Just One Out of 16 Hybrids Pays Back In Gas Savings

thecarchik writes with this snippet from GreenCarReports: "One of the criticisms of hybrid cars has historically been that there's no payback, especially given the cheap gasoline prices in the US. The extra money you spend on a hybrid isn't returned in gas savings, say critics. Well, that may be true, especially when regular gasoline is averaging $2.77 a gallon this week. But as we often point out, most people don't buy hybrids for payback — they buy them to make a statement about wanting to drive green. Nevertheless, a Canadian study has now looked at the question of hybrid payback in a country whose gasoline is more expensive than ours (roughly $3.70 per gallon this week), with surprising results. The British Columbia Automobile Association projected the fuel costs of 16 hybrids over five years against their purchase price and financing fees. In a study released in late July, only a single one of the 16 hybrids cost less to buy and run than its gasoline counterpart." The one car that would save you money, according the study, is the Mercedes S400 Hybrid sedan — and it will only cost you $105,000.

Comments

That's how the market is supposed to work.

[synaptik]

That's how the market is supposed to work.

Ideally, the invisible hand of the market would price the hybrid vehicles higher than their non-hybrid counterparts, to such a degree that the hybrid's price discounts the future value of the gasoline saved over the vehicle's lifetime. If the market didn't do this, an arbitrage opportunity would exist... and arbitrageurs would act upon it, which would have the effect of raising the price of the hybrids anyway.

Obviously this will never work out perfectly outside of academia, but if you had a crystal ball and all future prices were knowable by all parties in the present, this is how the pricing would work out, all other variables held constant.

Re:That's how the market is supposed to work.

[lgw]

A hybrid is a unique sort of car: it has a special cargo area to haul your smug around! It has never been about saving money, but about the very American idea of expressing your personal values through your choice of vehicle.

Re:That's how the market is supposed to work.

[SpryGuy]

Well, you're half right. It's not about saving money. It's about trying to use less fossil fuels, even if it costs a little more. Because there are longer-term and indirect benefits. And yes, it's also about making a statement. But it's not ONLY about making a statement. It's about taking necessary first steps. Without early adopters paying more (which "early adopters" always do, especially in the world of high tech gadgets), the road wouldn't be paved for the masses down the road. Do you think the people who bought the first PS3's did it because they thought it would save them money in the long run? It's not ALWAYS about saving money.

Re:That's how the market is supposed to work.

[PopeRatzo]

A hybrid is a unique sort of car:

A $80,000 sports car is also unique. People are willing to pay premiums for all sorts of things. They'll pay premiums for the status of driving a car that's worth twice the yearly income of a working-class family. They'll pay premiums to drive cars that use four times the amount of gasoline to travel one mile as other cars, just to make it look like they can afford it. They'll pay premiums for "sports cars" to make it look like they're younger than they really are.

You want to talk about "smug"? You ever talk to someone who lives in the city and drives one of these huge SUVs that look like locomotives? You ever talk to someone who drives one of the new Bentleys or Aston-Martin DB9s?

All of those things, status, looking young, looking wealthy, they're all subjective and illusory reasons to buy a car. So why do you have such a problem because someone wants to pay a much smaller premium to drive a car that is more fuel efficient? Even if the premium is never payed for by the differential between fuel economy and price difference. Do you really think the guy with the $170,000 Bentley or $2.5 million Bugatti Veyron is ever going to get enough pussy to pay for the difference in price? Do you believe the "he-man" type who drives his F250 pickup around downtown is ever going to realize the difference in his gasoline costs in make-believe macho?

If people can express their "personal values" by stapling teabags to their hats and carrying racist signs, what's wrong with expressing their "personal values" by driving a fuel-efficient car?

Re:That's how the market is supposed to work.

[timeOday]

In the report, the Civic hybrid didn't quite break even during their arbitrary 5 year cutoff, but it was very close (-$290), and that was with no tax incentives. That car would have shown a positive return if they had even extended the time window to 6 years, or assume it was driven slightly more miles per year. (They also placed the value of a 37% reduction in CO2 emissions at $0.) So, the case for the Civic is very easy to build.

In fact, the case for all the hybrids near the top (Civic, Prius, Insight) is very close, and several assumptions in the study are fairly arbitrary. It seems clear we are within a year or two of a new headline, "non-hybrids fail to provide savings." At that moment will everybody not driving a hybrid be accused of wasting money just to project an image of wanton wastefulness and pollution? I find the argument rather silly. People spend $1500 on leather upholstery and another $1200 on a fancy stereo system, and nobody complains. But spend an extra $290 to avoid emitting thousands of pounds of CO2, and suddenly you're some kind of leftist rebel.

