Hybrid vehicles are many things, some of them positive. I tested an Infiniti M hybrid recently that had so much right-now torque (an electric motor strong point) that it launched like a dragster, almost getting air under the front wheels. I tried out a Chevy Volt that could operate at 60 MPH on battery power alone. The Toyota Prius is very popular, in part because of its array of LCD displays and fascinating engineering, including near-seamless transition between gas and electric power.
So, hybrids can be quick, they are certainly neat in terms of the technology – and also different. All perfectly fine reasons for buying a car (any car).
But are hybrid cars really money-savers?
Not that I can figure.
Because I’ve done the figuring. The results of which tell me that a hybrid car’s better-than-average gas mileage is economically irrelevant when it takes years of driving to amortize the hybrid’s much higher up-front costs.
Example: One could buy a nicely equipped 2012 Nissan Versa, a car about the same size as a Prius, for around $15,000. That is about $10,000 less than the base price of a 2012 Prius. You can also buy a base model Versa 1.6 for about $10,000 – if you’re willing to live without power windows/locks and AC. This way, you start out about $15,000 ahead of the Prius, in terms of initial cash outlay.
But let’s go with $10,000 as the difference since most people want at least AC, a few power options and a decent stereo.
So, how long will it take to reach break even given this $10k disparity?
Let’s assume a Prius averages 45 MPG and a car like the Versa averages 30 MPG – a generous 15 MPG difference in favor of the Prius. It sounds good on paper.
Now let’s run some numbers
Assume 15 gallons equals one tankful of gas. The Prius can go 675 miles on 15 gallons of fuel at 45 MPG before it needs a refill. The Versa, 450 – a difference of 225 miles in favor of the Prius. To go the same 675 miles, then, the Versa owner would need to buy another 7.5 gallons of fuel (225 miles divided by 30 MPG) which at $3.20 per gallon comes to about $24.
Let’s assume 10,000 miles a year of driving.
The Prius owner will need to fill up about 15 times to go that far (675 miles per tankful at 45 MPG times 15 fill-ups equals 10,125 miles). The Versa owner, about 23 times (450 miles per tankful at 30 MPG times 23 equals 10,350 miles). That’s a difference of seven tankfuls of fuel, or seven times fifteen – which equals about 105 extra gallons of fuel annually to travel the same (roughly) 10,000 miles.
This means that at current prices of about $3.20 per gallon, the Versa owner will spend around $336 more per year on gas than the Prius owner – assuming they both drive about 10,000 miles annually.
Remember, we started out with a $10,000 up-front price difference between the Versa and the Prius. How many years of driving will it take to reach break even at this rate?
About 25 years.
Even if you triple the Prius’ annual fuel savings – make it an even $1,000 a year, say – it will still take you nearly ten years to work off the higher up-front costs of the Prius. Even if you assume $2,000 in annual fuel savings, it’ll be five years down the road before the Prius finally catches up to the Versa.
That’s a long time to wait to “save money,” isn’t it?
I won’t get into the opportunity cost of the hybrid – the $10,000 that could have been used for other things, such as investments – or the cost of the money itself (interest) which is no small thing when you finance a $24,000 car, even at just 2 or 3 percent. Nor the fact that after a decade of use and 100,000 miles, the hybrid will be getting on in years and like any older car, will be entering the problem-prone years of its life. And being a hybrid, it will of course have hybrid-specific (and expensive) problems that standard cars don’t have, such as tiring batteries.
None of this is rocket science. A pocket calculator and five minutes will make the math pretty clear to anyone. And the math does not favor the hybrid. Not unless you compare the MPGs of a hybrid to a real gas pig – something that gets less than 20 MPG. And even then, it’s going to take a while to reach break even. The better comparison – if the object is to save money – is a standard economy sedan like the Versa or (even better) a used economy sedan, which can drop your up-front costs to less than $10,000.
Granted, it won’t be snazzy, quick or a technological tour de force. But it will get you where you need to be in reasonable comfort, for very little money – and isn’t that the whole point?
Well, maybe not.
I don’t think hybrid buyers are dumb. The typical buyer demographic is middle-upper income and college-educated.
They may tell themselves they are being “green” – but deep down, I think they buy hybrids because they want to tell others how “green” they are. It is a political act, not an economic one.
If so, you have to explain why the best-selling hybrids – like the Prius – are the most visible hybrids. Hybrids that looked like standard cars – like the hybrid version of the Honda Civic – don’t sell as well, arguably because they don’t make a statement as well as models like the Prius.
There’s nothing wrong with any of this, by the way. People buy luxury cars and high-performance cars for similar reasons. It’s perfectly rational from this perspective, too.
Just don’t buy a hybrid because you think it’s going to save you green.
Because it won’t – or at the very least, you’ll be waiting a long time before it does.
Throw it in the Woods?
Thanks, been here ages, just never posted.
I think that the real question is how many miles do you have to drive to recoup the initial up-front investment based on the gas price. This should be compared to the expected mileage to failure for the car (~300,000 miles optimistically) to determine if there is even a case to be made regardless of how much someone drives per year.
Using your numbers, at $3/gallon you have to drive 300,000 miles to save $10,000 in gas costs.
At $4 per gallon, you have to drive 225,000 miles to recover $10,000.
At $5 per gallon, you have to drive 180,000 miles to recover $10,000.
At $10 per gallon (this is the price here in Norway), you have to drive 90,000 miles to recover $10,000. This is equivalent savings of buying a 20 MPG car in America for $15,000 with $4 gas prices!
For those interested, here is the general formula:
[COSThybrid – COSTcar]
Miles = —————————————
GasPrice * [ 1/MPGcar – 1/MPGhybrid ]
It is important to note that this is a best case scenario. When you include financing costs, depreciation, maintenance costs, etc you will have to drive much further to save money. Since the operating life of cars rarely goes beyond 300,000 miles, it is safe to assume that you will never recover your upfront costs.
Once again, well done Mr. Peters.
Your post adds the necessary emphasis. Even at $10 a gallon (roughly three times current U.S. prices) you’d need to drive 90,000 miles before reaching “break even.” That’s a a long time to wait!
Good to have you with us –
All of these calculations are accurate enough (even conservative), and the “show your green credentials” rationale is also no doubt a motivator for some. However, they both miss the point that no one ever mentions, and the one that was my personal motivation for going this route with one of my two vehicles.
