Hybrids Better Values than Other Car Options
The conventional wisdom around hybrid cars has been that they will save a significant amount on gas costs during their lifetimes and are better for the environment, but that those benefits come at a cost -- a higher initial price that makes a hybrid an overall more expensive option for transportation. But Yahoo Green has an analysis showing this is not the case when all of the various economic factors surrounding a car purchase are considered. In fact, it turns out that buying a hybrid is a better financial move than purchasing a comparable non-hybrid car because of the following reasons:
* Hybrids hold their value better than non-hybrid cars.
* Some lenders -- typically credit unions -- offer discounted loan rates for hybrids.
* Some insurance companies -- including Geico, the Travelers, and Farmers -- offer discounted premiums.
* The federal government is also offering tax credits of up to $3,400 for hybrids -- but only for the first 60,000 vehicles, which means that Toyota and Honda models are no longer eligible. Some employers offer incentives for hybrid vehicles as well.
* And, of course, hybrids cost much less to fuel up.
In the end, the analysis shows a Honda Accord being 45% more costly and a Honda Civic 16% more costly than a Toyota Prius.
Of course the calculations are highly sensitive to assumptions, but to most reasonable observers, it appears that conventional wisdom has taken another hit.
Rethinking the cost of hybrid cars [Yahoo Green]
(Photo: geognerd)
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Comments:
So do most local mechanics know how to work on hybrids? Always wondered how much different they were compared to a regular car.
When you get a Fast Lane pass for tolls and bridges in New York, there is a 10% discount for hybrids. It's a pretty specific discount, though. You have to buy the pass transponder from New York and the discount only applies in New York. Still, it's something just for owning a hybrid.
I drive a Honda Insight, which I bought in 2004 because, with our soldiers dying in the Middle East, I didn't want to use one more drop of gas than necessary, and because this car is a SULEV -- a Super Ultra Low Emissions Vehicle, and I need to get around expediently, but I don't want to impair other people's breathing unecessarily.
Meanwhile, I spent $228 on gas. Last year. All last year.
Recently, I spent $45 for a fill-up, but that'll last me a couple months. I get as much as 60mpg if there's no traffic on the highway, and 45 driving in the city. And I have an automatic. People with manual transmissions do much, much better.
I expect the new administration and Congress to introduce more and better financial incentives for purchasing hybrids. I think the average American will then consider them as a serious option when looking for a new car.
They aren't cheaper when it comes to renting one. Hertz charges about 2x the price for a Prius over a regular economy car. There's no way the gas savings would ever pay for the increased rental cost.
Which should Congress do incentives? The high price of gas is enough incentive. Let the free market manage this one.
If I'm reading the table correctly, the entire difference appears to be due to differences in resale value. So basically, unless you plan to sell the car after three years, the whole analysis is somewhat contrived. And honestly, you're on the consumerist, so we KNOW you're not dumb enough to sell your new car after three years...right?!?!? Am I missing something here?
Higher resale value *might* make leasing a cheaper option -- although due to demand for these things, I doubt they'd pass the savings along.
Or you can do like I did and buy a diesel car. My Passat gets around 42 mpg. I know diesel costs more than gas right now, but if you compare my car to the gas Passat, which gets about 30 mpg at most, I'm still coming out ahead since I get about 30% better mpg and diesel doesn't cost 30% more than gas yet. Not to mention, when I bought mine the diesel model was only a $300 option more over the gas model. I've put 120K miles on it and have not done anything other than changing the oil regularly. Their new 09 Jetta diesel is going to be getting around 60 mpg and they are supposed to be releasing a diesel hybrid in 2010 that wil get around 120 mpg. Also, the relsale holds great-I paid just over 21K for it in 05, Kelly Blue book says a trade will get me around 17.5K or private sale around 19K-not bad for three years and 120K miles!
what if you pay cash for a car, so loan rates don't affect you, and plan on driving it indefinitely and repairing it yourself?
somehow I think my '92 accord is a better deal.
Kind of hard to compare ... if you are one who typically buys a used car in the $6,000-$8,000 range, buying a new hybrid is a hell of a lot more expensive. If you are one who typically buys brand new cars, then it makes some sense to buy a new hybrid. If you're like me and drive a paid-off Neon with 130,000 miles, you might as well pump $4+ gas into it for the next couple years and drive it until it's dead.
