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With gas prices going through the roof, and no relief in the foreseeable future, a lot of people are looking for ways to save a little money at the pump. It seems to be common knowledge that the one of the better ways to save money on gas is to switch from a standard gas engine to a hybrid, but will a hybrid really save you money, or will you merely be paying for an expensive seat on the green bandwagon?
We do mostly city driving in my household, and I had heard that people who drive mostly stop and go city miles reap the most benefits from a hybrid. I headed over to Edmunds.com to investigate just how much green I’d be saving by going green. I was going to be like those people on TV who fill up so infrequently that they can’t remember where their gas tanks are. The oil companies were going to weep for me…
I dug into Edmunds looking for information on what hybrids were available, and I was pretty surprised to find that there were at least six four-door sedans on the market that have hybrid counterparts. When I saw the city mileage of the first couple of cars, I pictured myself talking to the neighbors saying things like “Yep, it gets 40MPG in the city. Can you believe that? Best car I ever bought that didn’t have a giant wing.” There was a lot of flexing and waving of complicated new power tools that were bought with the leftover gas money, but I won’t trouble you with the fine details of what goes on in my head.
When I started looking at the prices of the hybrids, I have to say that my excitement dwindled a little. If you’ve ever looked into any green products like wind power or solar, you know that they’re priced more for wealthy folks who want to feel good about saving the environment than for regular folks who want to save a couple of bucks. Hybrids seemed to be on a similar track, because similarly equipped gas-only models were thousands of dollars cheaper than their hybrid counterparts.
The Prices Of Hybrid Sedans And Their Gas-Only Counterparts:
| Car | Price |
| Honda Civic LX | $15,836 |
| Honda Civic Hybrid | $21,725 |
| Chevy Malibu | $20,451 |
| Chevy Malibu Hybrid | $23,312 |
| Saturn Aura XE | $20,045 |
| Saturn Aura Hybrid | $23,640 |
| Toyota camry LE | $19,346 |
| Toyota Camry Hybrid | $23,661 |
| Nissan Altima S | $19,878 |
| Nissan Altima Hybrid | $23,759 |
| Lexus GS 460 | $48,654 |
| Lexus GS 450h (Hybrid) | $51,328 |
Source: edmunds.com TMV pricing
While it’s great to do things that are good for the environment, when you don’t have a lot of money to throw around, you have to think economically about things. I wondered, “Was the hybrid just another fashionably expensive green technology, or could I recover the price difference in a reasonable amount of time through savings at the pump?” As a finance person by training and cheap bastard by lifestyle, I couldn’t help but make an attempt at calculating how long it would take to recover the hybrid price premium. I didn’t include interest rates, the inflation rate, financing costs, maintenance costs, or depreciation in my calculations, and I took a relatively simplistic view of increasing gas prices.
Gas is at about $3.50 now, and gas prices have been rising in the U.S. at an average of $0.30 per year over the last 5 years (approximated from midgrade gas prices from 4/2003 to 4/2008 from U.S. Energy Information Administration data). I chose $4 as a reasonable guess at the price per gallon about two years from now. If we assume that everything stays constant, that would also be the average price of gas over the next four years.
The guessing continued as I tried to figure out how many city and highway miles that we drive each year. I think we do an average amount of driving, a majority of which is through city and back roads, so I estimated that we drive about 15,000 miles a year, with 11,500 of that (76%) being city driving. It’s only a guess, but it seemed like a reasonable one.
