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.

Revived Auto Market, Great Rates Cue Car-Buying Season

Millions of consumers have been driving older vehicles through the economic downturn, reluctant to take on new financial obligations while their personal finances were unsettled. Finally, it seems, many consumers feel better about the economy—and low interest rates—to visit showrooms and buy cars.

If you’re in a shopping mood, you’re going to like what you see in the showrooms. Auto makers, competing for your attention, are stepping up with amenities, advanced technologies, and safety features.

Pair that environment with very low interest rates, and this is a smart time to buy a car.
According to industry forecaster R.L. Polk, Southfield, Mich., “New vehicle introductions in 2013 will escalate dramatically, with 43 new vehicle introductions in the U.S. planned for the year, up nearly 50% over 2012 levels.” And, 60 vehicle redesigns are expected in the coming year.

The large pickup truck segment, which has declined over the past five years, will likely grow with several important new launches in 2013 and into the 2014 model year.

“Recent redesigns of nearly every vehicle in the midsize segment are forcing more competition and continued growth,” says Tom Libby, lead analyst for North America at Polk. “The current array of options for consumers in the market for a new midsized vehicle makes it a great time to buy a new car.”

The luxury segment in the U.S. also will be one to watch in 2013, according to Polk, as it will see significant launch activity in compact sedans. And, if gas prices continue to decline, Polk analysts expect the small luxury crossover segment will continue to grow.

In addition, non-luxury compact crossover vehicles have grown by more than 50% in the past five years. Plus, increased competition in this segment has created pricing pressures—excellent news for consumers.

While the number of hybrid models in the U.S. will increase this year, Polk expects only a slight improvement in this category, due to the continued significant price differential between hybrids and traditionally powered vehicles, and the high number of traditionally powered vehicles that achieve mileage goals similar to those in the hybrid segment.

What to do now, if you’re looking to buy: Talk to a Hopewell Federal Credit Union loan officer and get pre-approved for a loan. This puts you in strong position to negotiate as a cash buyer at the dealership.

Sales are rebounding, although slowly, so competition will intensify. That’s another reason this is a great time to buy a car.