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Discussion Starter #1 (Edited)
Hey guys,

Figured I'd share this. Put it together today because I'm quite sick of people claiming that PHEVs/EVs are only for tree huggers and will never repay the price premium versus competitive vehicles. I feel the values I've put in the attached sheet are rather realistic, but the great thing is the blocked-off cells can be modified to reflect your experiences/anticipated figures and to compare the costs based on your usage. I think this would be a useful purchasing tool for anyone considering a PHEV.

I'm sure there are some variables that I could have calculated differently. I'm not a math major, but I have a decent idea of how this would work. Let me know if you have any ideas on how to improve the chart. My plan was to use values that most people would be familiar with from their car's efficiency displays.

I picked a Civic EX 2.0T as the comp because it's a popular model, is competitively sized, and the price delta versus package features seemed closest to what was available in a base LT or Prime.

The chart does not even account for the drastically reduced maintenance costs associated with PHEV ownership.

Welcome all input to modify/improve this. Please let me know what you think.

Edit: Ack! Put this in the wrong forum. Moving to Gen2. Sorry folks.
 

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The price of my electricity is approximately one half of your estimate. In a year of charging two Volts my electric bill hasn't changed from the prior year,so conceptually the electricity for me has been free.
 
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Put it together today because I'm quite sick of people claiming that PHEVs/EVs . . . . will never repay the price premium versus competitive vehicles. I feel the values I've put in the attached sheet are rather realistic
If you take away the Federal tax credit and other incentives to buy EV's or PHEV's, they are probably right - The $7,500 Federal credit alone will buy LOTS of fuel and it's not likely an average owner will keep the vehicle long enough to recover the premium paid when they bought it . . . . and to make matters even worse, the depreciation on most EV's and PHEV's is pretty bad making it almost impossible to ever break even

Don
 

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If you take away the Federal tax credit and other incentives to buy EV's or PHEV's, they are probably right - The $7,500 Federal credit alone will buy LOTS of fuel and it's not likely an average owner will keep the vehicle long enough to recover the premium paid when they bought it . . . . and to make matters even worse, the depreciation on most EV's and PHEV's is pretty bad making it almost impossible to ever break even

Don
Speaking of catch-22s, though... The depreciation on PHEVs and EVs mostly looks bad only because of that self same tax credit (and state tax credits) depressing the value of used cars right off the lot. Without the tax credit, they'd hold value better, but start higher.
 
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Yes. If you take away the tax credit, the math doesn't work.

But the tax credit is there (for now), so you have to consider it.

I echo what saghost said regarding resale value.
 
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The price of my electricity is approximately one half of your estimate. In a year of charging two Volts my electric bill hasn't changed from the prior year,so conceptually the electricity for me has been free.
That's awesome! My kWh rate is advertised at 6.9 cents per kWh, but I pay another 7.5 cents in "delivery fees" and taxes per kWh, so that's where that comes from. Unfortunately, my utility provider ended their peak/off-peak pricing model a few years ago and has made no indication that it will come back.
 
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The resale thing is also annoying. Used car prices are driven largely by new car prices. Period.

I won't get scientific about this, but Used 20K-40k mile 2013-15 Civics, universally praised for their resale value, are going for $14K on Carvana. New comparably equipped Civics would cost about $21K. So there is roughly a 7K decrease in value.

In comparison, used Volts in the same years, with the same level of equipment, with the same miles are going for $16K. New comparably equipped Volts would cost around $21,500, so there's a decrease of $5.5K in value.

I won't get into trade-in versus private sale and all that, because it's been rehashed repeatedly. What's important is to compare apples to apples.

The perception that EVs/PHEVs depreciate more is due to an artificially imposed depression in value with a massive tax credit on new vehicles that is not available on used cars. It was also fueled by price premiums associated with early adoption of 2011 and 2012 models that really were not price competitive with their conventional ICE counterparts even after tax credits. Certainly, this stinks for the 2011 owner who gotpennies on the dollar for his $50,000 sticker vehicle, but it's understandable when you can get a better, faster, longer range, more efficient, warrantied, updated version of the same car for just a few thousand extra.

Finally, and apparently less and less so with the Volt, EV prices on the used market plummeted because of anecdotal range degradation tales told about the first gen Leaf and got generalized to all EVs by skeptics. More and more people seem to be appreciating that this just doesn't happen the same way on the Volt, and secondary market prices are stabilizing as a result.

If the EV tax credit goes away and gas goes above $4/gallon, I can almost guarantee that used Volt prices will soar.
 

