Lease or Buy?

The recent financial crisis may have reduced the availability of great new-car leasing programs, but some are still available. This weekend’s newspaper, for example, includes an advertisement for the hot Mazda3 5-door (with automatic transmission) for a lease payment of $219 per month for three years. This sounds like a very affordable payment for a new car.

I believe it’s fair to say, however, that there is still quite a bit of mystery around auto leasing. Many consumers are simply scared of such programs and I think a lot of this has to do with a lack of knowledge about how these programs work. Unlike traditional car loans, the detailed financial terms of an auto lease don’t have to be (and as a result often are not) disclosed. In order to decide whether a lease is good for you or not, let’s review some of the basics.
What is a lease?
In simple terms, when you lease a car you are paying to use the car for a certain amount of time rather than paying for the entire purchase of the vehicle. In the example above, Mazda is offering the car for three years for a payment of $219/month (plus a down-payment of $2,814). This means that aside from taxes and other state fees, the lessee of this car will pay a total of $10,698 to drive the car for 36 months and 36,000 miles.

The terms of the lease are determined by a few things. First is the price of the car. This is called the “capitalized cost” in leases versus “purchase price” in regular financing. In the case of the Mazda, the base MSRP of a Mazda3 5-door automatic is $19,945. Note, however, that the capitalized cost for your lease doesn’t need to be MSRP. While many buyers are lured by the advertised payment and don’t ask many questions, if you negotiate the purchase price of the car, trade-in a vehicle on which you have equity, or take advantage of other discounts, the capitalized cost can go down… and thus your payments will as well. Of course, payments will also rise if you choose a car with more options than the one used to advertise the program or trade in a car on which you owe more than it is worth.
The second item is the amount the car is worth (or more accurately, projected to be worth) at the end of the lease term which is called the “residual value.” The small print on this Mazda lease offer indicates that the residual value will be $11,169 or roughly 55% of the MSRP of this car new. This residual value should not change because you negotiated down the capitalized cost… it’s based on a percentage of the MSRP of the car you chose.
The third component is financing cost. Unlike a regular loan in which we are all familiar with the idea of the annual percentage rate (APR) the finance cost on a lease doesn’t have to be disclosed by law. To further complicate matters, even if you do ask you will be quoted a “money factor” rather than a straight APR. This will look like some bizarre number taken down to eight to ten decimal places (e.g. 0.00001625). If you want a full description of how this cost is calculated, check out this site: http://www.leaseguide.com/lease08.htm. If you aren’t as interested, simply know that you can multiply the money factor by 2,400 and you will have the approximate APR (the number above works out to 3.9%, for example). Also note that while you are making payments on the portion of the car you use you will be paying interest on the entire amount… after all, you are tying up the bank’s money for the full capitalized value for three years.
Your payment is then the value of the car lost during the time you drive it (capitalized cost – residual value) plus the financing fees.

Are there advantages to leasing?
In most states, there is an additional savings for lessees versus buyers - taxes. If you finance the car normally you will need to pay sales tax on the full value of the car up front. So buying a $20,000 car in a state with 6% sales tax will require you to add $1,200 to your cost up front (or included in your loan). On a lease one typically pays this sales tax only on the monthly payment… or in our example 6% of $219 or roughly $13/month or $473 over the term of the lease. If you don’t plan to keep the car for more than three years anyway, the additional taxes are purely a loss and that loss is larger if you live in a state like California with 9.75% sales tax.

Perhaps the biggest advantage to leasing is a lower monthly payment. For this example I am comparing this lease program to financing offered on the same car by Mazda at 3.9% over 5 years. I’m assuming that if you qualify for the lease you will also qualify for the best available finance rate. I’m also assuming, for calculations sake that sales tax is 6% in your state and I am ignoring registration and title fees which would need to be paid regardless of your purchase method. I’m keeping the cash down payment (called the “capitalized cost reduction” in leasing) equal between the two methods.




You can see that the monthly payment is about $79 higher for a traditional purchase (34% higher than the lease) even with the great financing APR.

Is leasing a good idea for me?
Whether leasing is a good idea for you depends on a number of factors.
First, do you plan to get a new car every few years anyway? If so, leasing may save you money in taxes and reduces your monthly payment. If you live in a state with higher taxes than my example the advantage is even greater. There is definitely something positive to be said for the idea of always driving a car with a factory warranty.