They aren't cheaper when it comes to renting one. Hertz charges about 2x the price for a Prius over a regular economy car.
I think people rent them as a novelty thing, or because they're interested in buying one and the supply is too short at dealerships to try one. My boyfriend rented me an Insight for that reason. There wasn't a single one in Los Angeles when I wanted to buy mine. And a Prius is too big for me (just a girl with a tiny dog, and I can rent a pickup truck if ever I need to haul something...which I have yet to need yet, in the three years I've owned the car).
P.S. My battery is warranteed for 10 years, and I'm one of those midwesterners who generally doesn't buy a new thing until the old thing wears out. It's a great car, and looks like something out of Tom Swift, with the cool side panels covering the back wheels.
@weave: Zip Car has the Prius as the cheapest car to rent per hour. It's $7 an hour compared to $9 or $11 for some other cars. They pay for the gas too!
Somehow, I trust Consumer Reports more than Yahoo. The simple fact of the matter is that unless you're just itching to get under the smug cloud, it's a financially better move to drive your current car for as long as you can.
There's also the impact of buying new vs. used. Another issue that everyone seems to stick their head in the sand about is the battery disposal 10 years from now. Can they be recycled, or are we looking at literally tons and tons of heavy metals that need to be disposed of?
If you have to buy a new car anyway, it will still take you several years to get back to even on ROI. As they stand right now, hybrids are a feel good buy - not a financial one.
They should make incentives not based on whether or not something is a hybrid but based on EPA estimated fuel economy. Why should a 30MPG hybrid Ford Escape benefit from the same savings as a Prius when a 50+MPG Jetta TDI is excluded?
VW needs to do a little lobbying...
Unfortunately, I hear very very bad things about the Lithium Ion Batteries in Hybrids. Mostly that they are subject to going bad within a few years and that they are not covered under the warranty.
I know Lithium Ion Batteries do have a memmory effect so that would explain the batteries going bad (just like an old lithium ion cell phone battery will go bad), but they've just recently made some advancements in lithium ion batteries using carbon nanotubes that vastly reduces the memmory effect (20 years instead of 2) and can double the capacity of a battery of the same side.
So, maybe once those batteries reach a level of technological maturity enough to be mass produced.
The super high electro magnetic field associated with a Hybrid vehicle is going to give a lot of people cancer.
@WiglyWorm:
Where do you hear that? Consumer Reports has the Prius (present and former models) listed as one of the most reliable cars on the road. One would think that if these problems you mention were happening, someone in the CR survey might have mentioned them.
@WiglyWorm: The mass-produced hybrids on the market now all use NiMH batteries. I think the Tesla is the only almost-available vehicle using Li-Ion batteries just yet.
And yet I will still never buy a fugly Prius.
Tesla on the other hand....
Where does the article get the resale value data? From what I see on KBB.com, it shows that the Civic retains it's value more than the Prius:
From some article I read ages ago and can't find right now, when you take into account the resources required to make the batteries in hybrid cars, their "greenness" decreases significantly. It made me like my Civic Hybrid a bit less.
@WiglyWorm: The hybrid car "battery going bad" thing has turned out to be a scare and it's looking like the batteries will easily last for the life of the car.
Ok, so how's this for goofy perks of owning a hybrid - the parking garage I use for work has part of the 1st floor set aside as "Hybrid Vehicle Parking" and will tow anyone who parks in that area with anything else, even high MPG motorcyles, sub-compacts (there's a SmartForTwo around, looking for all the world like a Boy Scout Derby entry) and various diesels. On the verge of technological and ideological discrimination, no?
captadam: You can buy a used Prius! The deman is still high for them, but it's still cheaper than buying a new one, as you mentioned.
Buying a Hybrid is much more than just gas mileage. @Amy Alkon: mentioned they are also SULEV vehicles so they are better for the environment than a normal vehicle.
But it doesn't hurt that I filled up for around $30 the other day, and that will last me many, many miles.
@madrigal: last I checked my local car share was even cheaper than that for a Prius since they introduced a tiered pricing model per size and fuel efficiency.
as far as the batteries go, you have to pick the lesser of the evils. you do what you can and try and make the best of whats available. unfortunately there are no 100% perfect solutions in sight, but a Prius (which has so much room for improvement) over a similar non-hybrid vehicle is by far better for our short term goals to slam the breaks before we are royally f-ed. now the hybrid SUVs on the other hand, what a joke...