Once I had my constants, I headed back to Edmunds to gather MPG ratings, so that I could calculate what each of the cars would cost me for fuel each year. The formula for annual fuel cost (if you ever need it) is simply:
((city miles/city MPG)+(highway miles/highway MPG)) * gas price per gallon
Annual Fuel Cost Of Hybrid Sedans And Their Gas-Only Counterparts:
| Car | MPG (city) | MPG (highway) | Annual Fuel Cost |
| Honda Civic LX | 25 | 36 | $2,229 |
| Honda Civic Hybrid | 40 | 45 | $1,461 |
| Nissan Altima S | 23 | 31 | $2,452 |
| Nissan Altima Hybrid | 35 | 33 | $1,739 |
| Toyota camry LE | 21 | 31 | $2,642 |
| Toyota Camry Hybrid | 33 | 34 | $1,806 |
| Chevy Malibu | 22 | 30 | $2,558 |
| Chevy Malibu Hybrid | 24 | 32 | $2,354 |
| Saturn Aura XE | 22 | 30 | $2,558 |
| Saturn Aura Hybrid | 24 | 32 | $2,354 |
| Lexus GS 460 | 17 | 24 | $3,289 |
| Lexus GS 450h (Hybrid) | 22 | 25 | $2,651 |
source: edmunds.com TMV pricing
I was pretty surprised that only one of the hybrids on the list had what I considered to be an acceptably high city gas mileage (the Honda Civic), and three of them, namely the Chevy Malibu Hybrid, The Lexus GS450h, and the Saturn Aura Hybrid were absolute jokes. I have a car that burns fuel like a furnace as its turbo whistles it up to 60 in under 5 seconds, and it gets better gas mileage than these hybrids. They each get no more than 24 MPG, which is so ridiculously low for a hybrid that it suggests that neither Saturn, Chevy, nor Lexus put a lot of effort into their hybrids beyond simply getting them to market to capitalize on the green trend.
Once I had what each of the cars would cost me in gas for the year, I could find out how much a hybrid would save me at the pump by subtracting the hybrid annual fuel cost from the gas-only counterpart’s fuel cost. Then to find out how long it will take to recoup the difference in price with the money you save on gas, you take the premium that you paid and divide it by the fuel savings per year:
(hybrid price – non-hybrid price) / (non-hybrid fuel cost – hybrid fuel cost)
Breakeven Points of Hybrid Sedans And Their Gas-Only Counterparts:
| Car | Hybrid Price Premium |
Fuel Savings Per Year |
Breakeven (in years) |
| Lexus GS 450h | $2,674 | $638 | 4.19 |
| Toyota Camry Hybrid | $4,315 | $836 | 5.16 |
| Nissan Altima Hybrid | $3,881 | $713 | 5.44 |
| Honda Civic Hybrid | $5,889 | $768 | 7.67 |
| Chevy Malibu Hybrid | $2,861 | $204 | 14.02 |
| Saturn Aura Hybrid | $3,595 | $204 | 17.62 |
I had to check these numbers a couple of times with different gas prices, because I was pretty shocked by the results. Don’t be fooled by the Lexus being at the top of this list. The Lexus might have the lowest breakeven point, but it’s a $50,000 car that gets a mere 22 MPG in the city. The only reason it is in the top spot is that the non-hybrid Lexus gets the worst gas mileage on the list at 17 MPG. Even though the Chevy and Saturn grace the bottom of the list, they get similarly terrible gas mileage for hybrids, and would take between 14 to 17 years to recover the premium. It really should be noted that the non-hybrid Civic gets better gas mileage than the Lexus, Chevy and Saturn hybrids.
The gas mileage differences between hybrids and normal gas cars are greater for city driving, so someone like me who does 75% of their driving in the city should be a prime candidate for a hybrid. Unfortunately, the fastest that I could recover the cost premium for a hybrid is 5 years. People who do more highway miles will see less savings and longer payoff times, and people who don’t keep their cars for 5 years or more may never recover the hybrid premium at all.
Will you save money by buying a hybrid? You’d have to do your own calculations based on how much you drive and what you think the future holds for gas prices, but in most cases, it doesn’t seem likely. Hybrids may be a way of showing your neighbors that you care about the environment, but you will certainly pay for the privilege to do so.
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April 30th, 2008 at 11:13 am
Why do I not see the Prius on this list?
April 30th, 2008 at 1:21 pm
Because the Prius was made as a hybrid-only vehicle, there was no non-hybrid version to compare it to. I tried comparing it to the Yaris, but there were too many differences to call them equal in everything but the engine.
April 30th, 2008 at 2:40 pm
i was surprised that you didn’t include the prius. perhaps you could do a follow up post indicating the city/hwy gas mileage of a prius. you see them everywhere here, and yes, portland is the green mecca. also, you have to understand that saturn, lexus, and chevy are all jumping on the bandwagon. they aren’t necessarily out there to create a car that will give you extraordinary gas mileage. they want you to buy a car and perhaps they will gain a few customers by appearing “green”. the car companies fight against increasing the standard gas mileage per year. apparently they have til 2020 to get up to 35 mpg standard. that’s crap to me. japan is already there.
perhaps you should go hippy and buy a diesel vehicle and convert to veggie oil. or get on your BIKE!