Can you live with the mileage limitations of the lease? The Mazda lease is limited to 36,000 miles during the lease period (12k miles per year is considered average for an American driver, by the way). Be sure to note the mileage allowance and the fee you must pay if you exceed this amount. In the old days, the overage fees could be exorbitant (25 to 50 cents per mile, for example). Mazda’s lease program charges 15 cents per mile over, so an extra 1,000 miles/year for three years would cost you $450… pretty fair. However, if you commute 100 miles each day or plan to take numerous cross-country road trips you would be advised to think twice about leasing or ask about a lease with more miles included… this will usually lower the residual value.

Are you comfortable knowing that you will need to make another car buying decision again in two or three years? When your lease is up you will need to turn the car back in and buy another or decide whether you want to buy the car you just leased. Typically you can purchase the car for the agreed-upon residual value. If you find that the residual value is lower than the cost of a comparable car on the used-car market this might be a good deal for you. If it’s higher, you can just turn it back in and let the leasing company take the hit. In fact, it’s this latter example which is partly responsible for the decline in available leasing programs. The banks and captive finance companies (like GMAC and Ford Motor Credit) used lease programs to move a lot of iron over the past decade. The recent sudden decline in the resale value of SUVs, as one example, means that they were left with a lot of lease returns worth considerably less than they planned for. Of course, if you were the lessee of a Chevy Tahoe this would seem like a blessing to you… the bank was left holding the risk, you met your obligations by making the monthly payments on the lease and now just walk away from the vehicle.

How important are monthly payments to your budget? In our example above for a moderately priced car with a very low 60-month finance rate the payments are lower for leasing... probably enough to cover the average monthly cable and telephone bill. Alternatively, some people choose to lease so they can drive a nicer car than they could otherwise afford for the same monthly payment.

In terms of long-term cost, however, leasing isn’t necessarily the most cost-effective choice. Assuming that you keep the car for a long time and make your payments for five years you will actually own the car. If you leased you don’t own a thing. No matter what the used Mazda will be worth in 5 years it’s safe to say that it won’t be zero. Cars do eventually wear out and get recycled, but even then there is some value to the raw materials! For comparison sake, the KBB private party value for a 2003 Mazda Protege5 (which was replaced by the Mazda3 Hatchback in Mazda’s lineup) with 60,000 miles is roughly $8,500. Assuming this Mazda 3 is worth around the same amount (though it does cost more new than the Protege5 did in its day) the cost to finance and drive the same car for 5 years then sell is only $1,800 higher than leasing it for only 3.

The outright least expensive way to own a car is to buy it and keep it until repair costs start to outweigh its value. Or, as many people prefer, to buy a car when it is already a couple of years old (perhaps being sold by the finance company after someone’s lease has ended) and it has already experienced its largest depreciation hit. However, many of us have limited budgets and lack the desire to deal with the inevitable inconveniences that come with older cars. If this describes you, leasing may provide a convenient and cost effect option now that you understand how they work. `

My Auto Bailout Rant

I have terribly mixed feelings about the condition of the domestic auto industry.

Let's be honest, GM has been burning shareholder value and cash for decades. Even during the few good years they weren't nearly as profitable as they should have been. Internally, the company was a bureaucratic mess and career growth came to those who managed their careers better than the company's assets (check out the list of those at the top today). People with innovative ideas who were willing to stick their necks out found dead-end career paths and better jobs elsewhere.

On the other hand, the managers for the past 20 years were handed a whole host of issues which they were unable or perhaps unwilling to fix (legacy costs, health care, etc. which have been talked about ad nauseum).

When it comes to Washington, I'm also confused by politicians who suddenly find a pent-up desire to watch where our tax dollars are being spent after years of excess and no-strings cash handouts to banks. Similarly, I get a kick out of newly green-minded small-car proponents who have heretofore never proposed any sort of comprehensive energy policy. It's easy to point fingers at "Detroit" for making big SUVs but easy to forget that our federal government has had a policy of keeping oil cheap at the pump (by obfuscating other costs that we all bear). The DOT also passed confused fuel-economy regulations that helped encourage heavier vehicles by excluding trucks from CAFE measurements... and in some cases even rewarded consumers with tax credits for buying the heaviest and thirstiest of their kind.