@EBounding: I wondered that as well, but I think it's all about demand. When we bought our used Prius, it was when there was a 6 month wait to buy a new one (in 2004), and we definitely payed more than the bb value for it.
@chiieddy: It's called recycling. Most batteries are over 90% recyclable. Not to mention that people have hit 100,000 miles will little or no noticeable wear on the batteries in 1st gen Priuses.
Just more FUD that's all.
@WiglyWorm: Lithium ion batteries have NO memory effect. Some Nickel Cadmium style batteries do have memory effect though.
What people are complaining about is the fact that ALL batteries loose energy density (how much energy they can store given a certain mass) as the mass is constant in a vehicle battery install, loosing energy density results in lost capacity.
Honestly people, fact check before posting on sites. Unless you have built an electric car, or dealt heavily with battery chemistry, look this stuff up.
@DashTheHand: At $4/gallon and rising, I don't care if my Prius looks fugly. I'm getting 50 mpg and driving in the HOV lane to work. My previous Jeep Grand Cherokee averaged 12 mpg.
@WiglyWorm: The Prius and most of the other hybrids don't use the lithium ion batteries. And the standard warranty on the Prius batteries is 8 year/100,000 miles. Not too bad in my opinion. And from what I've read, the older Prius models are still running fine past that.
@Dead Wrestlers Society: The engine on my Prius is a standard 4 cylinder 1.5 liter engine that all mechanics should know how to take care of. In fact, most people who know cars will easily be able to do any of their own maintenance work. Granted they might be a lil freaked out by the bigger battery sitting right beside it. ;)
@chiieddy:
The batteries don't go bad. The ones in my 2002 Prius are still running great, and no failures have been reported. If/when they do start having problems, the Toyota dealer will replace the cells that fail and recycle them.
@WiglyWorm:
Most Hybrid Gas-Electric cars have been made with NiMH batteries until very recently, not Lithium Ion. Unlike the lead-acid car batteries we see dumped in fields and on curbs, hybrid car manufacturers recycle their batteries. NiMH and L-ion batteries are completely recyclable.
That resale value is very high.. I think it may be a temporary effect of recently spiking gas prices and a lack of established hybrids on the market. So if you bought a prius in 2005 and are selling it now, you're in luck, but they should level out with regular used sale prices eventually.
I love the smell of my own farts.
@bilge: So what is the life of the car? 10 years? My old man and I have vehicles pushing 30 years old that are still quite road-worthy, reliable, and cheap to repair. Heck, there's fellas I know using pickups that are pushing 50 as daily drivers. Are you telling me a Prius can last 30 or even 50 years?
Gas usage varies. The electric part only kicks in between 0-15 mph in most hybrids. So, you know, if you're going over 15 mph that's allllll gas, baby.
Kchenx,
granted the batteries last a long time. But the fact is the depreciation cost is not shown in the Yahoo Green calculations. I would also hazard that the prius will have a very deeply declining resale value as the warranty runs out.
Funny thing is you don't have to use hybrids to get great fas mileage. My wifes 2001 Geo Metro gets 42 on the road, 38 in the city.
Popken,
"* And, of course, hybrids cost much less to fuel up."
Not so of course, You pay the same $/gal as anyone else. Its just you get better mileage.
@ScottCh: technically not completely recyclable. they actually just extract the metals from the recycled batteries. here's a pretty good explanation of the process --> [www.buchmann.ca]
still, i'm somewhat skeptical about the batteries, although most of the detractors don't actually own a hybrid. i know a guy who's still driving around his 99 insight w/o a hitch.
@chiieddy: many offer a 100,000 mile warranty (such as toyota). They are ridiculously expensive to replace, but you can buy salvaged or OEM and pretty easily replace them yourself to save a lot.
"The conventional wisdom around hybrid cars has been that they will save a significant amount on gas costs during their lifetimes and are better for the environment."
Conventional wisdom? Someone hasn't been doing the math...
This article is simply wrong. My wife and I are car shopping and we made a big spreadsheet that factors in everything - insurance quotes, gas at different price points, cost of financing given available rates on different models, etc.
The hybrid is absolutely more expensive. We might get one anyway because the value of feeling good about our car might be worth more than the extra couple grand it costs, but in terms of how many dollars it costs, it's more expensive.
Keep in mind also that many non-hybrid cars can be negotiated down to less than the invoice price, so that the dealer's only profit is the holdback. Almost all hybrid cars are on waiting lists, and thus are sold for the full MSRP.
I wouldn't be so quick to jump on the hybrid bandwagon:
[cnwmr.com]
As Americans become increasingly interested in fuel economy and global warming, they are beginning to make choices about the vehicles they drive based on fuel economy and to a lesser degree emissions.
But many of those choices aren't actually the best in terms of vehicle lifetime energy usage and the cost to society over the full lifetime of a car or truck.
CNW Marketing Research Inc. spent two years collecting data on the energy necessary to plan, build, sell, drive and dispose of a vehicle from initial concept to scrappage. This includes such minutia as plant to dealer fuel costs, employee driving distances, electricity usage per pound of material used in each vehicle and literally hundreds of other variables.
To put the data into understandable terms for consumers, it was translated into a "dollars per lifetime mile" figure. That is, the Energy Cost per mile driven.
This is a general-consumer report, not a technical document per se. It includes breakdowns of each vehicle's total energy requirements from Dust to Dust but does not include issues of gigajuelles, kW hours or other unfriendly (to consumers) terms. Perhaps, in time, we will release our data in such technical terms. First, however, we will only look at the energy consumption cost.
The following 450+ page report will look at each section of the energy consumption for classes of models, individual examples and our own analysis of the data.
Interesting. Go read the links.
@bilge:
"The hybrid car "battery going bad" thing has turned out to be a scare and it's looking like the batteries will easily last for the life of the car."
Tell that to someone who bought a first-generation Civic Hybrid. The batteries regularly conk out between 70,000 and 100,000 miles, and the cost to replace is several thousand dollars if you can't convince Honda to pick up the tab.
@Amy Alkon: "with the cool side panels covering the back wheels."
Uh, is that what the salesman told you? That they're cool?
Sorry, but ... heh
Once every car is a hybrid, then every one of those advantages will disappear. Yeah, even the "fuel savings" advantage, since now you'll have parity with everyone else. No big deal if you buy your cars for only two or three years, but if you're looking to hang on to one of these things for years, don't count on those discounts and special treatment lasting for a decade.
I wouldn't mind owning a hybrid for my wife to compliment my pickup truck. But there were a few reasons why, when we replaced her car a few months ago, we didn't:
#1) We don't buy new cars. We let someone else take the initial depreciation. We got a great deal on a 9 month old car that had 16K miles on it. And there ain't many used hybrids available. I had initially worried a lot about the batteries going bad on a used hybrid but it sounds like that isn't the case.
#2) We don't get car loans. We hate debt. It has been mentioned that hybrids have a high resale value. We don't have the cash to buy a used car with a really high resale value.
#3) I'm holding out a few more years for quality reasons -- I know, the quality is high on these cars... but I want to see what happens come the 10 year mark. See how the technology has increased. See how the electric motors hold up over time. See how the electronics hold up. With all of the motor controls, power management, etc. there is lots more to break. It's the same reason I don't buy a combination car stereo, DVD player, and GPS unit. I have a car stereo, I have a portable DVD player, and I have a GPS unit... when one breaks I still have the other two. Hybrids have more moving parts and more electronics to break.
#4) If I get a hybrid, I want one that charges overnight. I know you can buy upgrade kits for the Prius but I don't have that kind of cash.
@Channing: Why comment about something when you don't know anything about it? A Prius can go 43 mph with just the electric motor, baby. Above that, the gas engine works with the electric motor.
I agree with some of the comments here. Hybrids are nice, but not a better value.
If you want a car strictly to take you from Point A to Point B, why spend all that money on a new car, especially a Hybrid? A slightly used Honda Civic or Toyota Corolla would be a better value for commuters. With all the money you save in the long run, you can buy yourself a "nicer" car for weekend driving.
Considering that my S.O. drives a 1992 Toyota pickup with 254,000 miles on it, we are about 95% sure we will be buying a new car in a year or two, and 95% certain that new car will be a hybrid. Even if ownership costs today are no better or only marginally better than standard gasoline engines, I still see it as a hedge against future increases in fuel costs. This time last year, oil was around $70/barrel. Now it's almost double. Next year? Who the hell knows.
What happens when the battery dies and it needs to be disposed of?