It's Not Cost-Effective to Own a Hybrid!

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Here's something I think that most people don't think about when they decide to buy a hybrid to save money on gas. While they are correct in that they are conserving gas, they really aren't saving any money, because the cost of hybrids is significantly higher than the cost of gas-powered vehicles. Here's a quick comparison between two Toyota vehicles, of similar size, one hybrid, one all gas:

All Gas: Corolla - average mpg - 41.
Hybrid: Prius - average mpg - 60

Cost: Corolla - $17,780 - that's fully loaded - leather interior, sun-roof - the whole nine yards. You could get a nicely equipped Corolla for $15,215.
Prius: $21,275 - they only offer the single type of Prius, and this is much closer to the options you get on the $15K model, but I'm going to use the most expensive Corolla, just for sake of comparison.

Difference: Prius is $3,495 more expensive.

So how far do you have to drive to make up this price differential? About 150,000 miles (250,000 km), assuming an average gas price of $3 per gallon. To use the more realistic comparison of the $15,215 Corolla, you'd have to drive 260,000 miles (430,000 km) to make up the price difference.

This doesn't factor in the extra money you may have to pay in interest on a more expensive vehicle if you took out a car loan.

Now, while it is arguable that the average Toyota Corolla can go over 150,000 miles with proper maintenance, and possibly even go 260,000 miles, I do not think the average person owns a vehicle long enough to put that kind of mileage on it. And even if you did, the vast majority of time you owned your car, it would actually be more expensive to own the hybrid.

So what gives here? We all want to conserve gas, so why aren't hybrid vehicles comparably priced to gas powered?

 

So what is the incentive then? Unless you are very ecologically minded (using the political not, scientific definition of ecologically), then what sense does it make? If there was really an interest in lowering dependency on oil, they'd have to offer a tax break on hybrid vehicles, or something of the like.

 

I don't think it's a bad example when one considers that the U.S. is by far the biggest consumer of oil (both total and per capita) on the planet. Granted, this may be due to having cheap gas prices, but you cannot argue that any attempt to reduce oil consumption worldwide is going to have to start with the U.S. to make a serious difference.

 

I see your point. However, it's a vicious cycle in the U.S. There are very few mass transit systems that are convenient enough to use to get where you need to be - which is very different from my admittedly limited experience in Europe. It seems like in major European cities, you can get a subway or train to just about anywhere, and get there relatively quickly. Not so in the U.S.

You see, the reason gas prices are low in the U.S. compared to Europe is not because we're getting some type of sweetheart deal from the Middle East oil producers, it's because it's not taxed out the wazoo like it is Europe. That tax is then used to pay for a great myriad of things, including a very functional mass transit system.

So really, it's not so much an issue of cost in the U.S., it's the ability to use other forms of transportation that are very limited. Even if the price of gas doubled in the next year to bring it to near European levels, people would still drive as no functional alternative transportation method exists.

 

Ah, I used to audit some Toyota dealerships in Canada and if you compared the Prius to the Echo which was pretty much the same car but with a normal engine the difference in price at the same level of options was roughly $10,000 Cdn.

I just about died when I saw that figure - even if you don't factor in the interest on that $10,000 the amount of driving required to pay for the difference was absurdly large - I think the breakeven point was somewhere in the 250,000-300,000 kilometer range. The price of gas has gone up considerable since then but it would still take an absurdly long time to recover the cost of that engine.

 

You also didn't factor in the cost of replacing the batteries. I've heard it could be 1-3K every three to four years. That may be incorrect so don't quote me on that.

 

One of the main factors in the lack of public transportation in the U.S. is that the federal government decided to use subsidies to develop the highway system instead of the rail system. IIRC, this was done expressly to facilitate the ability to move troops around the country in time of war.

As to foppy Aldeth's post: Whoa! I had no idea the difference was so great. I think Blackthorne TA hit the nail on the head, though. Hybrids, like light trucks and SUVs, are expensive because there is great demand for them. When I bought a light truck back in 2000, they picked me up at the subway station in a Prius. The salesman told me that they already had a huge waiting list for them, and this was back when Toyota was only leasing them.

 

Another reason why mass transit rail systems are having such a hard time catching on in many major US cities who could certainly use them (Houston being a prime example) is that the lobbies protecting the auto industry, and especially local auto dealerships, have very deep pockets. They spend a staggering amount of time and money trying to shoot down initiatives to install mass-railway systems in major cities, even when public support for such a system is high.

I agree with Aldeth's points about the hybrids, as I've looked into them myself and found they were a little too expensive to make real economic sense to someone in my financial situation. I'd love to have a car that gets double the milage of a normal car, even if it's a little more expensive, because I think in the long run the difference would even itself out in the gas you save. But at the state the technology is at the moment, that's not really the case. The cost/benefit ratio is just to extreme at the moment, but it won't be so high for long. In the next 5-10 years, more efficient hybrid systems will be introduced, and as the popularity of these cars rises the cost to mass-produce them will decrease as well. So I'll wait and see how they go.

