Should I buy and electric car?

[gotaholen1]

Background:  I currently have a 2004 VW Passat with around 80K miles on it.  It is in okay shape overall.  It is worth about 5k on a trade and maybe $5,500 to sell private party.  I live in a rural area and commute about 8 miles to work (biking is not an option).  All in all, I use about $80-$100 a month in gas based on my past budget figures. 

The dealership in my area is trying to clear their remaining stock of 2012 i-Miev cars with the new 2014 models coming out in a month. 

The sticker cost is $19,922 plus tax, title and license (probably $1,500 - $2,000).  There might be some room for negotiation on this price, but I haven't gotten that far in the process.
 
This vehicle also qualifies for the following incentives:
 
Federal Tax Credit of up to $7,500
IL State Rebate                  $3,112
City Rebate        $311

I would either sell my existing car or trade it in, if they offered a fair market trade.  Taking the trade in vs. selling would save me a few hundred on taxes, so it may be worth it.

Therefore it would breakdown like this...

-> $20,000 (appx. sticker) - $5,000 (trade in) = $15,000
-> $ 2,000 (tax, title, etc.)

-> $11,000 in a tax rebate that would be received in 2015. 

This would make the out of pocket cost around $6,000.  If I really wanted to, I could just pay the $17,000 cash.  I probably would not do this, but would instead take advantage of the 0% financing they have going for 36 months and would pay the car off in full after receiving my 2015 tax return.

The car can charge at my house without the need for any additional electrical work done.  I currently pay 11 cents per kw per hour.  In addition there are about 20 charging stations in the city that I work in that are free of charge.  One is about half of a mile from my office, therefore I could probably charge the car once a week at that charging station as I have never seen one car plugged in at that location. 

Should I pull the trigger on this Electric Car Experiment?

[Emg03063]

Are you asking if it's in your financial interest, or other considerations?  What do you spend on gas & oil changes in a year?  Subtract your electric cost for the miev and divide your $6000 cash cost by the difference to calculate your payback.  It probably makes financial sense.  Why is biking not an option?

[seattlecyclone]

The best option financially is probably to keep your existing car until it dies. By that point, used electric cars should be quite plentiful and affordable. Buy one then.

On the other hand, if you're willing to pay a bit more to be better for the environment right now, this seems like a much cheaper way than buying a Tesla.

[gotaholen1]

My oil changes are around $50 as my car requires synthetic oil.  My drive is about 8 miles due to an interstate.  The only bike path would be about 11 miles, and would require me to bike some country roads that are out of the way.  Google maps says the bike would take about 60 minutes, and the drive is about 12.

I guess overall my question is.... are there any real negatives or red flags based on the information provided. 

[Nicster]

If you decide to go for it, I would look further into a cash "discount" if you pay in full up front. There really is no such thing as 0% interest at a car dealership,  IMO. They just roll the costs into the purchase price.

[cdub]

The LEAF is a far better EV than the i-Miev in my personal opinion. Disclaimer - I own a paid for Leaf and love it.

[Thegoblinchief]

No.

I'd keep running your current car. Synthetic oil isn't that expensive if you DIY your oil changes.

But 8 miles? Bike that!

[Emg03063]

The only real negative is the $6k out if pocket cost.  If you're driving 16 mi/ day 5 days/ wk, 50 wks/yr, that's 4000 mi/yr.  38 mpg yields 105 gallons (less if you hypermile it).  $3.50/gallon makes that $368/yr.  Add $50 for an oil change, gives you $418 per year in fuel and oil cost.  You electricity is going to cost you $132/yr (figured at 3.3 cents/ mile from Mitsubishi's website --3.6 *11/12) if you don't charge for free, for a net savings of ~$300/yr, so figure a payback of 14-20 years (less if you drive more and/or gas prices go up)  The question then becomes is there something better you could be doing with the $6k.  A 5% return would give you the same income stream.  It's kind of a toss up, IMO, but think about selling your car, buying a used Prius, and converting it to a PHEV instead.  You may get similar savings for an out of pocket cost of about $2000 (less 30% federal tax credit) for a much faster payback, and you don't have to worry about range issues if you have to take a long trip either.

[sol]

The only red flag I see is potential non-commute uses of your vw.  Do you us it for longer road trips that the ev wouldn't be able to handle?

[slush]

Emg is right on regarding the math. Just remember your limited range, and if that isn't a problem, run the numbers. Include taxes, maintenance, registration, insurance, and since you are buying, I recommend including a depreciation estimate over the amount of time you plan on keeping the car. Depreciation may sound like the deal killer, but with an aging vehicle your maintenance costs will certainly be higher over time. Make a good spreadsheet.