Re:That's how the market is supposed to work.

[TooMuchToDo]

Current hybrids don't make economic sense except in extreme or lucky circumstances, or when your net benefit is based on government hand-outs.

Kind of like gas-only vehicles only make sense with hundreds of billions of dollars in government hand outs to gas and oil companies? God forbid you have to pay the $8-12/gallon true cost of gasoline instead of the $2.50-$4/gallon subsidized price.

Re:That's how the market is supposed to work.

[tkrotchko]

"People spend $1500 on leather upholstery and another $1200 on a fancy stereo system"

Nobody is complaining about people spending money for an option that lets them express their opinion and show their feelings about the environment. I think what the discussion is centered around is whether hybrids will save the owner any money. The evidence appears (to me) to say that if you do save any money, it's less than you think.

I think that's a reasonable discussion to have.

Re:That's how the market is supposed to work.

[im_thatoneguy]

Except that as of 2008 Toyota reported that they had sold a grant total of... 0 batteries due to wear and tear.

Re:That's how the market is supposed to work.

[sumdumass]

Have you even read the study? If so, don't you find it strange that the biggest subsidy counted besides the idea of the entire military and defense budge that they fallaciously claim is around only to protect oil producing state (I guess history and the cold war means nothing to them), is the road use tax which is applied directly to the people using gas in order to maintain the roads and build new ones? I mean why are they counting something as a large as they are simply because it passes through to the government before the oil companies benefit from it? If it went straight to the oil companies and they had to build and maintain the roads, we would be paying about the same amount if not just a tad bit more.

And the idea of tacking the costs of roads onto the subsidy list is ridiculous at that. Roads were around long before oil was in the economy. In fact, it was so important, it's actually in the US constitution as something the federal government is supposed to fuck with. Roads are needed for transportation no matter what the fuel or power source is and will exist with or without oil. Should we start taking this costs onto the costs of hybrids or Plug in electric vehicles too seeing how they don't pay the same amount of tax or in some cases none of the tax that goes to maintain and build roads?

If you can read that study and make any statement with the word true in it, you are either lying or stating where the study is wrong. the little nit pick about the fallacious costs of defense spending and a tax specifically designed to maintain and build roads and be paid for by some who use them in certain ways as being a subsidy, there are all sorts of other problems with it. Most if not all the tax breaks are because the government wants the oil companies to do something they wouldn't already do. The percentage depletion allowance isn't actually a subsidy at all, it allows them to deduct a portion of their lease payments based around the decreased value of the lease as the oil is removed. This is actually a penalty because in all other businesses, the entire lease payment is deductible as a cost of business. The non-conventional fuel production is a tax break only if they produce non-conventional fuels and develop uses for them that would benefit the economy. Without the tax break, the program would simply not exist as they are typically losing ventures. The immediate expending of exploration and development costs is not a break at all, it simply allows the costs to be deducted sooner then in a normal setting. The only advantage here is an interest break on capital loans because of short payback terms. The enhanced oil recovery credit only exists to get oil companies to drill in leases that aren't readily accessible or when something makes then non-profitable to produce oil from a well. This actually benefits the government as it allows more leases to remain active generating revenue in excess of the tax breaks.

The so called study is a load of hog wash passed off as fine filters spring water. You may not know the difference, but anyone without an agenda and the ability to pay attention will.

Well.....

[HappyCycling]

Not if you buy a used hybrid.

Re:Well.....

[Bigjeff5]

There is still a price gap of a couple thousand dollars, which will still take about a decade to make up. Buying a used civic hybrid instead of a used civic will only take you 10 years to make up the difference, instead of a new civic hybrid vs a new civic, which takes 30+ years, but it's still a long time, and the car already has wear now.

Re:Well.....

[Technician]

AC flame bait, or someone totally disconnected from reality.

Laptop batteries are maintained for long run time, not long life. They are deep cycled. Fully charged and then deeply discharged. Both reduce battery life. The battery in my car is rarely charged above 80% and never discharged below 50%.