In the mean time, I'm doing the best I can to conserve gas on my own, which everyone should be doing anyway. I ride my bike and days when the weathers nice (I do this as much for the exercise and the damn fine summer weather in Chicago), and try to avoid unnecessary trips, like planning all my weekly errends in one day, etc. But sadly, most people just don't give a damn. It's all about their own comfort and wants. New innovations like hybrid cars help, but at the end of the day, it all boils down to the individual.

I guess we just have to do what we can. Some people believe that "doing what they can" means driving a hybrid car. They'll be more and more correct as the technology progresses.

In some cases consumption can be helped, and in others it can't. I probably released more toxins into the air driving my relatively fuel-efficient Pontiac Grand Am (about 36 miles/gal highway) 80 miles round-trip every day to commute to work for 2.5 years, than did the idiot WASP housewife who lived down the street from me who just HAD to have a Hummer (about 10 miles/gal) to drive her kids to soccer practice and go get her nails done. But it's the a**holes who drive Hummers 80 miles each way to commute to work alone (like my former co-worker) who help make the problem worse for everybody in several respects. And no, he didn't give a damn about its impact either - he just had to have his big bad "whatever takes the focus off my tiny penis" Hummer.

 

@ BTA I thought the exact same thing when reading DR's post, but you beat me to the punch line.

One thing that Tal brings up that I was unaware of, is the possibility of maintenance and operating cost of a vehicle being much higher in Europe beyond the price of gasoline. Keep in mind that how much you need to pay varies greatly from state to state in the US. Your annual driver's license, vehicle registration, and driver's license fees are much higher in New York as opposed to North Dakota. That having been said, I have lived in several states, and all of these things cost about $50-$100 to get, and most of them don't have to be renewed annually, but rather every two or three years. License plates are pretty expensive, but once purchased you only have to renew them every year or so, for $60 a pop. The operating costs probably do not exceed $100 annually, if you averaged the costs over the life of the vehicle, with more paid out when the vehicle is first purchased, but considerably less in subsequent years.

Maintenance of cars is quite expensive though. I just took my Honda in for it's 45,000 mile recommended service, and that cost me $300. The highest indirect expense is car insurance. My wife and I together pay about $1900 per year to insure our vehicles with full coverage (not just collision), and keep in mind that since we're both over 30 and married, our premiums are actually pretty low.

Having never owned a vehicle anywhere in Europe, I cannot possibly guess at what it costs to operate vehicles there (beyond cost of gas), so if anyone wants to provide this insight, that would help. Of course, regardless of the price, there would be no benefit (that I can see) that owning a hybrid would provide.

I still think that some type of tax break is going to be necessary to get people into hybrids. It doesn't matter right now, because as BTA correctly points out, there's a waiting list in many areas of the country, so they can't even build them fast enough to keep up with the current demand. The other issue is that even if your vehicle is a gas guzzler, the price of gas is never going to get to the point where it is cheaper to buy a new vehicle if your current vehicle is paid off and functional for your needs than it is to keep paying for the gas. Why would someone who has a paid off SUV consider trading it in for a hybrid? Sure, he may be spending a ton on gas, but a new car payment is certainly going to cost him more. So tax breaks in the future would help in the sense they would make people more inclined to purchase a hybrid when the time comes that they decide they want a new vehicle.

 

Some cross-water confusion here. By "Gas" do you mean petrol? Because Gas in the UK usually refers to LPG (Liquid Petroleum Gas) which is what you'd find in a hybrid vehicle. Or by hybrid are you refering to a petrol/electric hybrid car?

You can get your normal car converted to petrol/gas in the UK, my girlfriends brother in law had both his previous cars (A land-rover discovery and a Audi 8-series) converted.

Brit's from London and the South East are now starting to take their cars to France in order to get them serviced. It's cheaper, even with the ferry crossing, and gives the added advantage of Calais supermarkets. Rip off Britain.

 

@Aldeth:

'Vehicles' imply that you have more than one car. If I'm calculating the exchange rate correctly, that's what my girlfriend and I started to pay for a single car (a tiny 1.2l Ford K) in Ireland three years ago.

It hasn't reduced much, tough. And then there's taxation.

EDIT: checked the conversion rates.

 

The two basic things that we pay annualy in order to operate a car are the traffic tax and the insurance. The cost for both of them depends on the cubic capacity of the car. I pay for my 1.4 cc Opel 140 euros for traffic tax and 750 euros for insurance (full coverage).

 

In the U.S. we say "gas" to mean what Brits call "petrol." For what you call "gas" we say "natural gas" or "propane" according to the variety.

There is absolutely no need to give tax breaks for hybrids -- although in general I am in favor of tax breaks for any reason whatsoever. People are already demanding them. If that demand goes away, it will be because gas has become extremely cheap or because someone has found that -- for example -- hybrid vehicles explode randomly.

If either of those things happen, then there is no advantage to putting people in hybrid vehicles.

 

i pay $800 every six months for my car insurance alone...but then im 16 =/...and thats only liablility