Anyone who remembers the gas lines of the 70s may figure it out. When there IS no gas, at any price, or there are widespread shortages, the winner is the car that will go the farthest on what you have. My 10 jerry cans of gas will get me half again as far in my Honda Civic Hybrid as they would in the Nissan Versa or similar vehicle.
The gas lines of the 1970s were a direct result of US federal government foreign policy, domestic policy, and monetary policy. They had ZERO to do with the market or amount of gasoline that could be produced and delivered to market.
The road to a shortage of gasoline is to put on price controls. Price controls can result from continued inflation driving up prices or a foreign policy of war driving up prices or both. Once price controls are in place gasoline will vanish from the market. (BTW, price controls is how all health insurance and health care providers will be bankrupted and taken over by the federal government in the coming years or decades if it takes that long)
A hybrid driver might have a day or two longer to keep driving than any one of my cars. I’ll make that up and then some by having multiple cars with gas in the tanks when this occurs. However it’s all moot because even a week more of driving doesn’t change the end result, nobody outside the ruling class is going to be driving… well except on ethanol from stills and bio diesel (until the government revenuers get a report they are driving and then make a visit). So you can enjoy that extra time behind the wheel. After that maybe I’ll sell one of my old bicycles for sack of silver. Full time bicycling a week or even month sooner than a neighbor with a hybrid isn’t going to kill me. I’ll probably start before I run out of gasoline anyway.
It is the need for foreign oil that will be our downfall. The guys that say they can afford to drive vehicles with low mpg ratings that will be our downfall because of our dependence on foreign oil that it produces.
Poor ol’ Clover!
He’s bought into the “peak oil” shibboleth.
See the new feature article, oh tasty morsel you.
There is no problem with “foreign” oil clover. Oil is just another good on market. The problem is the interventionist foreign policy and inflationary monetary policy. The use of government and military to secure that oil for connected corporations while diminishing the buying power of the dollar.
You might as well whine about people who buy foreign made wine or shoes or salt or gold or steel or iron ore or rare earths or anything else.
Foreign oil is just another boogie man. Instead of building a military we should be building things people in countries with low extraction cost oil want. Simple easy peaceful friendly trade. Or we could just have local higher extraction cost oil. Either or. No big deal either way.
What has to end is the meddling in other people’s affairs. That’s what will be the downfall of the USA. The meddling. Just because the meddling is so a few people can make more money on oil is no reason to deny ones self some fun. They are going to do it regardless of what world wide demand is. Only people waking up and objecting will stop it. People are waking up. The movement started behind Ron Paul’s lead is evidence of it.
Here’s a book for you clover:
stop being afraid, people are people.
Brent, foreign oil makes you a slave to those countries that produce the oil and the countries that have the ability to stop the shipment of that oil. If we had no need to protect that oil flow then we could save billions of dollars needed to protect that flow.
Clover can you actually show some original thought that isn’t repeating what the TV news or some government press release or dear leader says? Your vision is that of a scared insecure person, which those who run the government we live under largely are and you’re parroting them.
Trade is mutually beneficial. No party will cut off honest trade. Trade is shut down when it is not mutually beneficial and when scared little control freaks insert themselves in the middle of it. The scared, dishonest, control freaks work to make trade in oil imbalanced. That’s why the flow needs to be “protected”.
The oil guy in a foreign country is no more a slave master than the farmer in the next county. He’s just someone trying to get an fair amount for his goods.
What I worry about is the cheating scamming parasitical systems in the USA that you favor. Otherwise known as the status-quo. Those harm our ability to have things to trade. Those anger people because it cheats them. That’s where the concern is. Give people a fair price and there’s no worry about someone selling.
Brent we could not disagree more. Importing oil that causes us billions of dollars in trade deficit is not a good thing. You say that free trade is a good thing. Yes that is true if it is not all one sided. If you keep adding debt as you do in unballanced buying of oil then you become a country exactly like Greece. I am sure you have heard of their b problems.
Well, Clover, part of the reason the US has to import oil is because of Clovers like you who have made it economically untenable to produce oil here.
You’re not worried about the trade deficit anyhow. Hell, I doubt you even comprehend what it is, other than a talking point.
Rather, the constant theme is your urge to control others; to force them to do what you want them to do.
It just drives you nuts that others have different ideas and have the audacity to claim the right to do as they prefer rather than as you demand.
So you run to your Big Brother (the government) and get him to be your bully boy.
Someday, I pray, you will have to face your targets on your own.
Clover, there are numerous goods that come from overseas, but the only one people are concerned about is oil and most of that comes from countries nearby. Shipping cost is a big deal. Furthermore the reason people bother with middle east oil is because it is cheap to extract and the political conditions paid for with our tax dollars. Add to this the political barriers to extracting oil in the USA. That’s why we have foreign oil in a nutshell.
But even if there were no alternatives and all oil came from the middle east, there is no need to impoverish people there through meddling in their affairs. All that is needed is to be productive. That’s all. The products I have worked on and/or created are all over the world. I’m not special either. Productive people always have something to get what they need. Scared insecure people with no real skills need to resort to violence. And guess who has power in this country? Insecure people with no real skills. They have social manipulation skills but those aren’t real skills. Nobody is going to trade them real goods for those skills when the institutional structures they work in are kaput. They have to keep the scams going because for them there is no other way to live. Productive people can always trade something for something.
Greece is the way it is because of government, nothing more. Government kills productivity. Why be productive when politics, taking from other people is more lucrative? Eventually too many people become parasites and then collapse.
The USA can still avoid collapse, but the public doesn’t want to go through the pain to prevent it. So collapse will happen some time in the future.
Clover, I fear you are conflated.
You did make good points but you seem to have some malady that gets between these points and a logical conclusion.
Maybe it will help if we go through them one at a time.
Importing oil is a good thing. Our economy would come to a grinding halt without it. We have to have it and anything that is done to increase its price is a bad thing for todays’ economy. Try to stay in the present Clover, there is more.
A trade deficit is a bad thing. The wealth of country is either increasing our decreasing according to the direction of its trade deficit. The country is just like your family Clover. It you keep buying stuff faster than you can sell stuff, or earn money in some other way, how long before your in the street? But the economy and wealth of the country is enormous and the deficit can be sustained for a while yet.
However, this description, of the deficit, is an enormous simplification based on simple double entry bookkeeping. You see if something is used to create something of greater value, the price paid is simply a small incremental cost of producing greater wealth. And if the wealth created is greater than the deficit, then the country is actually getting wealthier.
