I am in the market for a new car. At a recent visit to a Ford dealer I was confronted with the choice between the regular hybrid-electric version of the C-Max (think standard Prius but made in the USA!) and the plug-in hybrid electric version of the same model. The only difference between the two is the plug-in, well, plugs in. You get a 7.6kWh battery under your now largely non-existent trunk, which you can charge using a supplied cable from any standard electric outlet. This lets you drive an advertised 22 miles in all electric mode and after your battery is empty you drive a regular hybrid. That is right, 22 miles, without ever burning a molecule of evil climate changing, health destroying, liquid petroleum product. My pulse quickened. I felt like I was about to lease a halo. And then the dealer said: “This car is great. It saves me so much money. I never plug it in at home. I just charge it at work!” Cold sweat started forming. I thought to myself “I wonder if this guy used to siphon gasoline out of his boss’ gas tank before he got his new wheels?”
So let’s think about this for a second. 7.6 kWh for 22 miles comes out to 0.35 kWh per mile. What the heck are kWhs? They are the units that the electricity delivered to your outlet is measured in. What do they cost? Well, that depends on who your utility is. In my case, this utility is called PG&E and I pay for my electricity using block rate pricing. Here is what the price schedule I face looks like:
What this means for those of you living in the hotter parts of Contra Costa County is that if you use your air conditioner when it’s hot, you are probably paying 32.4 cents per kWh. This means a single battery charge of the C-Max hybrid energy would cost 7.2 * 0.32445 = $2.33. While I would be cruising down the road quietly like a puma, my card carrying economic soul is crying into its pillow. Why? If I would have not plugged in the C-Max and just used the hybrid feature using some evil gasoline, I would have gotten 44+ miles per gallon. At $3.35/gallon (best price on gasbuddy.com right now), the 22 miles would have cost me $1.68. A savings of 28%.
My greener than Al Gore mother would argue that if I were more saintly in my home electricity consumption and were on tier 1, the 22 miles would have cost me $1.09, which is 35% cheaper than the hybrid mode.
So I pulled my electricity consumption record using the green button and tried to figure out what getting the plug-in would do to my electricity consumption and how the cost would compare to the regular hybrid using our past 5 years of electricity consumption as data. I added a daily charge of the car to our electricity bill and calculated out bill totals with and without the plug-in. The plugin costs about 67 dollars a month to charge at home, which comes out to 10.25 cents per mile. If I had driven in hybrid mode I would have paid 7.39 cents per mile assuming the low gas price. But even at $4 a gallon, the hybrid mode wins. Now, since I am supposed to do what is socially optimal, I have to add in the damage carbon does. Assuming the less favorable $4 gas and a $40 Social Cost of Carbon, the hybrid still wins – just barely. I would save about $90 by going hybrid.
One thought that had occurred to me is to see whether my utility offers a tariff which accommodates my new usage pattern. And it does.
Their estimates suggest that I will be paying $260 more than I currently pay for existing uses and a back of the envelope calculation suggests that I lose compared to the current plan with my plug-in hybrid as well.
Now here comes the kicker. Because of the federal and state subsidies, the lease price of the plugin hybrid and the regular hybrid are almost exactly the same. And at my place of work there are outlets in the parking lot. So what is the privately optimal thing to do? Buy that American made electro stallion, plug it in at work and save some money. Which is roughly what the guy trying to sell me the car did.
But this is just plain wrong.
- I would increase the university’s electricity bill and drive up my students’ tuition! (Severin has already written about why free charging is a bad idea.)
- I would get a free ride in the car pool lane, because I bought myself a halo and increase congestion in these lanes.
- I would rake in thousands of dollars in taxpayer-financed subsidies for the option to charge the car when it is cheaper for me to do so (at the movies and my mother-in-law’s house). These subsidies and stickers are pushing this technology and are hoping for it to become more efficient in the long run, which is sensible. But the gap is still several thousand dollars on the lot.
- On the marginal cost side the plug-in is almost competitive with the existing hybrid technology even in my very expensive electricity neighborhood and after accounting for the external costs from carbon emissions. But my electricity is California oh so clean! Areas with cheaper electricity mostly rely on a higher mix of cheaper dirtier coal power, which will drive up the external costs per mile. A recent paper by some alumni and friends of EI suggest that electric vehicles aren’t greener — compared to a comparable hybrid if charged with coal fired power.
I might still get the plug-in, but I am charging it at home. Because my Dean reads this blog.
Maximilian Auffhammer is the George Pardee Professor of International Sustainable Development at the University of California Berkeley. His fields of expertise are environmental and energy economics, with a specific focus on the impacts and regulation of climate change and air pollution.