As for their products, as a car enthusiast who came of driving age in the 1980s and who has never had a desire for an SUV I don't find anything to salivate over from GM, Ford, and certainly not Chrysler. Even niches they should dominate like minivans and family cars have been ceded through decades of complacency and aiming for the middle-ground (US Ford Focus, anyone?). Even new bright spots like the Malibu/Aura are hampered by GM's half-hearted efforts on the first year of 4-cylinder models (lacked the more fuel-efficient 6-speed automatic) and lack of manual transmissions (I know I'm in a small minority, but prefer a stick... part of my upbringing during the heyday of hot-hatches and compact cars). Same goes for the Pontiac G8. I recently spent time working for a charity at a car show and spent a lot of time checking out the various displays. The G8 really stood out as an attractive and interesting car for a very fair price. However, no manual transmission? Pontiac? And I don't need a V8.

Also, while quality appears high the list prices are also. It's simply impossible to justify buying a domestic car without serious discounts due to a lack of perceived long-term value (primarily due to historically terrible depreciation) and "initial quality surveys" aside, there is definitely a feeling that they just won't last as long... justified or not. For example, I spoke with a number of GM dealers who bemoaned sub-standard brakes and oppressive warranty requirements leading to customer satisfaction problems and increased cost (requiring multiple repairs attempts for known problems, for example).

So, yes, while I agree with the idea that we need to maintain a domestic manufacturing capability, I also know that many of the current problems have been around for a long time (particularly at GM about which I have personal experience). I also wonder about bailing out Chrysler when I don't believe Cerberus was ever planning to keep them operating in the first place. Ford may be in better financial shape today but they seriously don't have a single compelling car in their whole U.S. lineup (sans perhaps the Mustang but one niche product can't support the whole company).

I guess my final thought (and I apologize for the length of my rant) is that we should support our domestic manufacturers with loans if only because it's fair. We've given billions to the bankers but they still aren't loaning money. Either these loans need to come from our tax dollars or from banks as a condition of the next round of TARP. Additionally, a failure of GM will likely bring down the rest of the industry and I think it's simply a more efficient use of our tax dollars to keep them running than it is to absorb the cost and further destruction of our economy by the addition of hundreds of thousands of additional unemployed citizens. I also think about the supplier base and dealers, many of whom do make a profit and employ many people... perhaps GM and Ford's losses have simply been a subsidy for them?

CNG Cars – Once again, it ain’t easy being green

This recent listing on Craigslist for a used Honda Civic GX, a rare model that only runs on Compressed Natural Gas (CNG), sparked Miss Motor Mouth to ask me for some more information. What’s with CNG cars? Are they clean? What are the advantages or disadvantages? Where does one purchase fuel for them?

Most of us are familiar with CNG vehicles primarily in mass-transit use, such as shuttle buses at airports or city buses. The low emissions of CNG vehicles (think about it, this is the same stuff many of us cook with inside our homes) allows them to meet the tough PZEV emissions levels make them good choices for mass-transit operations concerned with their fleet emissions. Fuel cost is also low… reportedly about half the cost of gasoline per mile. Natural gas is also plentiful here in the U.S. so CNG use potentially reduces reliance on imported fuel. There are definitely some exciting upsides to CNG. Fleet use also eliminates many of the challenges associated with the fuel that affects individual drivers.

Those CNG buses are often easily identifiable because of the large auxiliary gas tanks on their roofs. This is needed because CNG has a substantial disadvantage relative to gasoline in terms of energy density. It takes over 126 cubic feet of natural gas to provide the same energy equivalent (measured in BTUs) as one gallon of gasoline. So, while the fuel costs a lot less you simply cannot carry as much of it at a time so range is limited in a regular-sized vehicle. In the case of the new 2009 Civic GX, according to Honda one can carry the energy equivalent of 8 gallons of gasoline (compared to 13.2 gallons for a normal Civic sedan) but this is with an enlarged high-compression tank that reduces cargo capacity to 6 cubic feet (half of the regular Civic sedan’s 12 cu. Ft. trunk capacity). With a combined EPA fuel efficiency of 26 mpg, this provides a driving range of a bit over 200 miles.