Please try to keep in mind, Clover, that the economy and the wealth of the country is not the governments’.
Now this is where it might start get difficult for you Clover. You see, free trade is not one sided in any circumstance, it always involves two or more parties. And perhaps you will note from the term “free” that these parties are agreeable to the exchange of goods.
And we get to your conflation. That the debt comes from buying oil. It is quite amazing how your malady draws you to the conclusion that the governments debt problem comes from free trade business transactions. Obviously, the solution is to bring the most coercive force know to mankind (that’s government, Clover) into play and bring and end to these free trade business practices. (Where’s a good sarcasm flag when you need one?)
To become a country exactly like Greece, all you have to do is do what Greece has done. Stop giving people money for nothing and the next thing you know they will be rioting in the streets.
Clover, I recognize that I’m probably not going to get through to you with reason, perhaps fear will get past your malady. So, when our government reaches the point that it has to stop giving money to people for nothing, please stay out of the streets. It is going to get ugly.
I totally agree that buying a new hybrid car is not a way to save money for most people. Buying a used reliable car is the way to go, including used Prius, especially when you drive a lot!
Here is a guy who drives 2000 miles/week on his job. Total 458k miles in 2+ years. I think Prius is the only best car for him. Want to run through the number for the gas savings?
It seems many posters on this site have some wrong ideas about Prius, such as:
1. Hybrid battery life. This guy’s Prius is still on original battery, a little bit weaker but still runs great. The reason is, Prius battery is charged between 30-70% full. So 400 cycle rule does not apply here. I’ve heard probably one or two cases the battery needs replace.
2. Expensive maintenance cost. No! Prius is probably more reliable than Camry in my impression, by reading a lot on Priuschat.com. I own both. My 2004 Prius was bought used two years ago at 110K. I’ve put in 43K and so far only oil changes.
I noticed that whenever you talk about Prius, some loyal Prius owners including me will jump up and show our different opinions, almost as loyal as Ron Paul supporters 🙂
Prius owners are loyal – and good on them for that.
I’ve got no issue with any car, if that’s what the person who owns it wants.
And yes, your example shows it’s possible to improve the math. That said, I would not want to be holding the keys to a Prius or any hybrid after about 120k. Not just because of the batteries, either.
It’s like the SUV debates of years past… just say it’s what you want instead of trying to justify it or preach it and the entire topic just goes away.
As to driving 400K+ miles a year, well there’s always an outlier in the data. BTW, all cars go for more miles if they are put on quickly rather than over long periods of time. It takes age and environment failures almost entirely out of the equation.
My point is, Prius Hybrid battery is not a weak spot that needs additional concern. The 400 cycle or 8 year service life does not apply here for good reasons.
I agree that any car can drive more miles if you drive a lot in short period of time.
What I prefer/own is not the subject here.
Batteries last considerably longer under those conditions as well. Plus cycle life is typically to when the battery holds 80% of what it did new.
That’s probably why I don’t hear any complaints of battery for Prius made since 2000.
And that’s the point of my post, that hybrid battery in Prius will not need to replace for most owners in 10+ year period.
Good Morning Eric,
As someone who has been intimately involved in hybrid cars for many years in the past with Lexus, I “did the math” years ago. You are correct, a buyer will never save money buying a hybrid, because of the upfront cost associated with hybrids, and, if the driver keeps the vehicle over ten years, the back-end cost of replacing the batteries. But, I think you addressed the point of hybrids. It’s not the savings; it’s the “protection” of the environment in this new feel-good world. They are almost a status symbol in the “green society.” I live in the Front Range mountains of Colorado, and the many of the residents here embrace the Gaia religion. It’s almost blasphemy not to drive a Prius. Seventy-five percent of the vehicles here are Subarus in the winter and I’ve never seen so many Priuses in the summer. Of course the very affluent, even though they act “green” in an Algore sort of way, would never drive a Prius. They stick to their Cayennes (Evergreen Mini-vans they are called here), Range Rovers, and Benzes. I drive an Avalanche just for spite. Thanks for another good column. I read them regularly.
Now, I’m a kook and like kooky things – like ancient two-stroke motorcycles – so I’m no going to slam people who are afflicted by hybrid lust, so long as they don’t try to tell me it’s about saving money (or “saving the planet”).
That’s my issue here: The preachy BS.
But if hybrids aren’t greener then there’s no reason to own them.
Very wise observation. That being said: Who are you and what have you done with the real Gil?
Oh, there are reasons – just as there are reasons for owning a Corvette (or a SmartCar). Reason, like opinions, vary. Some people just like hybrids, or they think they’re saving money. Those are reasons – just not reasons I happen to agree with!
Because you can drive solo in the car pool lanes on the traffic-jammed bay area freeways. If you were a bay area commuter, you were in line at the Prius dealer the day after they announced that policy.
I first read about the hybrid concept in the late 1970s in a Michael Hacklemann book. The vehicle he described was an electric car with a small gas engine used purely to keep the batteries charged. This would allow greater distances and more power for hills etc. than an electric only driven car. All the hybrids I’ve heard of these days are just the opposite – gas buggies with electric ‘assist’. I hadn’t done the number crunching that Eric did, but factoring in exotic batteries and parts that would require expensive repair and replacement seemed like a no-brainer to me that these were more bureac-mobiles than next generation (pun intended) improvements. I’m glad to see others bringing up the blessed simplicity of the original VWs. Not only were these little ‘bugs’ economical, they also served for introducing young drivers to the practice of auto maintenance! An engine could be removed and managed by a single person with a floor jack. One can’t say that about any car being made these days. And if memory serves, we got 30+ MPG too. Not bad at all.
We live in troubled times indeed when the standard for comparison is the Versa.
What’s wrong with the Versa, exactly? It’s roomy (more legroom in the second row than Prius), rides well, performs well, doesn’t look any worse (and arguably, better) than the Prius, gets decent mileage – and is very inexpensive.
In reply to your e- mail to me about my question ablout conserving scarce resources, you tell me that a Prius takes more energy to make and demands materials that are more toxic and expensive to mine than the non-hybrid. Are you referring to “rare earths?” (I spent many years working as a field geologist)
Where can I get a comparison of the elements, energy and materials that go into Prius vs a comparable non-hybrid?