Here's my post on leasing an EV in California. I did it, love it, and am happily saving a ton of money! I spend about $0.025/mi if i charge off peak (midnight to 6am) or $0.035/mi if I charge at regular peak hours. It's motivated me to be super efficient inside the house. My electric bill is down 66% year over year just with conservation efforts, even with the EV eating up a big chunk of charging.

https://forum.mrmoneymustache.com/ask-a-mustachian/what-am-i-missing-%28ev-car-lease%29/msg215701/#msg215701

[desrever]

Those tax rebates are likely to disappear when electric cars get really popular. Right now the $10K in free money really does move the needle quite considerably, especially if you are buying a car on the cheap end of the EV spectrum.

If you're looking at spending $6000 to reduce your fuel costs from $100/mo to $30/mo, it'll take about 7 years to recoup the cost and have this total thing be marginally cash positive. And plus you'll have the residual value of the vehicle. I think these numbers check out, but you should really try to bargain them down on price. Two recommendations that helped my wife: look at online forums to see what other folks are getting, and if possible negotiate with more than one dealer over email.

You also need to have the discipline to drive this car for at least ten years, while the other EVs around you get better and more commonplace.

In our state there is an extra $100/yr registration fee for electric vehicles supposedly to replace gas tax revenue. Meanwhile there are subsidies as well - no sales tax on EV purchases. It doesn't totally make sense, really.

[gotaholen1]

Thanks for the feedback everyone.  I am going to take a look at the car this evening.  We have a Honda Civic that we use for all out of town trips.  The math seems to make sense, and I have confirmed that I should be able to charge the car for free most of the time.  These fast chargers in my town only take about an hour.

Therefore since I already spend about $100 a month on gas (more expensive due to the passat needing Premium Fuel), it should be cash flow positive pretty quickly if I decide to pull the trigger.

My existing car is only going to get more expensive to service over time, and is 10 years old, therefore this should pay for itself pretty quickly.

It is always interesting that anyone that starts a car thread always gets the "you should bike" comment.  I guess I am not sure how I could possibly justify adding about and hour and a half to my commute each day to bike.  It would be great to bike, if it didn't dramatically change my commute time.

[sol]

I guess I am not sure how I could possibly justify adding about and hour and a half to my commute each day to bike. 

If biking would take you 90 minutes to replace what would otherwise be 30 minutes of driving, then I would normally view that as getting in 90 minutes of healthy exercise by only spending an extra 60 minutes of my day.  Much more time efficient than going to the gym, or even just going for a regular bike ride.

Then the cost savings on not paying for a new vehicle, or gas for the trip, are just pleasant bonuses.  As is the reduced environmental impact, and the fresh air.

If you're already in great shape and would not benefit from any exercise, then hats off to you!  If I were in that position, I might also consider buying a motorized throne and paying for the convenience of sitting on my perfectly sculpted ass for 30 and then having an extra 60 minutes of free time.  Alas, I am not yet that fit and I think I would miss seeing my neighbors while out riding around. 

Which is not to suggest that you should always bike.  Some trips really do require a car and I have no problem with driving on such trips, conceptually or practically.  Most trips I take, however, do not fall into this category because I have chosen to own a home within five miles of virtually everywhere I need to go on a regular basis.  If you're stuck in forced-car-ownership suburban hell, biking might not be a viable option for you.

[Prairie Stash]

Your math sounds wrong. How is a Tax credit and a tax rebate the same? Here a tax credit of $11000 is worth about $3000. Maybe our terminology is different.

[randymarsh]

Your math sounds wrong. How is a Tax credit and a tax rebate the same? Here a tax credit of $11000 is worth about $3000. Maybe our terminology is different.

Where are you located?

A tax credit reduces the actual amount of tax you owe. Your taxes are $3000, you get a credit for $2000, you only owe $1000. Tax deductions reduce your taxable income and are worth (tax deduction * marginal tax bracket).

I think IL and OP's city are using the term rebate the same way the federal government uses the credit.

[rtrnow]

Thanks for the feedback everyone.  I am going to take a look at the car this evening.  We have a Honda Civic that we use for all out of town trips.  The math seems to make sense, and I have confirmed that I should be able to charge the car for free most of the time.  These fast chargers in my town only take about an hour.

I am by no means an experts but have done a bit of reading on evs. There seems to at least be the potential that fast charging on a regular basis will dramatically shorten battery life. I would want to understand those tradeoffs too.

[gotaholen1]

It is IL.  The IL and City both give "rebates", but they use poor terminology to describe the program.  The IL and City rebates I would get in the form of a check in June.

The $7,500 requires you to have at least a tax basis of $7,500 in order to claim the full amount.  Therefore lower income people may not be able to get the full $7,500. 

