for the price difference. Even at $5 per gallon, you can drive 114,399 miles. (Does anyone seriously think that our economy could survive for even two years with $5 per gallon gas?) We have not even factored in the cost of replacing the Volt’s incredibly sophisticated (and expensive) batteries. But that only makes the case for the low-tech Aveo even stronger.

Of course, all of this assumes that you are starting from scratch. If you already have a car that gets more than 30 mpg on the highway, like mine (no, really, it does!), taking a bath on the sale of it to buy a hybrid to save money makes even less sense.

There might be a case for buying the Volt or other hybrids, but it isn’t based on economics. It is based on bragging rights, on showing everyone how concerned you are about Mother Earth. There is nothing intrinsically wrong with any of these things, but you have to be pretty darn rich to afford them.

There is another problem with this economically inefficient activity. Many years ago, I toured the first big solar power demonstration plant in the Mojave Desert — Solar One, near Barstow, California. It was very impressive: a vast array of mirrors, reflecting sunlight onto a boiler. There was a lot of electricity used in making all the glass for the mirrors, the electric motors, the boiler, the computer systems controlling all this, the posts holding the mirrors, and aluminizing the glass to make the mirrors (a very energy intensive process). I asked the tour guide: “How do we know that the system is a net producer of electricity? Even if it is a net gain, how much net gain?” She had no idea.

Eventually, I received a letter that admitted: They had no idea. The enormous subsidies that went into this project made it impossible to figure out what (if any) net gain there was. Energy is a major part of the cost of many alternative energy systems, and energy costs money.

How much energy is going into making the batteries that go into these hybrids? How much energy is spent transporting the batteries from China? How much will be spent recycling those batteries at end of life? When you see one of the “Save Mother Earth” projects that requires federal tax credits and is still a bad economic deal for the buyer, my immediate suspicion is that it is hiding an enormous energy input that destroys most of the ecological reason for doing it.

There may well be a case for the government subsidizing basic research or demanding new technologies. Throughout American history, such subsidies or government purchases have often more than paid for themselves in technological development and economic growth. Interchangeable parts and the development of the vertical milling machine are both results of government musket contracts in the 1790s, for example. Microprocessors and the Internet have similar U.S. government origins.

R&D encouragement, however, is not the same as subsidies to production, which can introduce severe distortions without producing much of value. Corn ethanol subsidies are among the most obvious of these — but in another ten years, we are probably going to see a lot of “green” technology, such as hybrids, fall into the same category.

If you are rich, and want everyone to admire your commitment to Mother Earth, by all means, buy a hybrid. If you want to help drive the cost of hybrids down so that they are more reasonably priced in the future, buy a hybrid. But don’t buy one because you are going to save a bunch of money on your commute — you are going to be disappointed.

Clayton E. Cramer is a software engineer and historian. His sixth book, Armed America: The Remarkable Story of How and Why Guns Became as American as Apple Pie (Nelson Current, 2006), is available in bookstores. His web site is www.claytoncramer.com.

[jazusamo]

There might be a case for buying the Volt or other hybrids, but it isn’t based on economics. It is based on bragging rights, on showing everyone how concerned you are about Mother Earth. There is nothing intrinsically wrong with any of these things, but you have to be pretty darn rich to afford them.

Yep.

[70th Division]

I just traded my ‘04 Cavalier with 251K that got 30 MPG for an ‘09 Cobalt that gets over 30 MPG. My friend at work has an ‘02 Saturn that gets over 40 MPG. Course they folded the Saturn. Brilliant!

[Mouton]

Yeah, love the dealer markups. Considered buying a v-8 Camaro when they first came out. Dealer said he could get one but it would be 10K over list. This was while GM was in bankruptcy. I howled. He countered, the 6 cyl model only had a 2500 markup over list. I just walked over to the Hyundai place and bought a genesis coupe for a huge savings and have never looked back.

[Jeff Vader]

in 1996 I was of limited means and needed transport so I bought a brand new honda civic hx. it just turned over 210K on the odometer last week. it still gets 38mpg every tank full, slightly less than the 42mpg it used to get. I don’t think a hybrid could be that cheap to buy and run. I’ll be replacing it with a 4wd truck because my needs have changed, but I would certainly buy another one if I needed cheap transportation.

