Will Electric Cars Ever Pay off for Consumers?

With gas prices high, the idea of driving your electric car right past all the gas stations and recharging it at home—as shown in those Chevrolet Volt TV commercials—has powerful appeal. But so far, the high cost of electric models has kept most consumers from acting on that vision.

With the price on electric models like the Nissan Leaf and the Volt (which also has a backup gasoline engine) near $40,000, the differential over similar gas-powered cars is just too great. That remains true even after a $7,500 federal tax credit for electric car buyers plus state credits in some locations.

For example, Edmunds.com senior analyst Michelle Krebs points out that even if gas went to $5 a gallon, gas savings on the Volt, rated at 95 MPG in city driving and 93 on the highway, would take nine years to pay back the price difference over the similar-size Chevrolet Cruze. Consumers can choose from lots of high-MPG all-gasoline cars like the Cruze that cost thousands of dollars less.

Much of the cost premium for electrics results from their very expensive batteries, which can cost $12,000 to $15,000. Cutting that price is crucial to getting electric vehicle prices down to affordable levels. In a recent study, consulting firm McKinsey & Co. projected that the cost of batteries could fall 70% by 2025—pushed by increasingly stringent government regulations around the world. But lower costs depend on higher sales volumes. And that may be the catch-22 for automakers, at least in the next few years.

Whether or not you’re tempted to consider an electric car, the combination of high gas prices and tightening federal regulations has worked to give you more choices. Small, high-MPG all-gasoline cars that once seemed cheap and unattractive now come with comfortable interiors, good driving manners and a host of attractive options.

No matter what you decide to buy, we offer the hands-down winner in new car loan rates and speedy approval. Talk to a Hopewell Federal Credit Union loan officer about your new car today.

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