The battery size of a Plug-in Hybrid Electric Vehicle (PHEV) is decisive for the electrical range of the vehicle and crucial for the cost-effectiveness of this particular vehicle concept. Based on the energy consumption of a conventional reference car and a PHEV, we introduce a comprehensive total cost of ownership model for the average car user in Germany for both vehicle types. The model takes into account the purchase price, fixed annual costs and variable operating costs. The amortization time of a PHEV also depends on the recharging strategy (once a day, once a night, after each trip), the battery size, and the battery costs. We find that PHEVs with a 4 kWh battery and at current lithium-ion battery prices reach the break-even point after about 6 years (5 years when using the lower night-time electricity tariffs). With higher battery capacities the amortization time becomes significantly longer. Even for the small battery size and assuming the EU-15 electricity mix, a PHEV is found to emit only around 60% of the CO2 emissions of a comparable conventional car. Thus, with the PHEV concept a cost-effective introduction of electric mobility and reduction of greenhouse gas emissions per vehicle can be reached. (C) 2011 Elsevier Ltd. All rights reserved.