April 30th, 2008 at 2:45 pm
First time poster, long time reader!
Just wanted to let you know that I’ve been enjoying your blog for a long time, ever since I stumbled onto it (somehow, I can’t remember!)
Also, I love this article, and submitted it to Digg, hope you get some more traffic, you deserve it!
April 30th, 2008 at 3:57 pm
Prius owner here:
You really want to compare the Prius to the Cambry hybrid. It has about the same amount of interior room and a TON more cargo space, in part because of its, yes, weird shape (the battery is a lot less noticeable than it is in the Camry hybrid, which actually only has the trunk space of a Civic)).
The city mileage figures are a little deceiving because you only get the really good numbers after you’ve been driving around for 15 minutes or so (more in the winter, less in the summer, because that’s how long it takes for the engine to fully warm up). Most of my “city” trips are under that time, so while my mileage is better than my old Focus, it’s nowhere near what the EPA claims. But since I drive like a grandmother, my highway numbers are way better.
The other, eathy-crunchier issue is that a hybrid puts out a lot less pollution than a gas-only car.
April 30th, 2008 at 6:57 pm
There are also some federal tax incentives to consider, although I don’t think that the Prius qualifies anymore ( something like several thousand dollars initially, but once so many models were sold, the break decreases rapidly and then ends )… Which should make a difference in the bottom line. My truck, which is diesel, averages about 18 to 20 mpg depending on traffic and my right foot, yet its one of the heaviest vehicles around. So I too am looking into these same things. If I buy a well used Civic for about 5k, I’m fairly certain it could last several more years because those things last for-freaking-ever.
Would a 10 year old hybrid be drivable and/or worth anything once those expensive and difficult to manufacture and dispose of batteries wear out? How much would I save by buying a used gas car than buying next year’s diesel Jetta even if it gets 50+mpg but costs 25 large? And when oh when will a new refinery EVER be brought online in the US?!?! Oh wait, I forgot, the oil companies need their record profits quarter after quarter after quarter…
-d—
May 1st, 2008 at 8:35 am
Some of your questions answered (I hope):
The Prius:
The Prius really is at the top of the gas mileage heap, being rated by edmunds at 48 MPG city and 45 MPG highway, but as Adam said that’s variable. The price is in the 20k range, making the payoff time 2-3 years, but I couldn’t include it because it didn’t have a non-hybrid counterpart. I wanted to, but it would’ve been like throwing into a hybrid/non-hybrid 0-60 MPH comparison when it doesn’t have a hybrid counterpart.
Federal Tax Credits:
Federal tax credits begin to phase out once the manufacturer has sold 60,000 vehicles, so the credits aren’t as big as you’d expect.
The maximum Federal tax credit for hybrid sedan is currently $2,350 for the Nissan Altima. The Saturn and the Chevy will get you about $1,300, the Civic will net you between $525 and $1,050 (depending on how fast you buy one), and neither Toyota or Lexus currently qualifies for a credit.
More info here:
Hybrid Tax Credit Info From the IRS
Hybrid Batteries:
Hybrid batteries are more expensive than a typical battery and they seem to run aboiut $3,000 to replace. Fortunately, the manufacturer’s warranties seem to be in the 10 year / 100,000 mile range (150,000 for Californians).
In terms of recycling, Both Honda and Toyota have phone numbers on hybrid batteries, and Toyota been recycling them since 1998.
Biodiesel:
This could take up another article.
Bikes:
I have had a
bilebike leaning on the back of my couch for approximately 4 years now. It used to get ridden, but the U.S. really isn’t set up to protect bikers from traffic. In the Northeast, people drive like idiots, and as someone who broke an elbow getting run off the road on a bike, I can tell you that trading life and limb to save a couple of bucks on gas just doesn’t seem worth it to me at my age. If we go all European and bikes become much more common, I think that would be great, but I’m not counting on it until gas goes up another $4 per gallon.May 2nd, 2008 at 10:32 am
You’ve got bile on your couch? I’m not helping move that!
