The High Price of Hybrids

BusinessWeek online ^ | 3/10/2006 | David Kiley

[eraser2005]

What should consumers look for to figure out the best model for the environment -- and their pocketbook?

Consumers have had a hard time figuring out if gas-electric hybrid vehicles are worth the sticker prices, which are thousands more than their gas-only counterparts. It turns out even Consumer Reports has trouble calculating the true value and savings associated with buying and operating hybrid vehicles.

[eraser2005]

Interesting. Consumer Reports has to backtrack on their previous claims of low mileage and no payback. They now say that Prius and Civic Hybrid owners WILL save money over 5 years and 75,000 miles compared to the gasoline only counterparts (though the savings are just $406 and $317 respectively). That's a $4000+ reversal for the Civic. Some is depreciation corrections, and some is fuel economy corrections (they now say they got 44 mpg in a Prius). The Escape hybrid is more expensive over 5 years than its gasoline counterpart, though not by much. The Escape hybrid saves $660 per year in gasoline costs, though, so a few extra years of ownership should close the gap (maintenance costs are lower as well - though you do have the potential for battery replacement, though all evidence says these are now lasting over 180k miles with very minor degradation).

Of course, it would be nice if CR could recall their magazine like they push manufacturers to do in order to correct their mistakes.

[tigtog]

There is no savings from a hybrid. The purchase price is known but the O&M costs are currently unknown to the market. The only benefit is that you get to use the HOV lanes as a single driver. That will change as soon as more hybrids are bought. If you want to really save money on fuel ride a motorcycle. You actually save money and will always get to use the HOV lanes.

[discostu]

Still doesn't look very impressive to me (deeper in the article):
The new calculations show that owners of the Toyota (TM) Prius will save $406 and owners of the Honda (HMC) Civic hybrid will save $317 compared with owners of their gas-only counterparts. However, owners of four other hybrids -- the Honda Accord, Ford (F) Escape, Toyota Highlander, and Lexus RX 400h -- will still end up spending $1,883 to $5,508 more over five years and 75,000 miles, Consumer Reports said.

So two of the models save money, and over the course of a 5 year ownerships these cars that cost 5 digits will save you a few hundred bucks. That's just slightly better than break even, and once you throw in time value of money you're moving to zero or a really small (less than $100) loss.

[DoughtyOne]

The Mariner hybrid's batteries are guaranteed for ten years or 150,000 miles. That pretty much removes that concern. I wouldn't be surprised if the Ford Escape's batteries are covered under the same type of warranty.

[Righter-than-Rush]

The Escape is not a worthwhile investment due to resale value. Both Prius and Civic are worth looking at, but ONLY in meeting all the following criteria:

1. You keep the car for 200,000 miles and have no accidents requiring replacement of driveline/engine/generator elements
2. You rack up those 200,000 miles in under five years, to retain some element of resale value more than zero
3. You pony up the extra purchase price moneys over the non-hybrid vehicles

If you cannot meet ALL of the above, a hybrid is nothing more than a feel-good toy. Frankly, I feel better by just driving my SUV less by combining trips and by letting my fingers do the walking.

[Publius6961]

Why must this tired argument keep cropping up?

I did not buy a hybrid for the "savings", or the price.

I bout it because I was challenged when I drove it. I was fascinated by the technology, the instrumentation, the challenge. The new experience.

"I just felt like it" is no longer a choice?

[EagleUSA]

The reality that never gets published (for the most part) is that the bring-back value on hybrids is very weak. Reason: uncertainties about battery life and care mainly. The batteries are very expensive to replace.

Because of the initial retail price tags and depreciation (loss) on value over the term of a lease, for example, do not make them a bargain in any sense. Any real savings is marginal.

[DoughtyOne]

And perhaps that's a fair comment, but wouldn't you say that contributing to cleaner air is probably a good thing if it didn't cost you more, or require a significant loss of performance? Some of the new hybrids are fairly nice cars.

[Doohickey]

Saving money is not the reason to buy a hybrid. Same with an H2 or a Corvette.

[discostu]

"You just felt like it" is a fine choice. But that's not their advertising push. Their push is that it'll help the environment and save you money, if those claims are invalid then the reasons they give to buy their cars are lies. If the focus of the advertising was the geewhiz factor (like the Mazda inverted piston thing... whatever happened to that car anyway) all this other stuff would be a non-issue, but they made other claims, claims which (inspite of the headline) are proving a little sketchy.

[Paloma_55]

After 5 years and 75000 miles, it will be time to change the batteries. Check out the impact on resale value that will cause. Who wants to dump a few thousand into a 5 year old car?

But if you don't, what does the resale price do?

I say they are gonna have a real problem selling used hybrids in 5 years.

[Publius6961]

Saving money is not the reason to buy a hybrid. Same with an H2 or a Corvette.

Thank you.
One sane person in a sea of controlling twits!

[tigtog]

I understand your motivation, similar to a sports car buyer. However, the entire hybrid marketing plan is sell them to consumers with the promise of fuel economy. This they really don't do. It is similar to the CAFE standards that required manufacturers to boost fuel economy. The first thing they did was to remove as much weight from the vehicles. This meant thinner, lighter windshields. The result of saving a gallon or two a year with the light windshield does not cover the annual replacement cost of the windshield. Penny wise, dollar short.

[Labyrinthos]

The Escape is not a worthwhile investment

No one should ever think of a new automobile as an "investment." Investments are supposed to produce a positive stream of income and/or captial appreciation after factoring in depereciation and the cost of ownership.

[Prysson]

Sure it is...just dont expect others to have to share the motive. Not saying you do but you knw as well as I do that there are people who think everyone should drive them. I think eveyone should drive what they want to drive...including you driving a hybrid if you want. more power to you.

[Righter-than-Rush]

>>No one should ever think of a new automobile as an "investment.">>

Quite right. Wrong word. Expense is more accurate.

[appeal2]

If you use cruise control more on the highways, you will get an additional 2-3 mpg which will more than make up for any feel good savings. As far as greenhouse gases go, we all better start eating more meat so that there are less cows producing less methane in their farts.

[308MBR]

The Chinese really appreciate you doing your part to make oil cheaper for them.

I'm cancelling out several greenies by building my 409 Chevy to 480 cubic inches, a nice lumpy Crane cam, and two brand new Carter 600 cfm four barrels. I figure to get about 8mpg when I have some fun per gallon with it.

[Doohickey]

Ford Escape's batteries are covered under the same type of warranty.

They are.

[Labyrinthos]

I thought so.