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Rationale for the Demand for Plug In Vehicles

4/11/2011

Currently, Chevy, Nissan, Tesla and Fisker are in the enviable position of selling every plug-in car they make before it even reaches the dealership.  Dealerships carry no inventory of plug-in vehicles and many don't even have demo vehicles.  There are some Leaf buyers who placed their deposits almost a year ago and are still waiting and the wait for a Chevy Volt or a Tesla is around six months, demonstrating a very high demand-to-supply ratio that currently exists for plug-in vehicles.  As Chevy and Nissan crank up production going forward and as new competitors enter the market this ratio will definitely drop but by how much depends on many factors, including the price of oil.

Why is the demand for plug-in cars so high other that the obvious environmental concerns? One reason is their low operating cost.  A plug-in can cover around 4 miles per Kilowatt Hour (kWh) of battery capacity.  Given today's electricity rate of around $.12 per kWh, that results in an operating costs of around $.03 per mile. This number could be even less as more utility companies begin to offer off peak rates. At $4.00/gallon, a modern non plug-in hybrid getting 50MPG costs around 8 cent/mile to operate for fuel alone. Additionally, a traditional hybrid requires around $300 of maintenance expense per 10,000 miles driven. Electric vehicles require far less maintenance expense because there is no engine oil change; no belts, distributor cap, exhaust system or spark plugs to replace.  Even the brakes last longer than non-hybrids due to regenerative braking.

While range extended plug-in vehicles do have an on board generator, the vehicles are designed so that the generator is only turned on for a small fraction of the vehicles operating life. With today's synthetic fluids, they require a small amount of maintenance compared today's conventional and non plug-in hybrid cars.

Other reasons plug-in cars are desirable are that they often make very little noise, less than some of today's high end luxury cars. They are very smooth to drive and typically have no gear shifting. They also have 100% torque at 0 RPMs resulting in strong, instantaneous acceleration. Other benefits reported by plug-in drivers is that they waste far less time at the gas station and their hands stink like gas less often.

With today's cost of gas and the current federal, state and local tax subsidies and the state of our environment, plug-in cars make a lot of sense and a lot of cents.