-d—
May 5th, 2008 at 12:26 pm
I’m glad you’re cracking open this rotten egg that hybrid cars are the answer to all that is evil and unholy about petroleum consumption. I’m really sick of the righteous hybrid owners in Seattle leering at the rest of us as though we’re literally, personally the entire problem with the world’s environment. I could throw away Duracells all day for the rest of my life and still not poison the oceans as much as one hybrid car’s lead-acid battery that was improperly disposed of. And what about the blind people? Blind people are getting run down by Prius’s every day because they can’t hear them coming! Hybrid cars will be the death of us! I think if I had $5000 extra dollars when buying a new car, I could make a much larger difference in the world with it than by throwing it at an 8mpg difference on an already pretty efficient engine. The smugness of the wealthy is what’s truly ruining the world.
May 5th, 2008 at 2:55 pm
My dad has the Altima Hybrid and says it blows him away at how much it saves him on gas. Granted it’s a company car, he still has to pay for his own gas and says the savings on gas are amazing. Says 550 – 600 miles on a 12 gallon tank are pretty standard. He goes 2-3 times further on a tank than my huge 5.7l V8 Hemi does.
May 6th, 2008 at 11:37 am
I bought a Camry Hybrid. It is the most money I’ve ever spent on a car. I saved 600 dollars on my taxes. I bought it because I want them to make more…and more efficient hybrids. The Prius is the best obviously, and they plan to put in lithium-ion batteries relatively soon. It should get in the 60mpg range at least. That’s pretty good but they should be better. I live in a fantasy world where I think we can actually break free from mid-east oil.
Great. They make hybrids, but like anything good for the environment or healthy for your body, it isn’t cheap. The people that really need the better MPG can’t afford it. Poor people.
While I actually kind of like Kraft Macaroni and Cheese, it is awful for you. It is all salt and butter. This is what poor people eat because it costs a buck a box. If you are eating out of the health food isle, then you’re lucky, because you can afford to eat healthy. Poor people can’t afford organically grown transfat free french fries.
The cars that poor people can afford are going to become the ones that nobody wants. Old SUVs and big V8 Crown Vics. There is no fairness to this world. If you can afford a hybrid, you need it less. If you can afford wind or solar, you don’t really care about your electric bill. You just spent 20-40 thousand on a freaken wind mill. You feel good about yourself because you’re saving the environment. I think it is good to do this. I think each house should have solar panel roofs and wind turbines to generate electricity that they can push into their car batteries and kitchen stoves. But I live in a fantasy world where I believe this can be done.
If those that can afford these things though continue to spend the extra money to purchase these products, over time I think these products become the norm and hopefully changes are made with lower end products. Once again I’m living in a fantasy, but I don’t know what else to do. I like this fantasy better than the reality that life is unfair and there isn’t a thing I can do about it except be grateful for what I have and hope the best for others.
What a load of crap. I’m full of it. Nothing we say is real. Nothing we say changes anything. Death is the only constant.
Time to take my pills….
May 14th, 2008 at 2:52 pm
Whoa, Jo Jo… step back from the ledge, man.
You’re right on both counts, though – spending money to make money only works when you have money to spend in the first place. And the costs of these technologies will only come down due to very large economies of scale.
I think we’re still quite a few years away from the legitimate claim that “i bought a hybrid car to save money”. Save gas, maybe. But save money overall, no.
May 18th, 2008 at 10:09 am
Thanks for the great comparison chart on this post. I’ve linked to it from my blog, in a posting in which I discuss lots of different quandaries where you have to wonder if paying more for something that’s energy efficient is worth it in the long run. If you’re interested you can read my posting here:
http://suddenlyfrugal.blogspot.com/2008/05/pay-more-to-save-more.html
Keep up the good work.
May 20th, 2008 at 12:34 pm
In the Netherlands on a 25.000 Euro car (Prius) you get 6.500Euros back for having bought a greener car.
May 21st, 2008 at 10:32 pm
I’m a bit late here, but i’ll add my 2 cents…
The engines in these cars simply are not equivalent. Most cars offer some sort of engine choice with different characteristics, and people typically pay $1000-3000 more for an engine which is bigger or better in some way. Hybrids are similar–the engine characteristics are completely different, so that plays a big part in what people buy. Many people like the quietness and high initial torque that electric motors provide.
Some of the hybrids in your comparison have more horsepower and faster acceleration than the non-hybrid version. I know the Lexus GS450h does. That’s the main reason for the variation in mileage advantages for hybrids.