Pamela de Maigret
Well, I’ll start with what I can state as fact:
The typical hybrid carries about 200-300 pounds of batteries – lithium, or (older models) lead-acid. Very nasty stuff, as you know. These are inputs that are either nonexistent (lithium) or much less (small lead-acid battery to start the engine) in a non-hybrid car. There are also disposal/recycling issues – which also involve further energy inputs down the line.
There is also the issue of the electricity used to charge up the newer plug-in hybrids. In the US, most power is generated by oil (or coal) fired utilities – which uses up energy as well as produces emissions.
If you are really concerned about not consuming more resources than necessary, then an already-manufactured used car is better than any new car, including a new hybrid.
More broadly: I’d much rather see light (less than 2,000 lb.) diesel powered compacts offered vs hybrids. Such a car – the lightweight diesel car – could return 60 MPG and cost thousands less than a hybrid and also last much longer (15-20 years before requiring significant repairs).
But this has been rendered all-but-impossible because of the conflict between “safety” (and the measures required to comply with government-mandated “safety” standards) and efficiency.
Can you imagine how awesome small diesel cars would be! My Yaris would be amazing with a little diesel powering it. How come only the VW TDI offers this? And while on the subject, what do you call a constipated German?
To use the original German: Fahrfrompüpin! 😉
“verstopft” which is actually kind of funny!
Yes the TDIs (older ones without DEF requirement) are nice.
I’ve got two. One is a 2005 Jetta Wagon 5MT. 190k on the clock. Built in Germany. Maintenance issues since purchased new:
1. Fuel pump — took 30 minutes to replace.
2. Alternator pulley — 30 minutes.
Neither failure stranded the car. Other than those ‘unplanned maintenance’ all I’ve had is tires, brakes, battery, and shocks (Love those Konis).
2006 New Beetle TDI with DSG transmission (a technological marvel AKA timebomb).
Built in Mexico. 98k on the clock.
Issues: Driver side i nner CV joint is bad — car currently sitting, multiple electrical glitches, $400 trans service every 40k — can’t be DIY’d without $500 in special tools — there is no dipstick on the DSG. Headlights failing, interior falling apart. Radio stayed on killing the battery — there are too many to list.
A POS car with good engine.
If the DSG goes, replacement costs run about $5k. If that car loses the trans right now, it’s going to the scrap yard because the trans costs more than the car is worth. What a piece of shit. Great engine, shitty build and horrible (but Roy nobody wants manual transmissions any more) transmission. I;ll pull the motor prior to scrapping, and set it aside in the garage for the day the Jetta rolls over 300k and the motor is getting tired.
Sure it shifts and drives great. But once they get 100k on them they can fail catastrophically at any moment.
We should be asking ourselves why mfrs are pushing so hard to eliminate MT. I believe it is more based on profit motive than anything else. The difference between what ought to be two very similar cars starkly illuminates it.
What a difference a transmission and point of origin make.
I don’t trust ANY A/T as far as I can throw it. I’ve had built TH2004r ATs fail, TH400s, TH350s, C6, C4, and various foreign pieces of shit.
Only one problem with millions of MT miles, that on a Mitsubishi Cordia that lost 3rd gear.
My car buying choices going forward are going to be limited by this. As much as like the idea of the Toureg TDI, I can’t trust the DSG that’s the only available trans.
I guess these high tech automatics are great if you get a new car before 100k.
But for long term reliability they suck.
(I’m posting my edited email to Eric and his response.)
Consumer Reports lists the Versa as a subcompact sedan and the Prius is a family mid-size sedan. Size-wise they aren’t in the same class so your comparison is not accurate to begin with.
My wife drives the 2010 Prius III and didn’t buy it to make a green statement. That’s another bias you assume and I doubt it’s accurate for most buyers. Also the car is not designed to look other-worldly or to attract a look-at-me buyer. It’s aerodynamic and that’s part of the reason why it saves gas.
The Prius is popular because it really does get 50mpg and the owner doesn’t give anything up. We bought ours for 23k. Other sedans in the same size class sold for 26-28k at the time. Therefore, we got the good mileage and a lower price. It rides great in town and on the highway.
You usually write a good car column but this time you swung and missed.
Reply from Eric:
Well, let’ see now…
Front seat room in Versa:
Front head room: 40.6 in.
Front hip room: 48.8 in.
Front leg room: 41.4 in.
Front shoulder room: 53.5 in.
Front seat room in Prius:
Front head room: 38.6 in.
Front hip room: 52.7 in.
Front leg room: 42.5 in.
Front shoulder room: 54.9 in.
Rear hip Room: 47.2 in.
Rear head room: 38.3 in.
Rear leg room: 38.0 in.
Rear shoulder room: 50.7 in.
Rear hip Room: 51.2 in.
Rear head room: 37.6 in.
Rear leg room: 36.0 in.
Rear shoulder room: 53.1 in
As you can see, the difference in room are slight. 1-2 inches in a few categories; virtually the same in several. The Prius is fractionally larger, but not large enough for the comparison to be invalid let alone ridiculous or unfair.
You spent $23k to own a Prius. I argued it’s smarter – if the object is saving money – to buy a very similar (but not-hybrid) car like the Versa you can get for $15,000 nicely equipped, saving you close to $10k up front.
That’s all I was trying to convey.
Ok. I didn’t realized the inside dimensions were that close. Why does CR place them in such different classes? I guess I’d have to test drive the two and make an evaluation. Consumer reports lists mileage on the Versa as 28mpg for the 1.8 engine. The Prius is listed at 44mpg. This is for the tested versions.
There is a lot of overlap between categories of vehicle – “compact” vs. “mid-sized,” etc. This is why it’s important to actually check the stats (and the cars!) yourself.
On mileage: It really does vary considerably depending on how you drive, where you drive, etc. Again, the only way to know what your mileage will be is to drive the car as you drive it, where you usually drive it.
Good to have you with us!
Hey, did you notice the Versa actually has two inches more backseat legroom than the Prius?
I know my Prius may never give me a complete economic payback at current market conditions, but I also consider it a hedge against idiotic EPA policies and Iran closing the straits of Hormuz. Do your numbers again with gas at $10 a gallon. A final consideration for me is the satisfaction of knowing I am minimizing the amount of money of mine that goes into the pockets of those who finance Islamist terrorism.
It’s a valid point, though of course if gas goes up to $10 a gallon, two-thirds of us are going to be worrying more about where our next meal will be coming from than what car to drive. $10 gas would turn this country into a Third World country overnight – a place where only the very affluent could even afford to drive, let alone buy a new car!