Im still running on the original 8 year old battery and have over 135,000 miles on it. The AC is spreading FUD that plagued sales from when the Prius first hit the US market. The rate of battery replacements and costs ate both below the frequency and cost of a standard automatic transmission.

http://www.greenhybrid.com/discuss/f13/toyota-hybrid-150-000-mile-battery-life-15002/

Short Study Timeframe

[Sponge Bath]

So the time frame is only over 5 years? Cars can and do last longer than that. Also the comparisons are against the non-hybrid equivalent (Camry Hybrid v Camry, Fusion Hybrid v Fusion). What did they compare the Prius to since it does not have a conventional equivalent?

Re:Short Study Timeframe

[Grishnakh]

Exactly. My car is 16 years old, and my wife's is 10. What kind of moron only keeps a car 5 years? Even if the original owner sells it, it generally lives a long life with the subsequent owners, unless it's some POS that falls apart right after the warranty expires. Toyotas are generally known for having very long service lives (as long as they don't have a stuck gas pedal incident....)

Re:Short Study Timeframe

[oldspewey]

Another possibility: you don't know anything at all about the personalities and motivations of the thousands upon thousands of individual hybrid drivers out there, and you're just making things up because it's intellectually convenient for you to do so.

Only true if you ignore the externalities

[guanxi]

The hybrids only cost more if you ignore the externalities. That is, if you conveniently ignore the cost of our climate warming up, and the cost in blood and treasure of maintaining access to oil, then sure, the hybrid costs more. Bicycles are even cheaper, if you ignore the cost of your time and of becoming a smear on the expressway. How about hitchhiking?.

Five years!?

[rnelsonee]

Well, it usually takes over 100,000 miles to break even, so the study, which only considers 5 years, is fairly useless. On a thread last week, someone calculated that a Prius will take 320,000 miles to to break even (and I checked the math, as we all like to do!). And the average Prius will last longer than 5 years - especially since those with a "greener" lifestyle know how bad buying a new car is for the environment.

I'd imagine about half of the cars pay back the owner in fuel costs. And it's obviously variable as gas prices are fairly volatile lately...

Sounds like most "1st Gen" tech.

[El_Smack]

Think of today's Hybrids as the equivalent of the first iPod. "No wireless. Less space than a nomad. Lame." It's the 3rd and 4th gen of these vehicles that will blow everything else out off the road, in a matter of speaking.

Re:Financial vs. environmental cost

[HolyCrapSCOsux]

From what I understand, nickel (used in Prius batteries) mining is much more polluting than burning hydrocarbons. (Which the Prius still does occasionally)

There is more to enviromental impact than what comes out of the tailpipe...

Re:I didn't buy one for the payback

[realmolo]

The thing is, if you are TRULY concerned about the environment (and must drive a car), then you would buy a used car.

The amount of energy and resources and toxic chemicals involved in the car manufacturing process FAR outweighs any "statement" you make with a hybrid.

And if you REALLY REALLY care about the environment, you would carpool, or take the bus (if it's available), or walk or ride your bike.

What I'm saying is, you aren't being "green" by buying a hybrid. You're just pretending. You're a poseur.

Not an accident

[amiga3D]

There's a reason that gas cars are cheaper. The oil companies are not stupid. They know the price point at which alternative fuels become competitive with gas and they keep the price a little below that. The price of oil is not high enough for anything else to compete....and it'll stay that way barring government interference. It's good for oil companies, they're rolling in the dough. It's good for consumers, gas is cheap and plentiful. It's good for politicians, their voters are happy with them. When glitches happen to the fuel supply and price drives high then all sorts of alternative power supply comes out of the woodwork. The price never stays high for long though. No one wants expensive fuel.

Re:I didn't buy one for the payback

[ArsonSmith]

Or, he's thinking of the long term rather than short term. If his buying a hybrid kicks in to the car companies that they should make hybrids and they do, then in the long term it will create much more efficient cars everywhere rather than just his one bike trip back and forth to work and the store.

the Nickel myth

[spage]

Nickel isn't polluting, it just sits there. Presumably you mean the production of a few hundred pounds of NiMH batteries, containing (if I recall correctly) about 20 pounds of nickel. Note that the chrome and steel in a regular car already contains nickel, and that the real toxic villain is the lead-ACID battery in a conventional car

So what makes you think the pollution from manufacturing a few hundred pounds of recyclable batteries is remotely comparable to the TONS of gasoline and CO2 saved over 100,000 miles by driving a more fuel-efficient car? Repeating crap you've heard doesn't make it true.