Are Electric Vehicles cost effective?

Yes. Here's a Leaf price comparison:

First, you have to decide whether you're looking at out of pocket costs, or trying to look at underlying "real" costs. If we look at market prices paid by buyers, we have to include the credit. If we want to look at actual system-wide costs, we have to include external costs like pollution, supply security, etc. For our purposes today, let's look at out of pocket prices.

2nd, you have to decide what vehicle to compare it to. Here's what Wired magazine says:

"A nicely appointed five-door, five-passenger compact—equivalent to, say, a Honda Civic or Toyota Corolla. But it’s electric, so it’s fairly torquey—the measly 107-horsepower motor hustles like it’s got double the ponies up to 40 mph. The ride is soft but surprisingly sure-footed thanks to a 600-pound air-cooled battery under the floorboard."

http://www.wired.com/magazine/2010/09/ff_electriccars/all/1

So, a comparable vehicle would be a Corolla at minimum. Other useful analyses might be: comparison with a Prius, which Consumer Reports tells us is cost competitive with a comparable car; and overall affordability, which might need a comparison with the average US vehicle.

3rd, you have to do your cost calculations.

Now, the average driver drives about 13,000 miles per year in the US. Total Vehicle Miles Traveled is 2,982,532,000 http://www.fhwa.dot.gov/ohim/tvtw/tvtpage.cfm and total number of vehicles is 238,314,692 http://www.bts.gov/publications/national_transportation_statistics/html/table_01_11.html for an average of 12,515 miles per year. The current price is before taxes is $2.29 - with taxes, that's about $2.80 http://tonto.eia.doe.gov/dnav/pet/PET_PRI_ALLMG_A_EPM0_PTC_CPGAL_A.htm . The Corolla gets about 30 MPG per http://www.toyota.com/corolla/trims-prices.html , so the Corolla costs about $1,168 per year for fuel.

The Leaf should use about .25kWh per mile, and night time power should cost about $.055/kWh ( The average retail rate for power in the US is $.11 (the coasts have more expensive power), and night time rates should be about 50% of that (often it is much lower, occasionally wholesale rates even go negative)), for an annual cost of $172.

Other factors: less maintenance, due to a much simpler drive train and the elimination of many support systems, fluids, belts, etc, etc. An important example: brake costs will be much lower, due to regenerative braking.

Insurance costs? Insurance costs are based on many things, including theft rates, collision rates, repair costs, anti-theft system and owner behavior. A taxi owner I just interviewed told me that a Prius would cost him 40% more than the usual Crown Vic-type workhorse, but that insurance would cost no more. BTW, the extra cost of the Prius is paid for in 10 months by the fuel savings... The Prius might be a guide: anyone seen a good source?

A Corolla, financed over 10 years, would cost $23,991 ($16,850 XLE, 7% interest) + 11,680 gas costs for $35,671.

A Leaf, financed over 10 years, would cost $35,993 ($32,780 minus $7,500 rebate, 7% interest) + 1,720 gas costs for $35,714.

So, a conservative comparison gives out of pocket costs which are almost identical. Other comparisons would look even better: including state rebates (CA-$5K, TN-$2K, GA-$5k?); comparing to a more expensive Corolla; to the average US vehicle; to a Prius; or using real costs (eliminating the rebate and including the external cost of oil).

In countries like Israel or Denmark, the Leaf will be a 1st car, supported by Better Place. OTOH, I don't expect Better Place to have a big impact on the US soon. On the 3rd hand, it's worth noting that: they are trying, in places like San Francisco; many places (e.g., Tennessee!) are installing charging stations on critical paths, and that a relatively small number can make a disproportionate difference; and the Leaf has a clever built-in app that finds efficient routes and charging stations.