Your financial calculation assumes you don’t get any money back from the cars when you are done with them. But what if you sold both cars at the end of five years, and the difference in what you got was still $10,000? Then the hybrid would have saved you money.
Really? Wouldn’t you just be recovering the $10k you already spent? In other words, no net gain?
It is the recovery of the $10k that you leave out in your financial analysis. According to your article, the Prius would save $336 per year.
Buy the Versa for $15,000, sell it for $5,000.
Buy the Prius for $25,000, sell it for $15,000.
Yes the Prius initially cost $10k more, but you get it back, so yes, no net gain (or loss).
BUT… you saved $336 per year along the way. So in that case you saved a total of $1,680.
There’s loss of use of that $10K. That $10K is going to buy less later. Most people paid interest on that $10K while they had the car. (3% is $300) and that’s if they get $10K back. Many times it’s going to be less.
Between interest income and interest costs alone most if not all the fuel savings has evaporated. For someone who buys the car outright and trades it at the right time they might save a little. However selling/trading a car just a few years old is a money wasting practice in the first place.
Yes brent you are correct it for the most part will cost you more if you trade every 3 or 4 years. For some with more money it may makes sense if they woulld rather spend it on a newer and latest car and do not have to worry about having it in the shop all the time.
Unless you are good at investing now days the loss of use of money means little particularly after you pay taxes on the little interest that you would get. There is another story if you invest it right. Investing the past few years has been very good. On the other hand the people that have invested right the last few years would have a lot of money to not worry about that small amount of loss of use.
Clover, I know I am old school when it comes to internet discussion, but really, if a post is more than a week old, it’s over, let it go.
Use of money is -always- important. In this current economic depression I’ve encountered quite a few media sob stories. Sob stories of people who have incomes considerably higher than mine no longer able to afford what they did when there salaries were several times mine. People who made more than me and now lost that job but have no reserves and so on. The idea is always that the government should tax more prudent people to provide for these people in their time of need.
IMO they have no excuse for their condition. There are a lot of people in this country who forgo a lot of material things to provide themselves with a cushion for bad times.
When it comes to saving money, borrowing extra to get a hybrid is simply foolish. Without the use of that money they are not going to be in as solid of a position if something goes wrong as they would have been with a different choice.
There’s no reaching him, Brent.
I’m with you, by the way, on feeling a little (no, make that a lot) resentful about those sob stories. We don’t have a flat screen TV, or even a sail fawn. My newest vehicle is 10 years old – and bought used. But we’ve been able to weather this depression despite the fact that I lost more than half my income after 2008 as the publishing business went tits up. We scrupulously paid off our debts, including the mortgage – rather than buy a new car and flat screen TVs and iPhones during the “boom.” Which we could have done, since we have “excellent credit.” But, we didn’t. Now I’m supposed to feel sorry for the people who chose to over-spend, who are in a hole because they just had to have that new Ford Explorer Eddie Bauer and a new Volvo for the wife on top of the McMansion, which of course they filled with flat screens and all the rest of it.
These aren’t accidents of nature. They’re the result of people’s deliberate irresponsibility. I’m not getting any pleasure out of their predicament – but I certainly don’t feel obligated to “help” (there’s that word again) them.
But you only “recover” what you spent! So it’s a net zero. Or am I missing something?
If you get the difference back at time of sale it doesn’t have to be made up with fuel savings.
Yeah, sorry that I am not making myself clear. I’ll start from scratch. Your article claims that buying a hybrid will not save you money. You claim that you could buy a car that is $10,000 cheaper but runs on gas and it would take five or ten years to make up the $10,000 difference through fuel cost savings. My point is that when you go to sell either car, you get some money back, which you did not account for in your financial analysis. Your financial analysis assumes that the value of the car goes to $0 at the end, which is why a $10,000 difference is important. My point is that the value of the car at the end is not zero, making the $10,000 difference unimportant.
Let’s assume for simplicity that you can sell a car for what you paid for it. It is obvious that the more fuel-efficient car would save you money, right?
Now to make it more complicated with some more numbers, assume that after five years you can sell either car for $8,000 less than what you paid for it. For the Versa you’d get $7000 back and for the Prius you’d get $17,000. The total cost to you was $8000 in either case. EXCEPT, that for the Prius you paid $336 less per year in fuel costs.
So the bottom line is that the hybrid CAN save you money. That is NOT a net zero, that is saving money on gas.
Yes of course there is the cost of money and the fact that different cars depreciate at different rates, making the financial analysis even more complicated.
Ok – but as Brent pointed out, you still have to come up with the $10k up front, or pay interest on it during the time you own the car, or you have it locked up in the car until you sell/trade. So, for the five or six years you have the car, you’re “out” your $10k.
That’s a cost, too.
And it’s a much lower cost with a less costly car – used or non-hybrid – that you pay less for up front, or, better yet, which you pay for in cash at the time of purchase.
I’m debt-averse as well as averse to spending money in order to “save” it.
That’s why I’m skeptical about the economic worth of hybrids.
I do not get it. I do understand now why you would be against insurance. You are against spending money that very well could save you money and possibly a lot. I on the other hand believe in spending money, even a lot of money, if I can get that money back in savings and then some. I am very willing to spend a grand if it will save me a grand and a half even if I have to borrow to do it.
I think it might be illustrative to include diesels in the analysis. Even though it seems only German Automakers are currently offering them in the US I can see that changing.
Although the upfront costs of the diesels are similar to the Prius and diesel fuel is currently more expensive than gas, the longevity of the diesel engine is a factor.
Of course if we did away with the ethanol subsidy and transferred it to diesel fuel we could see a major impact on prices which would be a boost to the economy with lower freight costs.
I dont necessarily agree with this assessment. I bought a hybrid vehicle in 06. A Honda Civic Hybrid, price was about 5 grand more than the base model, I got an immediate like 2500 tax credit (at that time) so that cut the price difference in half right there. Of course the taxes were more because of the higher price. But at 30 mpg base model vs the about 50 mpg I think it was worth it over the long haul. The assist battery has worn down over time I believe but I still typically get 40-45 per gallon pretty easily. Plus my car looks normal and that was the reason I got that kind of hybrid. I dont want some “stick out like a sore thumb” vehicle like a Prius. Plus if there is run away inflation one day and gas ends up 10 bucks a gallon (god forbid) the amount of savings will skyrocket immediately. Plus its pretty neat to drive from central Florida to North Carolina on one tank of gas in a 12 gallon tank.