If I get the car, I am challenge myself to not charge this at my house for the first 365 days as a challenge.  There are about 20 charging stations in my town that are free to use and charge in around an hour.  My plan would be to charge once a week while at work (about a 10 minute walk to the charger).

[Prairie Stash]

Your math sounds wrong. How is a Tax credit and a tax rebate the same? Here a tax credit of $11000 is worth about $3000. Maybe our terminology is different.

Where are you located?

A tax credit reduces the actual amount of tax you owe. Your taxes are $3000, you get a credit for $2000, you only owe $1000. Tax deductions reduce your taxable income and are worth (tax deduction * marginal tax bracket).

I think IL and OP's city are using the term rebate the same way the federal government uses the credit.

Canada, our tax code is a lot simpler. My basic tax guide is 60 pages. I'm still trying to wrap my head around the American systems, fed and state taxes with regards to the differences. In general ours seem a lot easier.

It seems crazy that a new vehicle could be obtained for $11,000 (listed at 19k). I'm wondering what the catch is? I usually try to see if there's a reason a deal seems too good, in general a too good deal is best avoided. A truly good deal shouldn't rely on gimmicks or rebates. It's possible the catch is the government has too much cash.

[libertarian4321]

Rather than pay big money for a "hi tech" electric or hybrid with ridiculously limited range, why not just wait a year and get a low tech, low cost, but extremely high mileage ELIO?

http://www.eliomotors.com/

[CarDude]

Your math sounds wrong. How is a Tax credit and a tax rebate the same? Here a tax credit of $11000 is worth about $3000. Maybe our terminology is different.

Where are you located?

A tax credit reduces the actual amount of tax you owe. Your taxes are $3000, you get a credit for $2000, you only owe $1000. Tax deductions reduce your taxable income and are worth (tax deduction * marginal tax bracket).

I think IL and OP's city are using the term rebate the same way the federal government uses the credit.

Canada, our tax code is a lot simpler. My basic tax guide is 60 pages. I'm still trying to wrap my head around the American systems, fed and state taxes with regards to the differences. In general ours seem a lot easier.

Yeah, we've kind of got a corrupt system here; much of the bloat is from companies underwriting their tax breaks into it each time a new official is bought / elected.

At any rate, I'd definitely suggest staying away from electric vehicles for the moment until they're cheaper. Yes, your VW is a money pit; I've spent a lot of time on the Passat forums and those things are junk. They're very safe vehicles, but things constantly break and they can't be fixed in normal ways (electric parking brake, anyone?). In your position, I'd sell it as soon as possible for a car that was designed to live outside of the dealer, such as a Toyota or Honda.

[soccerluvof4]

No.

I'd keep running your current car. Synthetic oil isn't that expensive if you DIY your oil changes.

But 8 miles? Bike that!

I agree, keep running your current car. I think more time is needed for all the politics, pricing etc.. to shake out on these cars from a practical/financial sense.

[TomTX]

Rather than pay big money for a "hi tech" electric or hybrid with ridiculously limited range, why not just wait a year and get a low tech, low cost, but extremely high mileage ELIO?

http://www.eliomotors.com/

Because it has less than half the carrying capacity of most electric cars? And so far it doesn't exist?

[stevewisc]

Be careful planning on free charging. 

The first one I found in Naperville in the Chicago area said this:

"charging at the station is free through October 2013, after which fees for using the EVCS may apply."

http://www.naperville.il.us/evcs.aspx

 
Trade the junker VW for another Civic (or bike) and you will probably have a far more cost effective solution.  New assets drop in value fast and new technology takes time to be rock-solid (like the Civic)

[Jamesqf]

Rather than pay big money for a "hi tech" electric or hybrid with ridiculously limited range, why not just wait a year and get a low tech, low cost, but extremely high mileage ELIO?

http://www.eliomotors.com/

Because it has less than half the carrying capacity of most electric cars? And so far it doesn't exist?

Reason #2 makes sense, but carry #1 to its logical conclusion, we'd all be driving these:
 

[libertarian4321]

Rather than pay big money for a "hi tech" electric or hybrid with ridiculously limited range, why not just wait a year and get a low tech, low cost, but extremely high mileage ELIO?

http://www.eliomotors.com/

Because it has less than half the carrying capacity of most electric cars? And so far it doesn't exist?

It does exist.  I sat in one just a few days ago when they came to San Antonio. 

However, you are correct in that it is not yet in production.  They have purchased a factory and expect to start production in Louisiana early next year.  If they succeed in doing so, I'm going to buy an Elio. 

I'm thinking of going with the bright orange Elio, because you just don't see enough orange cars on the road.