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the depreciation on most EV's and PHEV's is pretty bad making it almost impossible to ever break even

Don
Starting with the price after tax credit, please show your math on this statement. Every time I look, the depreciation is normal.
 

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Starting with the price after tax credit, please show your math on this statement. Every time I look, the depreciation is normal.
Aye, it's very normal, to even low for a compact car in its price class (low-high 20's after tax credit and dealer discounts for most models). I had a used BMW X5 before the Volt, and it depreciated right at 16-20% a year, averaging to about 18% per year.

Later 1G Volts seem to hover in the 8-9% per year range over a long period, and 2G Volts don't seem to really depreciate at all given that some people that don't qualify for the full tax credit are willing to pay over new-after tax credit price for a lightly used one. I still see a ton of base LT '16s and '17s in this area that sell for over what I bought my new '18 that has more options.


Really early EV/PHEV adopters got hit with a decent bit of depreciation due to the price of new ones dropping, which accelerated their initial run down the depreciation curve. I would say things are a little more stable now with battery and HV component pricing slowly trending down over time and manufacturers now taking some of that cost saving as profit. I don't think I'd lump those really early years in as "normal depreciation" though, the manufacturers used any cost savings they could to push the MSRP down and get sales volume up. Once pricing stabilized, the real depreciation trends emerged.
 

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We purchased our 2016 Volt Premier in July 2016, for $29,000 as GM at the time had 20% off MSRP and the dealer kicked in even more off for a total of $11,000 off MSRP. So with our $7,500 tax credit in which we got 100% of; the price was around $22,000 or so.

Electric prices here in north western Oregon for us is .113 / KWH with all cost. This is calculated by dividing the total cost of your electric bill by the KWH used.

So for $22,000 is what we probably would have paid for a loaded Civic or Corolla at the time. We had a level 2 charger from our 2014 Volt which we traded for our 2016 Volt. So we charge at home with a level 2, from empty to full takes about 4 hours 15 minutes.

Last trip yesterday my wife and I went fishing via Highway 101 down to the Tillamook Oregon area. Our car was fully loaded with all our fishing gear, loaded cooler with drinks and snacks, and all her camera gear.

Upon our return home the dash read for the entire trip: 128.6 miles / electric miles 67.6 with 13.5 KWH used (still had 3 miles left) and 61 miles on gas with 1.02 gal's used for 58.8 mpg displayed (regular 87 octane Costco Gas).

Now for comparison we also have a 2010 Prius. The Prius would have under the same load, driving etc. gave us about 55 - 58 mpg or so.

Total cost for trip with the Prius $6.65 with 58 mpg and Costco reg. gas at $2.999 / gal.

So the trip with the Prius would have been $6.65

For the Volt $3.05 for gas / $1.75 for electric = total cost $4.80

Also our Volt is my wife's daily driver and for her commute, 32 miles round trip, she can go the whole week and never use a drop of gas.

So far our Volt for fuel efficiency on both electric and gas is a real winner in my book..
 

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A substantial number of households won't qualify for more than maybe half of the tax credit, if that. So when they look at the msrp of around $33k and up for a Volt, it will just be dismissed out of hand. The Civic msrp starts at around $19K. That's a huge difference.

For an msrp of $21.5k, one can get a Civic with all the safety features of a $40k msrp Premier. An even larger difference. So they do without some bells and whistles and end up saving a boatload of $$ to buy gasoline with.

Sure one can get a bigger discount on the Volt, which will shrink the difference, but a big gap will remain without the full $7500 credit .

I'm not talking about people of so little means, they should never consider a new car either. I was able to afford a new $21k car, several years ago at a time when we would not have qualified for much of the $7500 credit.

Jon
 

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A substantial number of households won't qualify for more than maybe half of the tax credit, if that. So when they look at the msrp of around $33k and up for a Volt, it will just be dismissed out of hand. The Civic msrp starts at around $19K. That's a huge difference.

For an msrp of $21.5k, one can get a Civic with all the safety features of a $40k msrp Premier. An even larger difference. So they do without some bells and whistles and end up with a boatload of $$ to buy gasoline.

Sure one can get a bigger discount on the Volt, which will shrink the difference, but a big gap will remain without the full $7500 credit .

I'm not talking about people of so little means, they should never consider a new car either. I was able to afford a new $21k car, several years ago at a time when we would not have qualified for much of the $7500 credit.