Buses equipped with auxiliary tanks can make up for much of the range deficiency. Fleets also provide their own refueling stations since they can utilize a central location for maintenance every night. However, public refueling for CNG cars is limited. According to the U.S. Department of Energy, there are only 109 public CNG refueling stations in the state of California… the state with the most developed infrastructure. The state of New York offers 28 such stations, for comparison. To make matters worse, these aren’t exactly gas stations on convenient street corners or right off the freeway exit. They tend to be available because they also serve those aforementioned fleets, so drivers need to visit airports, municipal maintenance lots, or the local energy company’s headquarters.

Like electric cars, however, there is an alternative… home fueling. If you have gas coming into your home the cleverly-named Phill home CNG fueling station can be installed, allowing one to use this existing pipeline. However, again like electric cars this isn’t a fast process. Phill’s manufacturer says it takes about 4 hours to refill the gas used for about 50 miles of driving at an average of 30 mpg. That’s 2.4 hours per gallon equivalent, or in other words, that Honda GX will take 19.2 hours to fill from empty. This makes recharging a Tesla look like a NASCAR pit stop.

Phill also costs about $4,000 not including between $1,500 and $2,000 for installation… quickly wiping out the savings realized from the cheaper fuel and some available tax credits. Then again, in California you do get to drive in the HOV lane.

Minivan as a Corporate Symbol

I recently helped a friend search for a new vehicle to carry his growing family of soon-to-be three kids… all in baby seats or boosters at the same time. We concluded (and he later purchased one) that a new Honda minivan met his needs the best. A van’s balance of roominess, ease of entry and exit, cargo loading ease, comfort, and relative fuel efficiency won the comparison.

This week, while traveling on business I found myself behind the wheel of a Chevrolet Uplander minivan. The brain trust at Chevrolet, however, seem somewhat embarrassed to just call it like it is and suggest that this should be called a “crossover sport van.” Forget that the only thing “crossover” about this vehicle compared to their previous effort is an added on ungainly snout and a slightly raised ride height. And the only thing even remotely sporty about it… well I give up.

My thoughts throughout my two-day drive kept coming back to the same thing: that General Motors wasn’t even trying hard when they designed this car. Were the people behind this project just so bummed at being reduced to working on a mere minivan rather than a new Hummer SUX6000 that they just phoned in the details? Was an assignment to the minivan design team the automotive equivalent of graduating from the police academy only to get assigned to traffic control at the local airport?

I always try to look at the positive side of every vehicle and this does have a few decent details. The dashboard materials appear to be high quality and are sufficiently elegant in appearance, the engine and road noise are muffled, and even though it matches nothing else on the car, the upper door panels have real (!) stitching on the faux leather that actually looks nicely finished.

But then you turn to the details that make other minivans so endearing to millions of American families and you just have to wonder what happened:

Fuel Economy… I averaged only about 15 mpg during my brief time with the car… vs. EPA ratings of 16/23 city/hwy which themselves are nearly identical to the ratings for the larger and heavier 2009 Traverse SUV that claims 24 mpg on the highway. What’s the point of driving an “unhip” minivan if you can’t even rationalize that you are saving money on gas?

Comfort… the front seats were fine, if nothing to write home a about, and the standard cloth upholstery was pleasant and looks durable. However, the middle seats were tiny… seemingly undersized for the car. I suppose that this lets them claim more legroom that actually exists. The rearmost seats were larger… a split bench, but again, compared to the multi-adjustable units in vans from competitors weren’t even a decent effort. The middle row seats were crammed all the way over to the sides near the doors which left them feeling cramped but did allow, I suppose, for a larger space in the middle to walk-through to the rearmost seats.

Flexibility… those rearmost seats again, unlike nearly every other van on the market, neither fold flat into the floor when not needed nor do any other neat tricks like turn into a rear facing bench. To utilize the full cargo capacity one needs to remove the heavy seats and find a place to leave them for the duration. The ONLY storage space for storing odds and ends like baby wipes, cell phones, and other detritus that usually fill up the family truckster was a Pep-Boys style bungee net strung between the front seats. There was no convenient enclosed storage areas for anything. The only place I found to rest my cell phone was inside the cupholder that extended from the dashboard. Seriously? You’ve had 25 years to try to copy features from nearly every family hauler on the market and you missed the most basic needs of families with small children? I won’t even go into the fact that nearly every other van out there also has second-row seats that slide, fold, retract, and will probably milk a cow.