Sorry just read up and yeah 10 dollars a gallon is very unlikely but I dont think 5 or 6 is out of the question at all. I more or less bought the vehicle so I wouldn’t need to worry about gas prices. Its just one less thing to worry about. The cost of driving is cut way down, no matter where you are going it becomes an after thought when most are worried about how much its gonna cost to get there and back and how much gas they’re gonna use, I dont even think about it and even if it went to 5 or 6 a gallon I still wouldnt worry about it.
Well, yeah – but even at $5 or $6 a gallon, it’s still going to take a few years to work off the $15,000 difference relative to a $10,000 car.
Sure, you’re spending less at the pump – and so the trip is cheaper. But the total outlay isn’t because you spent more up front (and probably, you’re also paying more for taxes, insurance and – later – maintenance).
Nor trying to be a dick – just saying….
I’ve had the vehicle 6 years and aside from oil changes and the battery needing to be replaced one time, I haven’t had any other repair or maintenance charges. Then there are stories in the news like this one http://chicago.cbslocal.com/2012/01/13/gas-outlook-most-painful-year-at-pump-ever/
Sure I could have bought an el cheapo vehicle that gets 30 per gallon at about half the price. But I wanted a known reliable vehicle, so I knew I was gonna get a Honda anyway. If you take into account my old vehicle only got 18-20 mpg. I essentially almost tripled my previous gas mileage.
At six years, you’re ok – and should be ok for another four or so. But after about ten years, stuff is going to start to go wrong. And when it does, it is likely to be expensive because the systems are more complicated and there’s more to break.
Gasoline is cheap. That’s why they are trying to make wars and other political nonsense to drive the price higher. How can I say gasoline is cheap? I started looking at gasoline in 1964 US coin. Why? Because that’s when people say gasoline was cheap. It’s cheaper now. A 1964 quarter is worth $5.37 in modern federal reserve notes.
There’s lots of oil… gasoline is made very efficiently and distribution is more so. It’s a cheap fungible commodity and will continue to be so provided we have at least freeish markets. But people who crave power and wealth don’t want that so they come up with narratives to change perceptions to get what they want.
My ex-girlfriend has a Civic hybrid. She gets very nervous merging onto a highway from an ascending on ramp because of the lack of acceleration.
Well, in their defense, they’re only slow relative to the current standard (about 8 seconds, 0-60). But the slowest of them get there (to 60) within 11 seconds or so. It still feels gimpy, but if you want to experience slow, try an Old Beetle – they needed 15-plus seconds to get to 60!
Well, you’re probably just about breaking even at this point – about six years into it. And in a few years, it’s likely you’ll be spending some money – possibly a lot of money – on batteries.
I don’t dispute the coolness of making it from Florida to NC on a single tank. But the way I run the numbers, you’d be paying less to drive (overall) had you bought a nice used economy sedan for $7k or so back in ’06.
I’ve mentioned in previous columns that I own a ’98 Nissan Frontier pick-up. I bought it in ’03 for $7,100. So, I’ve had it for about nine years. Even if its current value was zero, my cost to own (not counting fuel and maintenance) has been about $65 a month. Of course, it’s still worth something – not nothing. Factor in its current retail value – about $3,500 – and my cost-to-own works out to about $33 a month. Even if I spend $200 a month on gas (five tanks, which is much more than I actually do spend) I am way ahead, relative to buying a hybrid.
And: The truck still runs and looks great. I fully expect to be driving it for another five years at least. The longer I own it, the lower my total “investment.”
Eric if you do not drive many miles on a vehicle and do not mind driving an outdated car or truck then buy a used car because it will cost you very little. I own a 95 Dodge Ram. I could care less about the mileage I get or that it is a newer more modern vehicle because I use less than a tank of gas a year in it. If I drove it every day and the miles that I drive each year then it would cost me a lot more than my far newer car. You can not make recommendations on just the way you drive a vehicle because in other cases a newer car and sometimes even a hybrid can save you money.
And you are about due to replace that battery. Let us know what it sets you back.
YOU got a 2500 tax credit that reduced YOUR price for the car by 2500 dollars. The 2500 was added to the national debt.
Gee, thanks….. Nothing personal, just math, just saying…
Cash For Clunkers also reduced the purchase price for the new car buyer, and added to the national debt. Not to mention the increase in used car prices because not as many are available now…..
Hybrids cause more pollution than conventional cars, it’s just that the pollution is caused at the power generating plant instead of at the vehicle itself. If it’s a nuclear plant that wouldn’t
be the case though.
Excellent analysis, especially when you pointed out the relative popularities of explicit hybrids vs those that are not immediately obvious as ones, but to be pedantic, buying something as a status good is an economic act. There is no need to distinguish between political/economic in this context.
No worries, Yancey – and, thanks!
There is one factor that would change you equation. It is possible that gas prices could go up a whole lot…..like to $10. Hopefully that won’t happen, but wars or economic upheavals could make it a reality. In this scenario, it would take much less time to recoup the higher initial price of a hybrid.
And in such a scenario, the priority might change from “lowest operating cost per mile,” to simply obtaining enough gas to “get you where you need to go.”
Again, with luck, this scenario is not probable. But it is definitely possible. And it should at least be considered in the decision making process.
Agree – though of course, if gas goes to $10 a gallon, it’s Game over for two-thirds of the population. Not just gas prices will go up; the cost of everything will go up proportionately. Most people would be concerned with scrounging some Ramen and staying alive – not about driving anything, anywhere.
Using Erics car prices and gas milages, you’d have to drive 90,000 miles at $10/gallon to recoup your initial investment through lower “operating” costs. Some would save in 2 year, some in 9 years. None would have their warranty anymore.
I live in Norway and pay $10-$12 dollars per gallon. I drive an 2009 Audi A4 1.8 Quattro with about 33 MPG. My car costs about the same as a Prius hre in Norway, but I’d be willing to bet I don’t lose much in gas prices in this mountainous terrain since my car weighs much less. In fact, I wouldn’t be suprised if I saved!
I’m sure our benevolent masters in the government can and will “level the playing field” by taxing non-hybrids and subsidising hybrids (not that they already aren’t, at least indirectly, already doing so).
