Are Hybrid Cars Worth It?

Posted in Auto Insurance

December 30th, 2009

Hybrid cars (also known as Hybrid-Electric Vehicles or HEVs) have been advertised as the environmentally-friendly cars of the future for some time now. Many environmentalists have promoted the car as a way to cut down on emissions, as well as gas.

But while they are heavily promoted as cars you should purchase – and even offer tax credits to help you do so – you have to wonder if making such a major purchase is actually worth it. So before heading out to get yours, let’s conduct a quick hybrid review to see whether it is actually worth the money.

What is a Hybrid Car and What Does it Offer?

Hybrid vehicles are vehicles that use two or more distinct power sources to move them. Typically, hybrid cars are electric cars that combine an internal combustion engine (which typically burns fossil fuel) and one or more electric motors.

One reason that they have often received good car reviews is because they don’t burn fuel in the same way as regular cars. In other words, they are highly fuel efficient. This is partially because they alternate between the gas engine and electric motor. Also, the battery in the hybrid vehicle, which helps power the electric motor, puts less pressure on the gasoline engine and stretches out the amount of fuel burned so that you’re using fewer miles per gallon.

Advantages of Hybrid Cars

In addition to improved fuel economy, some other benefits that come with the hybrid car include:

• Regenerative Braking: The electric motor is known to apply resistance, which causes the wheels to slow down. Additionally, the energy from the wheels turns the motor and functions as a generator. This helps to convert energy into electricity that is normally wasted during the coasting and braking process.
• Electric Motor Drive/Assist: The car gets additional power from the electric motor, which assists the engine in accelerating, passing and hill climbing.
• Automatic Start/Shutoff: The ultimate benefit of this type of car is that the engine shuts off when the vehicle comes to a stop and automatically restarts when the accelerator is pressed. This helps to avoid wasting energy while idling.

As you can see, there are benefits to the hybrid vehicle itself, but the real question is, if you’re thinking in terms of cost only, should you pass up a regular gas-burning vehicle for the hybrid vehicle that may have better gas mileage yet cost more?

Standard SUV vs. Hybrid SUV

Now’s the time to do the math. Let’s compare a hybrid and non-hybrid SUV to see if one is more cost effective than the other. To start, we’ll look at the 2009 Ford Escape and then we’ll take a look at its hybrid version.

The 2009 Ford Escape FWD (front-wheel drive) 4-door has an invoice estimate of $20,358, according to TheCarConnection.com. It offers 20 city miles per gallon and 28 highway. Let’s say that you’re financing the car for five years at 7.50% with a $3,000 down payment. With these figures, your estimated monthly payment would be $347.82, or $20,869.20, over five years.

Now let’s take a look at the 2009 Ford Escape FWD Hybrid 4-door with an invoice estimate of $27,422 and 34 city/31 hwy. If you finance for the same loan term at the same interest rate and with the same down payment, your estimated monthly payment would be $489.37, or $29,362.20, over five years.

Right off the bat, the hybrid costs more than the standard SUV.

So now let’s take gas savings into consideration, which is the main reason you’re considering a hybrid. Let’s say that you drive an average of 15,000 miles each year (give or take a mile). Of those miles, 6,000 are city and 9,000 are highway.

Assuming that you get regular oil changes, tire rotations, tune-ups, etc. and gas averages $2.75 per gallon (if we’re lucky), let’s first look at the standard Ford Escape with a 16-gallon tank. You should get 320 miles per one tank of gas for city driving (20 miles per gallon x 16-gallon tank) and 448 miles per one tank of gas for highway driving (28 x 16).

If you drive 6,000 city miles, you will need to fill up your tank roughly 18.75 times per year (6,000 / 320). And if you drive 9,000 highway miles, you will need to fill up your tank 20.09 times per year. If you add these numbers and round up, we find that you’ll need to fill up roughly 39 times per year. Assuming that it would cost $44 to fill up (16-gallon tank x $2.75 per gallon), the standard SUV would make your cost for gas $1,716.00 per year or $8,580 over five years.

Now let’s do the same for the hybrid vehicle with the same 16-gallon tank. In this case, you would get 544 miles per one tank of gas for city driving and 496 miles for per one tank of gas for highway driving. Driving the same number of miles, you will need to fill up 12.10 times with your city driving and 16.54 times per year for your highway driving. If you add these numbers and round up you get a total of 29 times per year that you need to fill up. At $44 per gallon, the hybrid would cost you $1,276 per year in gas or $6,380 over five years.

Sound attractive? Well, let’s take one more step. The 2009 Ford Escape Hybrid is eligible for a $750 tax credit if purchased before March 31, 2010 (the incentive will phase out to $0 if purchased after this date). So now let’s do the math with the hybrid tax break:

Ford Escape Standard (over five years): $20,869.20 (invoice) + $8,580 (gas costs) = $29,449.20

Ford Escape Hybrid (over five years): $29,362.20 (invoice) + $6,380 (gas costs) – $750 tax credit = $34,992.20

Uh oh. It looks as though the hybrid, over five years, will average $5,543 more than the standard car.

So Are Hybrids Worth the Cost?

If you’re all about the environment then the hybrid vehicle is a great option. You emit few pollutants into the atmosphere and burn less gas. However, if you’re looking at total costs, we hate to admit it, but the hybrid doesn’t appear to be worth the cost unless you own the car for a significant amount of time.

Is the cost of owning a greener vehicle worth more to you?