When my daughter turned 16 there were many conversations revolving around buying a new car. She would watch the commercials and read all the promotions. “This one gets great gas mileage. This one is cute. This one has side air bags. We should buy a …” You name it; she was full of recommendations and would point out her favorites as we drove to school. Finally, I told her we needed to sit down and do the math.
At the time the Prius was a hot car and we even test drove one. We all agreed it was a nice car. But then we did some calculating. Comparing the cost of the car and cost to drive versus our two year old Chevrolet my daughter discovered it would take nearly five years for the better gas mileage to pay off. That’s a long investment.
Today, with the rising cost of gas it occurred to me that many will be like my daughter, wondering if they should update to a new, better gas mileage car. For fun I checked into the cost of several new popular cars, including a couple hybrids (I consider the new Volt a hybrid as it uses a gas engine after the battery runs down.) For the purposes of this article I used the Edmunds website as a source for pricing and estimated mpg and electric costs. Warning: Math Involved.
So what does this graph tell me? A two year old Prius might be the best deal. We are always told that a car loses a large amount of value the first year. The cost of the Volt, even figuring in the current tax credit is most costly to operate. An interesting note: Toyota is now making a ‘plug-in’ version of the Prius which is listed at $32,000 and may be eligible for a $2,500 tax credit. It gets 50mpg in the hybrid mode.
Personally, I really like the idea of an electric car. It’s quiet and should be easier on the environment. I do wonder about the inconvenience of plugging the car in each night. Many areas, like mine, offer very reduced electricity rates after 7 or 9pm. Will I remember to charge my car each night? Will it become bothersome to take the charge cord out of the trunk each trip? Will I have to install a new super electric panel? Living in the sprawling Phoenix area will I find that I am always using gas just to drive across town, especially because I refuse to drive without air conditioning thus increasing my costs? Can I plug it in while shopping? Or is it a car before its time?
It is remarkable that the average income of a Volt buyer is $170,000; wages well above the working class ($30-100K) who more often are living paycheck to paycheck. Personal experience of acquaintances has shown that many prefer buying a used car due to the lower cost. Due to the Cash-for-Clunkers many have said that the used car market is a lot tighter than before. Unfortunately, friends who drove “clunkers” were not financially able to buy a new car and participate in the program. Like the tax credit rebate on the Volt, the Cash-for -Clunkers program seemed to help those already with better finances.
The decision to buy new or upgrade is not one to be taken lightly. For many the cost of a new or even slightly used car is still significant and a major portion of our budget, especially during these challenging economic times. With groceries up over 9% and the job market still unstable many are making the decision to wait a while longer before buying a new car. From my friends there is a strong feeling to wait, that while my car does become another year older at least I am not taking on more debt. A stronger economy would help. Still, should you buy a Volt? Do the math.