As an engineer at one of the previously “big” 3, it is insane the amount of money we are spending to save a pound to meet the new CAFE requirements.
We weren’t willing to spend 25% of this cost to save a pound just 3 years ago.
Just wait until lane departure warnings, back up cameras, radar based cruise control, and MORE airbags become mandatory.
Don’t the safety Nazis know that their agenda is directly at odds with the green Nazis? Aren’t they all one big, happy Nazi family?
You think cars are expensive now…
I am kind of looking forward to the inevitable conflict between the Safety Nazis and the Green Nazis. Though of course, it’s us who’ll be the casualties.
The whole thing’s just demented. If you took an ’80s-era flyweight like the old Honda CRX or a Plymouth Champ, fit it with a direct-injection diesel and CVT, the thing would deliver 60-plus MPG and the cost to build it would be less than $20k. Assuming, of course, you could build it without air bags and without having to meet current bumper-impact standards.
It’s infuriating that we – the consumers – don’t get to decide what matters more: “safety” or excellent fuel efficiency at a reasonable cost.
The “safety” thing, in particular, is vacuous because so much of “safety” really depends on the driver. Competent drivers rarely have “accidents,” which are more properly described as avoidable wrecks caused by driver error. Rather than encourage better driving, we encourage more passive driving via technologies that take away more and more responsibility for driving, including the most elemental basic thing – paying attention to what the hell is going on! Instead of that, we have back-up cameras, lane departure warning systems, drowsy driver alerts, “active” cruise control and “smart” braking….
You write: “Competent drivers rarely have “accidents,” which are more properly described as avoidable wrecks caused by driver error. Rather than encourage better driving, we encourage more passive driving via technologies that take away more and more responsibility for driving..”
I saw a recent discussion in which Hugh Hendry, the hedge fund mgr, complained in his Scottish accent about
the American automotive air bag, jokingly suggesting that a dagger projecting from the steering column would make for much safer drivers.
Ament to that!
The other day, a friend of ours bought a ’70 Morris Minor. Right-hand drive, four on the floor and no “safety” devices of any kind, except the driver’s attentiveness and skill. I like old cars in part because they got you involved in driving. Modern cars are much more capable, of course, but hey encourage passivity behind the wheel. Lane Departure Warning systems and Active cruise control are tow cases in point. My sense of it is they are pushing forward to the driver-less car. That makes me sad, because it means one less thing we’ll be allowed to do for ourselves, let alone learn to do well.
Several aviation accidents have pointed to the problem of piloting skills atrophying when crews excessively depend on autopilots and autolanding systems.
What with the appearance of drone technology, may we even see the day of airliners with ground based crews? I, for one, wouldn’t want to board a plane in which the guy at the controls doesn’t have his neck on the line.
One could make a good case that distracted driving would be much less a problem if operating the vehicle still entailed manual shifting, un-powered steering, the necessity of keeping both hands on the wheel, etc.
Duke, shifting is done very little in a car unless you are in town in stop and go driving. Shifting does not make you more alert except for possibly the few seconds it takes to get to the highest used gear. I used to have manual steering way back when and that also makes little difference because it is only very noticeable during parking. I would not be without a cruise control in my car. It saves you a lot of gas and you have less of a tendency to go too fast.
Technically there is a conflict. Politically there is none.
The more I learn about the power elite, the more what seems stupid about government isn’t so stupid any longer. It starts to make sense. It makes sense by seeing things from their point of view.
So I look at the result of these incompatible demands on a product which limits the power to control and manage people. The result is to turn it back into a rich man’s toy.
People would have to live close to work. They might be forced back into company housing. Or maybe government housing. Exactly what the power elite desire, control over society, their company towns reborn.
Right on, BrentP! One place in recent history where cars WERE toys for the rich was the former USSR (where being “rich” meant being high-up in the Communist Party). Sure, the Sovs had an auto industry that in terms of sheer size was up there with the US, Germany, and Japan, but the USSR had one of the lowest rates of private car ownership of major world countries.
The Sovs had a lot of “company towns” and focused a lot on public transit. Two examples of this are the ornate Moscow Metro and Pripyat, a company town for the Chernobyl reactor.
Private cars were out of reach for most Soviet citizens. For example, a Lada cost about $27K in today’s dollars and a 2-3 year wait was typical; but ranking apparatchicks could get one for $6K in 2-3 days. Not that they really needed them, ’cause they got to ride around in big chauffeured limos. Plus, Soviet hi-rise apartments had limited parking, and roads were below Western standards, except, for example, where Moscow had special lanes for official use only.
COMING SOON TO THE USA!
Absolutely correct sir!
The Elites don’t want the prisoners to have cars. It’s another aspect of that friendly little piece of lore known as UN Agenda 21…pile’em high and stack’em deep, shovel the prisoners into mean little hovels close to work.
I believe the /actual/ Nazis prefered seating capacity…
“In 1933, Adolf Hitler gave the order to Ferdinand Porsche to develop a Volkswagen (literally, “people’s car” in German… Hitler required a basic vehicle capable of transporting two adults and three children at 100 km/h (62 mph). ”
Crunching numbers is my bailiwick, so I really like to see these particular articles on your site.
An acquaintance of mine is having to replace the battery cooling fan and servo-operated fan door on his 1st-gen Ford Escape Hybrid. Parts and labor will be ~$1,500.00. These particular components are known to be problematic. More to the point, the vehicle cannot be safely driven (for real, yo!) if either component is malfunctioning.
The repair bill is, I’m sure, not the type of green my acquaitenance had in mind when he purchased the Escape. All he wants to do now is…well, what’s the name of the vehicle, again?
That sucks. On a regular car an electrical fault will cause you to burn some fuses and do without something (small issue usually). On a hybrid, an electrical fault will cause you to die (exaggeration maybe) but you sure as shit ain’t traveling anywhere. 4Reel Yo, fuck hybrids!
From what you’re saying Dom, I take it that it’s not a good idea to park your hybrid in an attached garage? That is unless you want to collect on your fire insurance….
Back in the late ’90s, when I met my wife, she was driving an older Corolla. The car cost her $5,000 or so and we would probably still have it today had she not been rattled by a dog that ran in the road, causing her to swerve and then over-correct, lose control and roll the thing. She wasn’t hurt and after I got the car right side up, it ran fine. The only problem was the crushed roof and left A pillar. Would have cost $3,500 or so to fix, so we sold it for parts.