May 22nd, 2008 at 8:11 am
@Eric: I’m sure that the hybrids have high fuel economy, but because the premium is so high over the non-hybrid, you never recoup the cost with gas savings. If you typically own a car for less than 5 years, buying the non-hybrid generally ends up being cheaper.
@Brian: You’re right. The answer to all that is evil and unholy about petroleum consumption isn’t a hybrid. It’s a program of free unicycles for everyone that keeps getting shot down in Congress. It’s a conspiracy, I tell you.
@leah: Thanks fro the link.
@Mark: That’s not a bad deal at all. We have a few similar tax breaks in the U.S., but they’re not nearly as high.
@Andrew: I that there are many different reasons to buy different kinds of cars, but the common wisdom is that bying a hybrid will save you money. What I was trying to show was that the premium paid for a hybrid is difficult to recoup with savings at the pump.
May 26th, 2008 at 10:23 am
I agree with Brian.
While we’re so focused on going “green” by trying to save a few gallons and the associated $$$, we lost sight of the major environmental effect the metal hydride batteries have when they need to be disposed of.
Our focus should be on non fossil and renewable fuels as a source of our energy needs.
May 28th, 2008 at 12:02 am
I drive >25k miles/year, and in 2005 looked at the Prius vs. a similarly-equipped Corolla. I figured the cost difference was about $5000, which at $3.30/gal should be paid off in 5.5 years.
Now that gas is $4/gal., that has dropped to 4.5 years. Glad I bought the Prius! I am NOT a tree-hugger by any means, but this car makes economic sense to me … I plan on driving it for many years.
May 28th, 2008 at 8:20 am
@Rick: What I was doing was comparing the hybrids to their non-hybrid counterparts to show that it’s not really a money saver for people who keep their cars less than 5 years. I couldn’t include a Prius because it was like having a hybrid to non-hybrid horse power shootout and throwing a Corvette in there.
The Prius is admittedly a hybrid champ and makes good economic sense, but it has no traditional counterpart to fairly compare against.
June 22nd, 2008 at 1:24 pm
I think you missed a few things in your analysis. Lets just look at the civic. I think a better comparison is between a comparably equipped EX and the hybrid. Honda’s website lists the comparably equipped prices as 20180 and 23270. But I’ll split the difference with you and say the hybrid costs $4000 more. So there is no additional cost to you out-of-pocket, lets assume that $4000 comes from a 5-year loan at 7%. That means your extra payment for buying a hybrid is around $960 a year. Your estimate of gas savings was based on gas averaging $4 a gallon, maybe you want to revise that now? At $5 a gallon average, the savings is $960, the exact cost of the loan. So it looks like you are breaking even. BUT WAIT, we left one thing out, THE TRADE-IN value! Look at 5 year old civics in good condition with 75,000 miles, the hybrid is worth $1700 more!!!
So lets see, you pay no more money out of your bank account, the extra cost of the hybrid comes from a loan that pays for itself in gas savings. You pollute less, in some states you get to drive in HOV lanes or get priority parking spots, more of the money you spend stays in the USA as opposed to going to OPEC, you spend less of your valuable time in gas stations (not to mention, what do think the chances of are of there being 1970s gas lines sometime in the next 5 years?). And after 5 years you get an extra $1700 for your trade-in.
Sounds like a very good deal to me.
July 17th, 2008 at 3:01 am
I subscribe to the belief that while it may not be any cheaper for a hybrid right now, it may be easier to float a loan for one as nobody is going to float me a loan for several years for fuel. When restrictions return (not if) on how much you are allowed to purchase, a hybrid may squeeze enough miles from it to get you where you need to go, whereas a thirstier vehicle will not. I am still waiting on a hybrid that leans heavier on the electrics, is a plugin, and uses a very small diesel or micro gas turbine to generate re-charging electricity for a new generation of battery. I’d like to see 200 mile ranges in sedans and 100 miles in pickups the size of the original Tacomas (all unloaded, driver only) and fast recharge times (80% in under 30 minutes) but this may take awhile. A small diesel that could run on WVO or gas turbine that could run on darn near anything from alcohol to heating oil would be my ideal. Besides, electric vehicles need some sort of noisemaker to alert the populace of their presence.