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Extension > Environment > Energy efficiency and renewable energy > Should I buy an alternative vehicle? > What do my results mean?

What do my results mean?

By Douglas G. Tiffany, University of Minnesota Extension educator
Revised 2011

Back to Should I buy an alternative vehicle?

There are many lessons to be learned by using this tool and experimenting with various input factors. Most users should focus on the following key factors:

For a range of input factors, it is often necessary for the owner to drive the car for many years until the savings in gasoline overcome the higher purchase price of hybrids or extended range electrics. The assumption of higher gasoline prices is helpful when trying to recover the additional costs of alternative vehicles. The effect of an income tax credit, if available on a new car purchase, can be readily determined in the spreadsheet. The number of miles driven per year is also a critical variable in determining whether or not an alternative vehicle can be cheaper to own and operate at some point during its expected fifteen year life.

Electric vehicles may not be appropriate for some owners needing to take longer trips; however, electric vehicles have very low operating costs and are very efficient in converting the energy flowing from their batteries to motion. Consumers probably focus too much on the daily price changes of gasoline because they are reminded of these prices everywhere they go and each time they refill their tanks. However, in terms of the effect on total accumulated discounted cost, the costs of ownership typically have a greater impact than fuel costs.

Fuel prices for the life of the car

At the time this content was prepared, July 2011, retail gasoline is selling for $3.80 per gallon at a time when crude oil is around $100.00 per barrel. As the world economy recovers, we should expect that prices of crude oil and gasoline will rise. Electricity prices are unlikely to be as volatile as gasoline because U.S. electricity is largely produced from cheap coal, cheap natural gas, and veteran nuclear power plants. In addition, if climate change legislation is enacted, additional taxes or emissions fees will be added to the price of gasoline and electricity to encourage consumers to reduce their use of energy sources that contribute to the production of greenhouse gases (GHG) that are responsible for global warming. Owners of electric vehicles will often be offered favorable prices for power purchased at off-peak times by their utilities. Some electric vehicle owners may elect to pay more for wind or other renewable energy, if offered this option by their utility.

Understanding your desire to reduce your carbon footprint

The green-shaded area of the input/analysis sheet quantifies monthly costs of gasoline and ownership for the first five years and shows the differences in gasoline usage and GHG emitted. If the car buyer chooses to buy an alternative vehicle when its monthly costs are higher than the conventional vehicle, the spreadsheet calculates the effective rate of tax per metric ton of CO2 that the car buyer is effectively paying by buying and operating an alternative vehicle. If negative figures are shown in expenditures per month or in terms of effective carbon tax, the use of a hybrid or electric vehicles lower total monthly costs of ownership and operation in that scenario. In such a case, consumers "pay" a negative tax or receive a financial benefit by buying and operating an alternative vehicle versus costs associated with a conventional vehicle.

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