[DeTomaso] NPC fascinating "financial planner" view of the SUVvs. gas-efficient car argument

Ken Green kenn_green at yahoo.com
Sun May 8 14:39:39 EDT 2011


Will,
 
    GM lied.  The Volt is a hybrid.
 
    I think you are right, battery technology needs a breakthrough.  
 
Ken

--- On Sun, 5/8/11, Will Kooiman <wkooiman at earthlink.net> wrote:


From: Will Kooiman <wkooiman at earthlink.net>
Subject: Re: [DeTomaso] NPC fascinating "financial planner" view of the SUVvs. gas-efficient car argument
To: "'Ken Green'" <kenn_green at yahoo.com>, "'Pantera List Serve'" <detomaso at realbig.com>, "'Christopher Kimball'" <chrisvkimball at msn.com>
Date: Sunday, May 8, 2011, 11:22 AM


Agreed.

I like some of the hybrids.  They're interesting.  It was pretty cool when I
averaged 80.3 MPG over 350 miles.  The total tank average was 77.5 MPG.  I
refueled at 770 miles with a 10.5 gallon tank.

I don't think the battery technology is there yet, though, for a 100%
electric.  The batteries need to last longer.

I'm appalled at the price tag of the Volt too.  As mentioned, our Insight
was $20K.  Why does a 100% electric cost over $40K?  That's pretty
ridiculous.

-----Original Message-----
From: detomaso-bounces at realbig.com [mailto:detomaso-bounces at realbig.com] On
Behalf Of Ken Green
Sent: Sunday, May 08, 2011 1:15 PM
To: Pantera List Serve; Christopher Kimball
Subject: Re: [DeTomaso] NPC fascinating "financial planner" view of the
SUVvs. gas-efficient car argument

What bothers me the most are the federal subsidies for bad technology.  The
Volt is not a viable product at it's retail price, so the the feds throw
$7,500 at it so people will buy it.  That's the same as giving more of our
tax dollars to GM so they can sell a bad product.  
 
http://www.washingtonpost.com/wp-dyn/content/article/2010/10/29/AR2010102905
959.html?sid=ST2010111205135
 
Obama is probably happy about $5 a gallon gas because it gives him more
excuses to push electic cars that few want, and fewer can afford at their
real cost, based on present technology.
 
Ken

--- On Sat, 5/7/11, Christopher Kimball <chrisvkimball at msn.com> wrote:


From: Christopher Kimball <chrisvkimball at msn.com>
Subject: [DeTomaso] NPC fascinating "financial planner" view of the SUV vs.
gas-efficient car argument
To: "Pantera List Serve" <detomaso at realbig.com>
Date: Saturday, May 7, 2011, 11:23 PM



Does Trading in an SUV for a Gas-Efficient Car
Make Economic Sense?         Whatever your politics are, it seems clear that
the President has no short-term energy policy when it comes to dealing with
the prices of oil.         I decided to write this short and simple
newsletter when I heard part of a speech by President Obama last week about
gas prices. Amazingly, the President was making light of higher gas prices. 
His speech was fairly typical.  He looked down his nose at Americans who
like gas-guzzling cars; and, as usual, he had little sympathy for those who
drive them.         His idea for those who drive SUVs was simple-get rid of
them and buy fuel-efficient cars like the Volt.   This shows how truly out
of touch the President is and that he lives in some sort of green energy
fantasy land.          I imagine some financial planners have been asked and
surely will be asked the magic question: Does it make financial sense to get
rid of a less efficient SUV
and buy a new more gas-efficient car?         Let's look at the math using a
$42,000 Chevy Volt. I'll assume NO financing costs and that the car payments
are amortized over five years. The annual payment would be $8,400.     
   The average driver puts 15,000 miles on a car.  For this newsletter, I'll
give numbers assuming gas is $4, $5, and $6 a gallon.          The Volt
averages 35 city and 40 on the highway (from Kelly Blue Book), and so I'll
assume it will average 37.5 MPG for this newsletter.         I'll compare
the Volt to the most popular SUV which is the Ford Explorer.  I'll assume
the example driver has a 2005 vehicle (with no payments) that averages 15
miles per gallon.         The following are the average cost of gas each
year and the annual savings using the Volt.For ExplorerAnnualChevy
VoltAnnualAnnualGallonsGas CostGallonsGas

CostSavings1,000$4,000400$1,600$2,4001,000$5,000400$2,000$3,0001,000$6,00040
0$2,400$3,600         Hmm. That doesn't sound like a lot of savings, does
it? Not to mention that the SUV is a much larger and more useful car (and
safer).         The KBB trade-in value for a 2005 Explorer in "good"
condition with average miles is $6,500. Therefore, after the trade-in amount
of $6,500 is applied, the out-of-pocket cost every year to pay for the Volt
is $7,100 each year for five years.         The Math-let's consider the math
following the five years after buying the Volt. Because the comparison is to
keeping the used Explorer, I'll assume an additional $1,500 a year in
fix-it-up costs to keep it in good working condition.         Without
factoring in savings on fuel, if it takes five years to pay off the debt on
the Volt, the additional costs this buyer would have to pay each year
because of the decision to buy the Volt would
be  $7,100-$1,500 = $5,600 a year.          If we now factor in the fuel
savings by buying a more fuel-efficient car, the net LOSS when buying the
Volt is:         at $4 a gallon = $3,200 a year or $16,000 total over five
years.
         at $5 a gallon = $2,600 a year or $13,000 total over five years.
         at $6 a gallon = $2,000 a year or $10,000 total over five years.   
     Tax credit, home charging station, and annual electric bill-there is a
one-time tax credit of $7,500 which needs to be factored into the savings.
There is also a need to factor in the cost to install a charging station at
home ($2,000 with cords), and the annual electric bill to recharge the car
($450). When you factor in the credit and the additional expenses, you need
to subtract $3,250 from the above totals.         If you have clients who
are interested in the here and now and having the maximum amount of money in
their pockets over the next five years, it certainly won't be as the
President advocates which is by buying a new gas-efficient car.     
   Also, to be fair, in five years, the 2005 Explorer is probably going to
need to be replaced (even though I've budgeted enough money to keep it in
good working condition). The fuel-efficient
car will also be older but assume you could keep the gas-efficient car for
another five years and that you'd have to buy another SUV to replace the
2005.         Even if gas goes to $6 a gallon, you'd have saved enough from
2011-2016 to buy a 2011 used Explorer with the savings (meaning you can keep
your big gas hog, drive a safer car, and still save money).     
   Conclusion         Our job as advisors is not to look out for the good of
the country or for the good of the world.  We do that when we vote and elect
officials.  Our job as advisors is to give the best advice possible to our
clients.         When your clients ask you if they should get rid of the SUV
they love so much (spacious/luxurious and safe) to buy a
President-recommended Volt or other fuel-efficient vehicle, give them my
newsletter and tell them what they want to hear, e.g., that they should keep
the gas hog, enjoy life, and still save more money than if
they had bought the car the President and other green crusaders are trying
to guilt them into buying.  Roccy DeFrancesco, J.D., CWPPT, CAPPT, or CMPT
Founder, The Wealth Preservation Institute
3260 S. Lakeshore Dr.
St. Joseph, MI 49085
269-216-9978                           
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