This paper presents a performance analysis of plug-in hybrid electric vehicles (PHEVs) considering battery preheating economy under low temperature conditions. In subzero temperature environments, PHEVs suffer a dramatic loss of all-electric driving range due to the energy and power reduction of LiFePO4 batteries, as well as severe battery degradation due to lithium ion plating. This decreases the battery life time and thus increases the operating cost of the PHEV. A quasi-static model is adopted for the simulated bus, and a battery dynamic degradation model is established based on the Arrhenius degradation theory. The PHEV performance under low-temperature conditions is evaluated considering three factors: fuel cost, electricity cost, and battery degradation cost. In addition, the economics of battery preheating powered by the engine or grid is first investigated in this paper. The charge depleting-charge sustaining energy management strategy and convective heating method are adopted. Simulation results show that the preheating strategy can reduce the PHEV operating cost by up to 22.3% in 40 Harbin driving cycles. The heating process becomes increasingly necessary as the battery price, heating efficiency, and daily recharging time of the PHEV increase as well as the environment temperature decreases.