Charging that Electric Car Could Cost More Than a Tank of Gas

It made a big splash when Walgreens announced last month it was installing electric car charging stations at 800 stores nationwide. But the headlines left out one important detail -- this is a for-profit charging business, and one that could get very expensive for drivers. In fact, they could be paying more to charge their new Volt than if they filled up a Ford Taurus.

Doing the Math

EV vehicles are pricey--costing $32,000 and up for a compact battery car that would sell for half that in gas form. Blame their expensive battery packs. But the assumption has always been that owners will pay down the extra cost over time through cheaper refueling -- everybody cited two to five cents for an electric mile, versus maybe 12 to 15 cents for gas.

But the prices cited by Walgreens charging partners, which are putting in the company chargers at their own expense, are much higher than that. Tim Mason, the president and co-founder of 350Green, told me he expects to charge drive-up consumers up to $4 for a 90-minute charging session in a Walgreens parking lot. Michael Farkas, who heads the Car Charging Group and is also a Walgreens partner, agrees with the $3 to $4 session pricing. "It's somewhere around there," he told me.

Here's the problem: You can't fully charge an EV from a 240-volt charger in 90 minutes. So, consumers who own cars like the Nissan Leaf or Chevrolet Volt will be buying only about 20 miles of range, and that means 20-cent miles -- likely more expensive than the gasoline equivalent.
A Flawed Pricing Model

The basic idea of charging by the hour doesn't make much sense, since electric cars charge at different rates. A Tesla Roadster, for instance, has a huge 16.8 kilowatt charger, and a 2011 Nissan Leaf just 3.3 kilowatts (it goes to 6.6 in 2013). The Tesla takes in far more electricity over the course of the 90 minutes than the Leaf does. The way to envision it is to imagine paying for gas by the minute, but with cars that pump at different flow rates.

The charging-by-the-hour model is necessary under current rules because, due to outdated regulations in most states, only utilities themselves can charge for electricity by the kilowatt-hour. California has exempted EVs from those rules, but other states have yet to act.

Farkas agrees that the per-hour pricing model is deeply flawed. His analogy:

When you buy a can of Coke from a machine, you accept that it costs more than the same can from a supermarket. But at least you know you're getting a can of Coke, with a finite amount of liquid in it. Here, people are buying different amounts of electricity for their money. Charging by the kilowatt hour is the fair way to do it.

Mason says that 350Green also wants to use a monthly subscription plan, charging perhaps $70 to $80 per month. The subscription model would soon prove more cost-effective than paying for public charging a la carte, and it would also probably lead to considerable use of public chargers like those at Walgreens. Customers on subscription plans have every reason not only to maximize use of their EVs, but also to plug in and top off their cars during quick shopping stops.

Even better, the subscription model would be much cheaper than filling up with gas. People who commute 50 miles daily spend, very conservatively, $40 to $50 a week on gas. The subscription gives you unlimited charging opportunities, at home, at the big-box store, at work, and for less than $20 per week. Perversely, subscriptions also takes away the financial incentive to charge at night when demand is low, so some kind of mechanism would need to be in place to ensure that happens.

Still, aside from NRG Energy, the subscription plans are embryonic. And many drive-in customers at Walgreens and elsewhere will swipe their credit cards and pay $4 for 90 minutes. They're going to wonder where the savings went, but that's the status quo in the charging world.

Related:

• A First Shot at EV Charging: 50 Cents per Kilowatt Hour
• 3 Reasons Not to Buy an Electric Car Just Yet