I can’t imagine anyone in the market for a minivan test driving models from multiple manufacturers and deciding to buy an Uplander

So I end with the thought that GM’s half-hearted effort, if you can even call it that, at competing in this segment is a symbol of why the company is struggling so much. In the hypercompetitive vehicle business if you don’t even enter the game aiming for best-in-class you might as well just give up and go home.

Fortunately for GM, I believe that much has changed at the company and newer vehicles like the new Traverse, the Malibu, and some others represent more competitive offerings. I just hope that the attitudes that permitted a car like the Uplander from seeing the light of a dealer showroom have been exorcised as well.

Buying a car for commuting?

So here is a fairly common situation: You have a truck or SUV and suddenly find yourself deeply affected by the rise in gas prices… but there is little you can do. You simply may need the utility offered by your truck (you have 4 kids to take to soccer games on weekends, you tow a trailer, you’re on a first-name basis with the staff at the local Home Depot, etc.). You also have to drive to your regular job every day, which is usually done alone or with one carpool partner, but you only have the one vehicle.

You may even have been tempted enough by fuel prices to try to sell or trade-in your truck for something more efficient for your commute. But, you find that nobody is buying large trucks and the value has dropped to the point that you owe much more than it’s worth.

What about keeping your truck for the times you need it and buying something else… a dedicated car just for your commute? After all, you don’t need that big utility all of the time, do you?

I’m not talking about going out and buying a new car, I’m talking about taking advantage of the improved quality and reliability of the automotive fleet over the past decade and buying a used car. I aim to show that you can find a good used for less than the first-year of depreciation on a new Camry.

I decided to take a look online to find some recent sales which fit this criteria: A purchase price of less than $7,000 (approximately one fourth of the average purchase price of a new car), less than 100,000 miles (still a mental barrier for me), model year 2000 or newer (I like driving classic cars, but in this case let’s be pragmatic and look for a car with working air conditioning, a CD player, and modern safety equipment). I’m using eBay Motors here because it’s one of the only places to see what cars have actually sold for as opposed to dealer asking prices. As you can see, appliance cars are out there if you keep an open mind. Some of them are even fun to drive.

Some recent finds:

A 2002 Saturn Vue with 67k miles for $6,300: http://cgi.ebay.com/ebaymotors/Cars-Trucks___02-VUE-4-CLY-GAS-SAVER-5-SPD-BEAUTY-NO-RESERVE_W0QQitemZ290247241823QQddnZCarsQ20Q26Q20TrucksQQddiZ2282QQcmdZViewItem?hash=item290247241823&_trkparms=39%3A1|65%3A13&_trksid=p4506.c0.m245.l1318
Yeah, it’s an SUV, but it foregoes all-wheel drive and a thirsty V6 engine (who needs a lot of speed when you’re stuck in rush-hour traffic anyway?). The manual transmission gives you a bit more oomph and it’s certainly large enough for kid hauling duty and occasional stops at the big-box store on the way home from work.

Red and sporty 2002 Saturn SC2 with 50k miles:

http://cgi.ebay.com/ebaymotors/Cars-Trucks___NO-RESERVE-2-OWNER-FL-CAR-POWER-ROOF-CLEAN-3rd-DOOR_W0QQitemZ190236857849QQddnZCarsQ20Q26Q20TrucksQQddiZ2282QQcmdZViewItem?hash=item190236857849&_trkparms=39%3A1|65%3A13&_trksid=p4506.c0.m245.l1318

Leather, automatic, sunroof, plastic fantastic Saturn sports coupe for $5,100.

Ah, you see a trend here… cars that lack the premium brand names but still offer reliable service are great buys used. You’re looking for an appliance, here, not something to impress your neighbors like a shiny new BMW (or a Honda, for that matter). Frankly, late model cars are almost all good and, in fact, better than even the best cars of 20 years ago. They are reliable, inexpensive to operate, and if maintained properly, if they do break it’s most often something minor like a window motor or radio.

