Chevrolet Volt: What Will the Car of the Year Really Cost You?

General Motors had a great 2010, with rising sales and a wildly successful stock offering. Now it has started 2011 with its Chevrolet Volt winning North American Car of the Year at the auto show in Detroit. Clearly the Volt is great for GM's finances, but let's talk about your finances for a moment. What will a Volt really cost you to own and operate? More to the point: is it worth it?

The award seems to validate GM's decision not to make the Volt a pure electric car like its competitor the Nissan Leaf. Instead, the Volt has a backup gasoline-powered generator that kicks in when it runs out of pure battery power after 40 miles or so and extends its range to around 300 miles. That makes the Volt a potential family car and not just a commuter vehicle.

However you might use it, here is a look at the key money issues:

What will it cost you? The Volt, with a list price of $41,000, qualifies for the full $7,500 federal tax credit based on the size of its battery. And you may be able to get additional state tax credits depending on where you live. The better alternative however, is to opt for the three-year $350-a-month lease with $2,500 down at signing. That payment wraps in the federal credit. That's the same lease payment as for the Nissan Leaf - even though the Leaf's list price is $8,220 less than Volt's. Leasing is good for another reason: Because leasing spares you from having to sell the car eventually, it hedges your bets against potential repair problems with a brand-new technology.

What about charging? Installing a special 220-volt home charger will average about $2,000. But you want to do it. Otherwise, a full charge on a regular household outlet would take eight hours for the Volt and 16 hours for the Leaf with a bigger battery pack. The special charger will cut those times in half.

Do I save on operating costs? Comparisons to gasoline cars get complicated. The EPA has developed an electric-car rating it calls miles-per-gallon equivalent. The Volt is rated at 93 mpg equivalent when on battery power alone, 37 mpg equivalent when the gas engine is running and about 60 mpg equivalent overall. The Nissan Leaf, which has only battery power, is rated at 99 mpg equivalent. The actual mileage can vary greatly with driving habits. A Volt owner who drove only on a short daily commute might avoid using any gasoline for months.

In most areas, charging your electric car will cost less than filling up with gas. To figure your recharging costs, look for another EPA number on the window sticker: kilowatt hours per 100 miles. That is how much power you will need to recharge after 100 miles of driving on battery power. But rates can vary greatly. In Hawaii, that charge would cost 36 cents per kilowatt hour, threatening the advantage over high-mileage gasoline cars. But in Washington state, the average rate is eight cents per kilowatt hour. Check on your local rates, especially for the cheapest off-peak charging at night.

Am I helping the environment? For some buyers, green principles are as important as the cost. Electric cars certainly help cut out some smog-forming pollutants like nitrogen oxide. But whether your electric really cuts global-warming greenhouse gases depends on how your power is generated locally. (See Electric Cars: How Green are They Really? )

For now, the Volt is selling in limited areas: California, Connecticut, Michigan, New Jersey, New York and Texas. Initial demand will be key in GM's decision whether to expand the car's territory. If the company decides to, volume will probably bring down the cost. Only then will we really be able to tell whether the Volt and its competitors are truly affordable.

Photo courtesy of General Motors

More from MoneyWatch: