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Check me here / Conventional vs Hybrid
None ^ | March 18th, 2008 | Self

Posted on 03/18/2008 11:01:12 AM PDT by taxcontrol

I am now considering replacing my vehicle and I was doing an ROI/Break even analysis on a conventional power vs a hybrid to see if the additional cost was worth the effort. So I built the table below in Excel and have come to the conclusion that even with today's gas prices ... it simply is not a smart move.

My assumptions and math is below. If I'm wrong would someone point out my error?


TOPICS: Business/Economy; Chit/Chat; Science; Society
KEYWORDS: automakers; co2; energy; hybrid; suv
Model is based upon round numbers of a Ford Escape Hybrid. I'm assuming 12,000 miles per year, over 50 weeks (2 weeks off for vacation). Cost delta is based upon MSRP price difference. All numbers are "rounded".

Miles per week 240 240 240 240 240 240 240 240
Cost delta for hybrid 5000 5000 5000 5000 5000 5000 5000 5000
Cost per gallon 3.25 3.5 3.75 4 4.25 4.5 4.75 5
   
MPG conventional [C] 20 20 20 20 20 20 20 20
MPG Hybrid [H] 30 30 30 30 30 30 30 30
   
Gallons per week [C] 12 12 12 12 12 12 12 12
Gallons per week [H] 8 8 8 8 8 8 8 8
   
Cost savings per week $13 $14 $15 $16 $17 $18 $19 $20
Weeks to break even 384.6 357.1 333.3 312.5 294.1 277.8 263.2 250.0
Years to break even 7.4 6.9 6.4 6.0 5.7 5.3 5.1 4.8
   
5 year Fuel Cost [C] $9,750 $10,500 $11,250 $12,000 $12,750 $13,500 $14,250 $15,000
5 year Fuel Cost [H} $6,500 $7,000 $7,500 $8,000 $8,500 $9,000 $9,500 $10,000
5 year Fuel Savings $3,250 $3,500 $3,750 $4,000 $4,250 $4,500 $4,750 $5,000
Savings vs Cost delta -$1,750 -$1,500 -$1,250 -$1,000 -$750 -$500 -$250 $0

1 posted on 03/18/2008 11:01:12 AM PDT by taxcontrol
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To: taxcontrol
Toyota Prius proves a gas guzzler in a race with the BMW 520d
2 posted on 03/18/2008 11:05:17 AM PDT by MotleyGirl70
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To: taxcontrol

Is the MPG for the hybrid the EPA estimate or actual? From what I understand the EPA estimates have usually overstated the hybrid mileage. Also, I am not sure what hybrid system Ford uses but for the Prius the main mileage gain is based on city driving with stop and go traffic because braking helps recharge the battery.


3 posted on 03/18/2008 11:05:49 AM PDT by C19fan
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To: taxcontrol

Yes, I know you’re considering the Ford Escape Hybrid (and not a Toyota Prius) but you may want to read the article I linked just for the heck of it.


4 posted on 03/18/2008 11:07:00 AM PDT by MotleyGirl70
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To: taxcontrol

Check into the life and cost to replace the battery. I’ve heard they die early and are very expensive (2K). If it’s true it’s probably worth factoring the cost into your analysis.


5 posted on 03/18/2008 11:09:24 AM PDT by socialismisinsidious ( The socialist income tax system turns US citizens into beggars or quitters!)
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To: taxcontrol; All
Read this first:

http://www.freerepublic.com/focus/f-news/1987631/posts

6 posted on 03/18/2008 11:09:29 AM PDT by buccaneer81 (Bob Taft has soiled the family name for the next century.)
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To: taxcontrol

I got 43 mpg out of my Honda Fit last tank of gas, now keep in mind I nursed it seriously just to see what I could get. Coasting on hills, staying below 65mph, etc but it got it.


7 posted on 03/18/2008 11:10:40 AM PDT by Intimidator (Its not unilateral,just try saying you're a Progressive Dem in your typical Evangelical chur)
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To: Intimidator

Thats 3 MPG more than I used to get out of my ‘87 Renault Alliance (freeway!). I miss that li’l car.


8 posted on 03/18/2008 11:15:57 AM PDT by ExGeeEye (NIE or no NIE, I've been waiting since 11/04/79 to do something about Iran.)
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To: ExGeeEye

I usually get 35-39 regular driving.


9 posted on 03/18/2008 11:17:15 AM PDT by Intimidator (Its not unilateral,just try saying you're a Progressive Dem in your typical Evangelical chur)
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To: taxcontrol

Check out http://www.hybridcars.com/economics/hidden-costs.html

The one item that nobody has been talking about is the replacement costs for batteries—because nobody is replacing them. That’s what I thought until I received an email from Ray Molton, who works in the real estate industry in Houston, Texas. Ray wrote, “My 2001 Toyota Prius lasted five years and 113,000 miles. And then the batteries seemed to die. My dealer estimated the replacement cost at $7,000. They recommended scrapping the car for parts.”

Ray told me that Toyota had been “no help whatsoever on this issue.” He called another dealer only to discover a larger estimate of $8,000 to $9,000. Even worse, Ray discovered that the Toyota shop had another 2001 Prius with a bad battery. Maybe there is a conspiracy brewing, after all. In a follow-up email, Ray wrote, “Toyota doesn’t want these battery issues to get out to the public. How could there be two 2001 Priuses in the same shop at the same time, if they have had no problems with the batteries?”

To make matters worse, Ray bought a salvage Prius battery to soften the damage to his pocketbook—only to discover that the salvage battery’s #13 cell was corroded, the same #13 cell that had a problem on his Prius.

All of this threw me for a loop. Apparently, it had the same effect on Toyota.

Ray continued to appeal to Toyota’s corporate offices, and finally got through to a customer care representative who promised to look at the Ray’s expenses. He persisted at the local level, and finally got Metroplex Toyota in Houston to clean the corrosive cell on the salvage battery and install it—at half their normal price—in his Prius. The total bill, including rental car, salvage battery, service, and gasoline during the entire ordeal, was $1,345. Ray’s Prius runs like a top again.


10 posted on 03/18/2008 11:18:51 AM PDT by dblshot
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To: dblshot

2002 Honda Odyssey van. The auto transmission replacement cost out of warranty would have been $5,600. 1/4 the list price of the van itself.


11 posted on 03/18/2008 11:23:35 AM PDT by listenhillary (You watch, Hillary will challenge McCain for the R nomination)
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To: taxcontrol

Spreadsheet looks good with a couple of exceptions:

1. The higher MSRP is also likely to lead to a higher resale value. i.e. - you’ll recapture some of the premium when you sell the vehicle.

2. There is a tangible reduction in other maintenance and wear costs, such as brakes. The hybrids use “regenerative” braking whereby the braking power is actually the generator load recharging the battery, until you’re below about 5 mph, when the brake pads then contact the rotors.

I have a Lexus RX400h, and it came with an 8-year full warranty on the batteries, so I don’t care if they fail or corrode - I don’t plan on keeping it 8 full years and, until then, it’s their problem.

My expectation is that I’ll either break even on the premium, or come out somewhat ahead due to the resale premium.


12 posted on 03/18/2008 11:42:46 AM PDT by Be Free
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To: ExGeeEye

How about the Renault LeCar? Only car I ever saw with only three lugnuts...


13 posted on 03/18/2008 11:55:58 AM PDT by Yo-Yo (USAF, TAC, 12th AF, 366 TFW, 366 MG, 366 CRS, Mtn Home AFB, 1978-81)
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To: taxcontrol
Here's a chart that was published in the WSJ :

Look's like your numbers are probably pretty good.

What this table really tells me is that those who paid for the Prius (smug-factor) really got screwed. I know that includes some on FR who have flamed me in the past but, so be it.

In my opionion, the battery issue is a red herring. A 3-4 year payback for this technology is probably a good deal assuming you mostly drive short trips in the city.

You have to factor in the positive effect to cash which is immediate.

14 posted on 03/18/2008 11:55:59 AM PDT by keat (You know who I feel bad for? Arab-Americans who truly want to get into crop-dusting.)
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To: Be Free
"....8-year full warranty on the batteries"

If failure occurs at 4 years, are you entitled to a replacement of a NEW battery system at ZERO cost to you, or:

1- a charge of 50% of replacement cost for a new system.
2- a replacement that is a "factory refurbished" system at ?? cost?

Option #1 could be expensive if the MSRP for a new system is $9,000.

Option #2 could be as satisfactory as them giving you the sleeves out of their vest.

15 posted on 03/18/2008 12:01:23 PM PDT by river rat (Semper Fi - You may turn the other cheek, but I prefer to look into my enemy's vacant dead eyes.)
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To: keat
I made a similar chart with one of the stat heads in my office in 2005 and we figured it would take about five years at $5 per gallon to make up for the cost of the hybrid Escape over the basic 6-cylinder Escape, outside the cost of replacing the batteries in year 6. I think the premium back them was over $2,000, but I'm not sure, I just remember the decision was too easy.
It looks like that cost has come down considerably and hopefully they will do more to make the option more of a possibility for the rest of us.
16 posted on 03/18/2008 12:06:57 PM PDT by newnhdad
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To: socialismisinsidious

The batteries take a LOT of resources to make,

and are toxic to dispose of.


17 posted on 03/18/2008 12:08:01 PM PDT by MrB (You can't reason people out of a position that they didn't use reason to get into in the first place)
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To: Yo-Yo

Well, I never owned one...


18 posted on 03/18/2008 12:41:22 PM PDT by ExGeeEye (NIE or no NIE, I've been waiting since 11/04/79 to do something about Iran.)
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To: MrB
Liberalism always generates the exact opposite of its stated intent.
Jim Quinn, 104.7
19 posted on 03/18/2008 1:04:50 PM PDT by socialismisinsidious ( The socialist income tax system turns US citizens into beggars or quitters!)
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To: socialismisinsidious

Example -

the “War on Poverty”

as initially called the “War on Dependence”


20 posted on 03/18/2008 1:10:44 PM PDT by MrB (You can't reason people out of a position that they didn't use reason to get into in the first place)
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To: keat
Ok, I was not factoring in Tax credits. The 2007 Ford escape gets a Colorado tax credit of $1,942 and with the WSJ stated Federal tax credit, that works out to a total credit of $4,542, which just about wipes out the cost differential.
Battery warranty is 100,000 miles or 8 years.

Seems only to be worth it if the Feds subsidize the technology.

21 posted on 03/18/2008 1:11:37 PM PDT by taxcontrol
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To: keat; taxcontrol

Good chart, except that prices for Regular Unleaded are alot higher than $2.79 in many places. I just paid $3.48 here in the San Francisco Bay area, yesterday morning.

Taking that into consideration, with respect to the comparison between the Escape models, the Annual Hybrid Gas Savings figure jumps up to $546, which reduces Years to Break-even down to a more enticing 2.5 years.

(438/2.79) x 3.48 = 546

1,364 / 546 = 2.5

At the day’s end, then, I’d say the decision would have to factor that break-even against your own plans for ownership. How long are you thinking of keeping this vehicle? If the answer is “as long as possible”, then you’ve got to do research into the battery replacement issue as it pertains to your prospective purchase, and determine how that negatively impacts your break-even date.

A $3,000 battery replacement expense incurred in 2013, would drag you kicking and screaming backward over the threshold of break-even, because it would bump your “Hybrid Premium” up to $3,364, which makes your break-even 6.2 years; not 2.5.

So, you’d think you broke even in the fall of 2011, but just two years later, you may find yourself suddenly on the downside, again, over against your cost of owning the non-hybrid model, with break-even pushed out until the middle of 2014.

And, too, gasoline prices will likely continue to rise, contributing to a further increase in annual savings, which would pull that break-even date back in, so that as you leave the repair shop in 2013 with your new $3,000 battery pack installed, you still find that you’ve already broken even.

In the face of all that, I’d simply advise you to get the vehicle that best fits your budget, and your actual needs, and let your “green” conscience go begging until the alternative power technologies mature, and the costs of ownership are truly on-par with those of traditionally powered vehicles. When all of this calculus is obsolete; THEN the decision to buy hybrid or not can be made in complete freedom.

For NOW; get something you truly LIKE, because you truly LIKE it, can afford it, and because it will do what you need done.

Good luck!


22 posted on 03/18/2008 1:17:48 PM PDT by HKMk23 (When everyone's special; nobody will be.)
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To: taxcontrol

Get a scooter. :’)


23 posted on 03/18/2008 11:05:00 PM PDT by SunkenCiv (https://secure.freerepublic.com/donate/______________________Profile updated Saturday, March 1, 2008)
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