Here are some more thoughts:

Hyundai XG300… never heard of it? Well, most people haven’t. It was Hyundai’s first big car and offered a ton of features. Here’s one loaded with features, less than 75k miles, and it was sold by a dealer for less than $5,800. http://cgi.ebay.com/ebaymotors/Cars-Trucks___Beautiful-in-Black-Great-Cond-full-Warranty-6MO-7500Mi_W0QQitemZ330255279474QQddnZCarsQ20Q26Q20TrucksQQddiZ2282QQcmdZViewItem?hash=item330255279474&_trkparms=39%3A1|65%3A13&_trksid=p4506.c0.m245.l1308

Ford Focus… one of the most popular cars in Europe never really got the respect here in the States that it deserved, despite positive reviews from journalists. Here’s a loaded sedan, complete with leather and low miles for $4,500! Personally, I like the looks of the old Focuses (Foci?), especially the hatchbacks, better than the new model. Yeah, the new integrated iPod stuff is great, but based on my Windows Vista experience I really don’t want anything from Microsoft running my car.

http://cgi.ebay.com/ebaymotors/Cars-Trucks___2001-FORD-FOCUS-ZTS-NICE-FAMILY-CAR-ONLY-4-CYLINDERS_W0QQitemZ120281569548QQddnZCarsQ20Q26Q20TrucksQQddiZ2282QQcmdZViewItem?hash=item120281569548&_trkparms=39%3A1|65%3A-1&_trksid=p4506.c0.m245.l1318

If you like the Focus, for a few thousand more but still under my price cap, is this rare Focus SVT… the factory hot rod sure to make your commute a bit more lively:

http://cgi.ebay.com/ebaymotors/Cars-Trucks___2003-Focus-SVT-6-Speed-Exhaust-Intake-6CD-2Tone-Leather_W0QQitemZ320275164273QQddnZCarsQ20Q26Q20TrucksQQddiZ2282QQcmdZViewItem?hash=item320275164273&_trkparms=39%3A1|65%3A-1&_trksid=p4506.c0.m245.l1308

Wow, $4,500 for a car with less than 30,000 miles on it. Kia Rio, just tint the windows and think how cheaply you’re driving!

http://cgi.ebay.com/ebaymotors/Cars-Trucks___2003-Kia-Rio-LOW-Miles-29K-Almost-40MPGs-WOW-RARE_W0QQitemZ270254863881QQddnZCarsQ20Q26Q20TrucksQQddiZ2282QQcmdZViewItem?hash=item270254863881&_trkparms=39%3A1|65%3A-1&_trksid=p4506.c0.m245.l1318

A Passat Wagon with the lively and efficient 1.8T motor with 43k miles for $6,200… Hmmm, stop me now.

http://cgi.ebay.com/ebaymotors/Cars-Trucks___2001-PASSAT-WAGON-AUTO-1-8T-SUNROOF-ASR-42K_W0QQitemZ310069327649QQddnZCarsQ20Q26Q20TrucksQQddiZ2282QQcmdZViewItem?hash=item310069327649&_trkparms=39%3A1|65%3A-1&_trksid=p4506.c0.m245.l1318

My point here is that there are a variety of great fuel-efficient used cars out there that can be had for less than ¼ the price of a new car. You’ll save on depreciation, save on gas, have a much lower insurance bill than you would on a new car (and might even realize a multi-car discount on the SUV you already have). Instead of taking a $6,000 charge to get out of your SUV, keep it and find a used commuter car instead. Happy shopping.

Staying Cool and Saving Gas: A/C or Open Windows?

With American drivers suddenly looking for every way to save on the cost of driving, I thought I would revisit an old question, “which is more efficient, air conditioning or open windows?”

I first ran into this question while in college at the University of Michigan. I had a roommate who had heard that the refrigerant used in air conditioning systems was bad for the environment so he went the whole hot and humid summer without turning on his car’s air conditioner.

Of course, he didn’t realize that Freon (this was before it was replaced with R134a as a refrigerant in cars) isn’t actually released into the atmosphere when you run your A/C. Air conditioning runs in a closed loop and the environmental concern about the chemicals comes when some is accidentally released during servicing or if the system develops leaks… ironically most likely to occur after long periods of disuse. Running the A/C system distributes lubricating oils to the seals in the system so an unused air conditioner could develop leaks.