Jon
That is where creative tax planning could help. Suppose you qualify for half of the $7500 tax credit this year. Instead of losing out on the remaining $3750 in federal income tax credit, if you have a traditional IRA, you could elect to convert part or all of your IRA to a Roth IRA. The money you originally contributed to the IRA, plus any gains, would be coming out of the IRA and going into the Roth account would be taxed as ordinary income in the current tax year. You would be able to claim up to any remaining unused portion of the $7500 tax credit and reduce the tax owed from the IRA conversion, perhaps eliminating any tax owed on the Roth conversion. Once the money from the traditional IRA has been converted to a Roth account it would continue to grow, tax free, for life. You will have purchased a 2018 or 2019 Volt or Bolt or other EV/PHEV, before the $7500 federal income tax credit is due to expire, and you would benefit from the full amount of the federal tax credit. It would have cost you nothing, all you did was move some retirement money around.
 

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That is where creative tax planning could help. Suppose you qualify for half of the $7500 tax credit this year. Instead of losing out on the remaining $3750 in federal income tax credit, if you have a traditional IRA, you could elect to convert part or all of your IRA to a Roth IRA. The money coming out of the IRA and going into the Roth account would be taxed as ordinary income in the current tax year. You would be able to claim up to any remaining unused portion of the $7500 tax credit and reduce the tax owed from the IRA conversion, perhaps eliminating any tax owed on the Roth conversion. Once the money from the traditional IRA has been converted to a Roth account it continues to grow, tax free, for life. You will have purchased a 2018 or 2019 Volt or Bolt or other EV/PHEV, before the $7500 federal income tax credit is due to expire, and you would benefit from the full amount of the federal tax credit. It would have cost you nothing, all you did was move some retirement money around.
I agree with you and recently suggested that very thing on this forum. However you are talking to a mostly financially savvy audience here. Also an audience that is in the position to have IRA's.

The very same households that are not generating a sufficient tax credit without this kind of creative tax planning, are by and large, the same households with little or no $$ in IRA's.

We could argue they would be much better served by buying a used car and funding an IRA with the savings, but we all know that's not how a lot of people operate. There are huge numbers of people in this country driving around in new cars with no savings to speak of, IRA, or otherwise.

They will go out and buy that $20k-$25k new car with a long term loan, but they won't consider a car like the Volt with a $33k+ msrp. They couldn't qualify for a large enough loan anyway.

As for my individual example of buying a new $21k car at a time when I would not have qualified for a $7500 tax credit? I was referring to my 2001 Mazda Miata, so obviously buying a Volt back in 2001 and doing a Roth conversion for the tax credit, was not an option.

Now that I think about it though, if someone can't generate the income tax liability to get the full tax credit, either directly or with a Roth conversion then a used car is the way to go. So I was wrong about that point.

I probably was not particularly wise about the Miata purchase either. We had just paid off our mortgage the year before though and I had just received a $20k inheritance from my Aunt. The Miata was my dream car at the time. So I gave in to temptation.



Jon
 

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I agree with you and recently suggested that very thing on this forum. However you are talking to a mostly financially savvy audience here. Also an audience that is in the position to have IRA's.

The very same households that are not generating a sufficient tax credit without this kind of creative tax planning, are by and large, the same households with little or no $$ in IRA's.

We could argue they would be much better served by buying a used car and funding an IRA with the savings, but we all know that's not how a lot of people operate. There are huge numbers of people in this country driving around in new cars with no savings to speak of, IRA, or otherwise.

They will go out and buy that $20k-$25k new car with a long term loan, but they won't consider a car like the Volt with a $33k+ msrp. They couldn't qualify for a large enough loan anyway.

As for my individual example of buying a new $21k car at a time when I would not have qualified for a $7500 tax credit? I was referring to my 2001 Mazda Miata, so obviously buying a Volt back in 2001 and doing a Roth conversion for the tax credit, was not an option.



Jon
Thanks. I have asked my tax adviser about this as he may have some clients who would be able to convert IRA funds to take advantage of the $7500 tax credit, purchase a GM, Tesla or Nissan EV or PHEV. There are probably many people who have a traditional IRA or 401k from their current or prior employment who could use this information to take advantage of the federal EV tax credit, purchase an EV/PHEV, before the 200,000 vehicle threshold is reached and the credit is gone.
 

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Thanks. I have asked my tax adviser about this as he may have some clients who would be able to convert IRA funds to take advantage of the $7500 tax credit, purchase a GM, Tesla or Nissan EV or PHEV.
It's a great idea which I did not think of when I purchased my 2011 Cruze Eco, and I did consider a Volt then too. OTOH, Volts were more expensive then ,and with smaller discounts.

Also my Eco was only $17.7k, and at 42 mpg highway beat out the gen 1 Volt on the ICE. This at a time when I was often driving on the freeway well beyond the 2011 Volt's EV range .

Jon
 
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