But she got nine years out of thing before the wreck, so it cost her $46 month to own ($5k amortized over 108 months), not counting maintenance, insurance and so on. If you tripled the $46 to account for those things (a gross over-estimate) the Corolla cost $138 a month to own. Realistically, the per-moth ownership cost was closer to $100.
No hybrid can touch this.
For perspective, if you bought a new Prius and got a really sweet deal and paid sticker ($24k) you cost over the same period would be $222/month – and that’s not counting maintenance, insurance and so on. If you add those things in – being very conservative, so let’s say only $50 a month spread over the same nine year period, you are now pushing $300/month to own the Prius.
Sure, it gets better mileage than the Corolla. But not even close to good enough to cover the difference in total ownership cost.
Lesson: If you want to save green, buy a solid used car and drive the snot out of it. If you want to spend green to look green, buy a hybrid!
Eric, what sort of new car (any new car) does one hundred bucks a month get you? Your point is a solid one: Good used cars are much cheaper to own and run than an equivalent new car, regardless of the type of powertrain used.
I don’t think it’s possible to get any new car for much less than $200 a month. Even a $10k Versa (the least expensive new car on the market) would cost you $166/month for five years at 0 interest. And I don’t think Nissan will give you a five year loan for nothing!
I know people see their finances on a monthly basis but the monthly payment is a calculated value. If someone values a lower payment he just needs to choose down payment and price (plus tax!) appropriately. But saving is nearly a lost discipline these days.
(I assume everyone here knows this, I just felt like saying it)
$200 bucks a month? That will get you at least a $36,000 car. If you figure almost all cars will last a minimum of 15 years then $200 a month comes out to $36,000. It all depends on if you are talking about a short term loan or depreciation. If you still have the car after 15 years you can sell it to Eric for 5 grand and have money in the bank.
“$200 bucks a month? That will get you at least a $36,000 car.”
The maximum new car loan is six years (72 months). $200 x 72 = $14,400. That’s assuming zero interest.
Reality: A 72 month loan on a $36,000 car works out to $500 a month – again, assuming zero interest.
And: Not only will you have spent the $36k (plus interest, plus cost to insure, plus taxes) you will eat about $10k in depreciation over the six-year loan period.
Meanwhile, oh scrumptious Clovers, I’ve got $7,100 in my truck that I bought eight years ago. It’s still worth about $3,500. So, let’s see now…. net cost to date is about $3,600 ($7,100 less current value) which, over eight years (96 months) comes to a monthly cost of $37.
Mind, I also pay much less to insure this vehicle (liability-only coverage) and my taxes are much lower than they would be on a new car.
Poor ol’ Clover…
Eric you keep bringing up personal property tax on vehicles. Most all states do not have personal propterty taxes any more. We can not help it that your state is so far behind every other state.
One thing I left out about buying a new vehicle. If a person were to drive a new vehicle as little as the amount of miles that you put on your personal vehicle then a new car would last 20 to 30 years. How much is that per month even a $25,000 vehicle? My answer is very very little. As I said before, if you want to try to save 10 bucks a month driving an old vehicle that is far less dependable than a new one then go for it. Financially you are saving little unless as you say, you keep it in the garage most of the time.
Eric you call me stupid for bringing up that $200 a month would buy you an expensive car but at least I know the difference between a car payment and depreciation and actual cost of ownership of a vehicle. I know enough that I am willing to spend an extra few hundred dollars on options because if you keep a vehicle for 15 years then those options cost you very little per month. Yes if you have to get a car loan and interest rates are 10 percent or more then a new car might cost you more but that is not the case today. When I went to look at used cars 16 years ago I found that I could buy a new one for only slightly more than what a newer used one would cost and get a warranty with it and hardly any maintenance or parts needed for years.
As is known from my previous posts ( http://epautos.com/2011/09/05/prius-math/#comment-6631 ), it’s also miles. More miles than typical new car buyers keep a car and probably more than the initial battery pack will last.
The entire ‘green agenda’ is built on a series of LIES promoted by the government/media complex, controlled by elitists. All electric storage batteries have a maximum number of recharge cycles, usually less than 400 times. Replacement battery for Prius is over $8,000 and recommended every 8 years minimum. The Nickel for this battery is mined in a Toyota owned Canadian mine that is SUBSUDIZED by Canadian taxpayers to provide jobs. There is ample evidence that “CO2 Climate Forcing” is a false canard and that all green solutions are FRAUDS. Visit Faux Science Slayer website for more on all the related greenhouse gas warming, green energy and peak oil FRAUDS….and possible real world solutions. Find and share Truth.
I am well aware of the limitations on batteries. I’ve been part of the development of many battery operated products in my career.
As to CO2. It’s entirely a con. It’s the oldest con in history in a new wrapper. It’s the high priest demanding sacrifice (treasure and power for himself) or the sun won’t come back after the snake god eats it. (eclipse). (also use spring rains, renewal of crop land by spring floods, etc and so forth)
Good stuff, Joseph – thanks!
The green shibboleth became popular at just about the same the Soviet Union imploded. Interestingly enough, Gulagchev, the former Soviet Dear Leader, founded an organization. Guess what it’s name is?
Eric, I’m not good at math, but I know we put more than 45,000 miles per year on one car. We have 3 cars: a 2001 Camry, about 140,000 miles on it and a 2008 Honda we bought used 2 years ago, then we have the Prius we bought new taking advantage of the Tax break dollars and free tires for life. I started driving it October 15, 2004, the car has 290,000+ miles on it and no break downs. we get the oil changed religiously, I wonder how much money on gas we have saved? we were up to $4.50 per gallon and have seldom seen $3.10 gas. when I bought it, I was putting on about 55,000 miles per year and gas was zooming upward, I had no intention of making a green statement so much as to save some money, I just didn’t want all my money going to BP or Shell, . we have owned several Camrys mainly because they last and don’t look dead in ten years. most of our cars have been kept for over 300,000 miles. We expect to have to replace batteries on the Prius any time now, the car still looks pretty good, so when we do install the new bank of batteries, we’ll just pretend we bought a used car for $8000.00 and keep it rolling! I have chosen to make my green statement by being a vegetarian, as a lot of resources are squandered feeding and watering animals for food when there are cheaper sources of more nutritious food as long as Monsanto, AG Daniels or others like them haven’t messed with the food. Oh well, I fell in love with the little Prius and it has been a very good car.