Of course, when faced with this information he changed the topic to say that it was more efficient to drive with the windows open because air conditioning makes the engine work harder. Ah, perhaps he had a point? Frankly, I didn’t have an answer.

Years later, I was working on the GM EV1 (electric car) program. If you didn’t know, this was the most aerodynamic production vehicle ever offered for sale with a coefficient of drag of 0.19. Since the car carried so little energy on board (the 1,200 lbs of lead-acid batteries provided the energy capacity of about ½ gallon of gasoline… providing about 60 miles of driving range) every step was taken to minimize the use of that energy. Besides weight savings to conserve energy when accelerating, air drag is the biggest, well, drag when driving at speed. As an example, I was once told that they didn’t use a mast-style radio antenna because it would have cost nearly a mile of range.

Anyway, we often had to drive the cars around Los Angeles and Phoenix for various events and the question arose whether we were better off using the A/C or opening the windows for maximizing range. There was no hesitation from the engineers: They said that we should make ourselves comfortable and use the A/C with closed windows when driving over 55 mph. I wish I had this information at hand when I was sweating in my roommate’s car on a 90 degree Michigan day!

Why is this the case? Well, while running the A/C does put a drag on your efficiency, running with the windows down does as well. It isn’t that simple, though. The aerodynamic drag varies with your speed. Air drag increases exponentially as speed increases, so driving 75 mph requires much more energy than driving 55 (sorry, Sammy Hagar).

At freeway speeds, this drag becomes greater than the cost of running the air conditioning compressor.

While perusing the Web, I came across a study by the Society of Automotive Engineers (http://www.sae.org/events/aars/presentations/2004-hill.pdf) that looked at this exact question. They found that at high temperatures the cost of running the A/C was between 5% and 10%. However, the drag caused by running with the windows down at 68 mph (110 Km/h) varied from 8% to 20%.

The lower number was for SUVs… basically, cars with bad aerodynamics in the first place suffer less from the effects of opening the windows. The 20% number was for a regular sedan. Though they didn’t disclose what type they used, they do indicate that it was a large sedan with a V8 engine. A really aerodynamic car like a Honda Insight or a sleek coupe would be affected even more.

So the bottom line is that around town you are better off with the windows open but once at speed you should close your windows even if it means turning on your air conditioner.

If you drive a Hummer or a Mercedes G-Wagon with the aerodynamics of a brick… well it doesn’t really matter. Just go buy Exxon stock.

Of course, driving while suffering from heat stroke isn’t good either, so here are some other hints about staying cooler if you must run your air conditioner around town:
• Try to park under cover or use a window shade. The cooler your car is when you get in the less you’ll need to run the A/C to cool it down.
• In the same vein, if your car is hotter inside than the outside air, open your windows before turning on your air conditioner.
• Max A/C (a.k.a. recirculated air) isn’t always the best way to cool down. Again, if the air inside of your car is hotter than the air outside, you’re just running super-heated air through your A/C system. Use the fresh air setting until the interior temperature is lower than the air outside.

Electric Porsche

Check out a great eBay listing: eBay Listing

Electric vehicle conversions have been around for a long time but I can't recall ever seeing one of a clean low mileage narrow-bodied Porsche 911. This 1973 911T appears to be a long-abandoned project, the owner claiming he undertook the adventure after his car failed to pass a smog check. Of interest for those attempting their own conversion is his link to his project details here: http://www.ztac.net/porsche.htm. It's an interesting read in its own right.

As he realizes now, perhaps a Porsche 911 isn't the best candidate for an electric conversion. There is probably a reason that cars like VW Rabbits tend to be popular for projects like this. Besides being cheap to buy those square lines and ample storage space for batteries make them easier projects. I won't even mention the recent price trends for early Porsche 911s… with engines of course.

On the other hand, with over 30 bids from 11 unique bidders (and over 6,400 page views) in only the first couple of days of the auction, there appears to be a lot of interest in this car. It would be interesting to see if the interest is in the clean rust-free 911 body shell or in completing this environmentally conscious project? In any case, the idea of a fun sports car that runs on electricity alone has been around longer than Tesla.