[jazusamo]

I believe this Cramer nails it on mileage and cost savings.

Fairly high mileage gas powered vehicles will be hard to replace on an overall cost basis. The technology is proven and the original cost of the vehicle is reasonable.

[red devil 40]

ping for later read

[jazusamo]

It really burns me when a dealer pulls that “take it or leave it” bs.

In ‘65 I told a ford dealer I’d buy a new ‘65 Mustang that was in the showroom if he’d knock $100 bucks off the sticker, he said no way. I said if he didn’t I was going down the street and buy a new Olds Cutlass, he still refused so I bought the Cutlass.

[IYAS9YAS]

it still gets 38mpg every tank full, slightly less than the 42mpg it used to get

I'll bet most of your mileage loss can be attributed to ethanol in your gas. If you can find a vendor who sells pure, non-ethanol "enhanced" gasoline, I'd be willing to be you'd be back up to where you were.

[Scutter]

I’m amazed at the mileage these cars are getting now. My motorcycle only gets about 39-40 MPG, and there are cars that do better than that.

[70th Division]

I agree

[5thGenTexan]

That's been going on for years. It used to be mainly on the imports.

My story, my college rommate and I had both just gotten jobs in our indutry, he had gradutated and I had 1 yr left. We both had college beaters on their last legs and were carpooling to shop for cars. Two young males looking at sports/sporty cars - him single and me engaged but still wanting something sporty.

We went to the Mazda dealership and both were looking at the RX7. There was a line item called "surcharge" for $10k (in 1985) on the window sticker. We asked the guy "what is that for?". He said "we know you'll pay it to get a Mazda". We both turned and left without another word and him running after us "but, wait"...

He bought a new Mustang that day. I bought a Plymouth Turismo the next. He putted around in the 'stang to save gas money. I zipped all over in the Shelby-tuned Turismo and had a blast until a new baby caused me to trade for a 4 door a few years later.

[baldisbeautiful]

Why would anyone in their right mind buy a car from GM aftre all the money we taxpayers have handed them?

[baldisbeautiful]

Why would anyone in their right mind buy a car from GM after all the money we taxpayers have handed them?

[70th Division]

I buy Chevys because they build a good car. 251K on the ‘04 with no problems.

Now it is NOT the average Joe’s fault. They show up build cars and go home. If you want to blame someone blame the union BOSSES. Blame stupid high level management. Blame the politicians who put the scheme together.

If you had a failing company and someone offered you cash to save it, what would YOU do.

So go ahead with your personal boycott. That is one car.

[esoxmagnum]

There is a dealer in Rochelle Il that I used to pass by every couple of weeks, and they had an early release of the Challenger when it came out (sorry, I’m a Mopar man). A nice one, black on black RST 8. So, I pull in, and the sticker is on asking I think 42 for it, then the sales guy comes out, and we start talking. He says he can let me have the car for 75k......

He explains that they aren’t making any money at that price, because they had to reserve the car and yada yada yada...

6 months later, I drove through Rochelle again, and the car was still there, so I pulled in, they were selling it at 42k, but it wasn’t on the metal display ramp anymore, but it was all prepped, polished, the tires were even shiny.

I took it for a test drive, and when I got back, I looked at the odometer and it had over 9,000 miles on it. The salesman said it was still new because it wasn’t titled, and the owners wife was driving it.... GREAT, an RST8 hemi motor, driven by and broken in by some schmuck, selling for new car price.... with 9,000 miles on it...

...and the American car dealers wonder why they are getting their arses kicked.

[Hoodat]

It is mechanically simpler than the Toyota Prius.

[jazusamo]

Powered by brontosaurus burgers? :)

[Mister Da]

There is but one test that can truly validate a technology, product, or service: The marketplace.

[arthurus]

I have a 96 Cavalier that gets 31 mpg in pre rush hour city driving-like on the road but slower. It cost me $800 and I have had to do no more than routine maintenance and replace a timing chain in the three years I have had it. I am not in a hurry to trade it for a Volt or Prius.

[arthurus]

My Reflex 250 scooter gets 80-83 mpg and will easily reach and hold any legal speed in the county- that's up to 65 mph. The 920 Virago I used to have got 55 mpg highway and 53 city and outpowered Sportsters at bottom and tơp easily.