Hybrids: cost vs. savings

23. AUTOS
Hybrids unlikely to save owners money, study says
Alex Kaplun, Greenwire reporter

Hybrid vehicles are not efficient enough to produce long-term savings for their owners, even with gas prices soaring, according to a study released yesterday.

An analysis by Edmunds.com Inc. found the increased total costs of owning a hybrid most likely will not be covered by the savings in gasoline use for most drivers. In calculating the total cost of owning a vehicle, the company considered the initial purchase price, insurance costs, maintenance costs and various tax credits and financing costs.

Overall, the company found the cost of hybrid ownership over the first five years for virtually all models would exceed the traditional counterpart by $3,400 to $5,200. To break even, a hybrid owner would either have to drive far more miles through that period than the average driver or gas prices would have to increase dramatically.

Michael Chung, a price and market analyst for Edmunds.com, said that while the technology may become more cost-effective in the long-run the current high demand for the vehicles will keep prices high for at least another couple years.

"They provide a lot of value on top of fuel economy," Chung said. "All these perks really drive up the value of these vehicles that are more intrinsic rather than qualitative."

For example, the study estimates the total cost of buying and operating a Ford Escape hybrid over five years at $50,521 -- almost $3,500 more than a non-hybrid counterpart. In order to cover those extra costs during the five year period, gasoline prices would have to reach an average of $5.60 per gallon or the driver's annual mileage would have to exceed 37,000 miles.

The cost difference is even more dramatic with the Honda Accord and Honda Civic hybrids, both of which cost at least $3,600 more than the traditional models. In both cases, the consumer would need to drive more than 60,000 miles per year or gas would have to increase to more than $9 per gallon in order to break even.

The only model currently available that would come close to breaking even for consumers is the Toyota Prius hybrid as compared to the traditional Toyota Camry vehicle. According to the study, at the current average price of $2.28 per gallon of gasoline and 15,000 miles in annual driving, the Prius would save the consumer $81 compared to the Camry over the first five years of ownership.

At the same time, the Prius would cost far more than another popular Toyota, the Corolla. The Prius driver would need to drive more than 66,000 miles a year or gas would have to rise above $10 in order to break even.

Chung admitted that consumers may see additional savings if they keep a hybrid beyond five years but also pointed out that there are many unknowns with the long-term viability of hybrid technology. Because hybrids have only been in mass use for a couple of years, questions remain about their reliability, the extra costs associated with repairing a hybrid battery and the resale value of the vehicles.

But Chung added that even if hybrids do not turn out to be the money-savers that consumers may think, they are likely to remain popular with consumers in the near-term because of their "cool" factor. He specifically cited the Prius -- by far the most popular of the hybrid models -- as becoming a hit with consumers because of its unique look, its environmentally friendly reputation and its use by some celebrities.

"The Prius of all hybrids became the cool car to own -- it was environmentally sound and it looked different," Chung said. "Toyota really pulled out all the stops with that vehicle, they really wanted to show it as the technology trendsetter."

Qorc - do you pay for parking? If so, how much?

By this point, it ought to be obvious that gas savings and reduced pollution are not the motivating factors in deciding to purchase a hybrid: HOV use is. How else would one account for the fact that little ole Virginia has almost as many hybrids as huge California? The answer is obvious and qorc says it himself: he "gets to drive to work more quickly and efficiently." The me-first philosophy is what is driving people to buy hybrids.

So qorc saves 20 minutes not picking up slugs. How nice of him to spare us his presence.

quote:

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Originally posted by scottt
[br]qorc, I think you missed the point of the article. The point is that you could have purchased a Toyota Corolla or such and still saved gas.

For example. I believe I read in one of my auto magazines (Car and Driver, or MotorTrend) that if you priced out a Ford Escape Hybrid, and a non-Hybrid Escape with the same features (power windows, locks, etc) and you drove 15k miles per year, it would take you 8 years to break even on the gas savings vs. the extra cost paid for the hybrid.

And if you are in the 28% tax bracket (like most of us) the $2000 tax credit only equals $560 in your pocket.

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No, I got the point. But I wouldn't get the advantages of driving HOV solo, nor the tax credit, etc.

For ME, it was worth it. I got rid of a gas guzzler, I paid relatively little for the Prius ($11,000, and then got a $2,000 tax credit), I save the equivalent of $100 a week on gas, and I accrue all the advantages of driving solo on HOV. Yup, totally worth it to me.

Yeah, I know; 234 is a bad place to commute out of -- did it myself from the day it opened until it started getting full too early. Now I meet my carpool at Horner, regrettably adding to the number of vehicles on I95 south each evening between Horner and 234. Oh well.

While you know my feelings on high-breds and smugs and all that, I do think these vehicles ought to be heavily subsidized by the government with tax breaks and other incentives. Big fat tax breaks that cut the price in half. Event though hybrids aren't the ultimate eco-answer we need, they are at least a step in the right direction. We ought to encourage their use (carrying 3 people, that is! [:D])