about buying that Prius? You might want to think twice.
A recent study released
by the automotive analysis site TrueCar.com confirms what many
already suspected -- that the benefits of hybrid vehicles still fail to
justify their inflated premiums versus fuel-efficient budget vehicles.
I. Hybrids v. Gas Vehicles -- Hybrids Lose
A report examines the 2011
Toyota Prius from Toyota Motor Comp. (7203) -- the most
popular hybrid vehicle in America -- which gets about 49.6 miles per gallon
combined gas mileage and retails starting at $22,120 USD + fees. It
compares this to the 2011 Hyundai Elantra by
Hyundai Motor Comp. (005380), a fuel efficient budget "traditional"
gas vehicle which gets 33.1 mpg combined gas mileage and retails for $14,830
USD + fees.
At a gas price of $3.52 USD/gallon (the average price at the time of the
report's publication) the Prius owner would pay approximately $1,063 USD to
travel 15,000 miles over the year, while an Elantra owner would pay $1,594 USD
to travel the same distance. At $5 USD gas -- an extreme not yet reached,
the difference would grow to $1,510 USD (Prius) vs. $2,250 (Elantra).
Thus under the current price scenario, it would almost 14 years to recoup the
cost distance between the Prius and Elantra. However, Prius batteries are
only under warranty for 10 years and may die or experience significant
performance degradation as the vehicle gets up in the years. In other
words, buyers will have to wait years and may even then have trouble breaking
Of course if gas reached $5/gallon then it would only take 10 years to recoup
the difference, in which case the Prius might seem slightly more attractive.
Jesse Toprak, Vice President of Industry Trends and Insights at TrueCar.com,
concludes, "If you’re looking for the most fuel-efficient car, the Toyota
Prius wins. If you’re looking for the most cost-effective and fuel-efficient
car, the Hyundai Elantra is the clear winner."While intriguing the study has one serious flaw... read the update at the end of the study for that point and our conclusions.
II. Battery Electric Vehicles -- the Best Option of All?
What the report fails to mention is that the battery electric 2011 Nissan LEAF
EV from Nissan Motor Company, Ltd. (7201) might be the
most attractive option of all, given the initial comparison. Here's our
The LEAF retails for $25,280 USD + fees, post $7,500 tax credit. (Note,
i EV retails for even less --approximately $20,500 after federal tax
credit -- but is a significantly smaller compact and has limited availability).
The LEAF, comparable to the Prius in size, is approximately $3,150 USD more
expensive than the Prius and almost $10,500 more expensive than the Elantra.
But in theory that same driver could travel the 15,000 miles using only the
electric drive (even if you only consider driving on weekdays, this would work
out to an average of about 58 miles per day -- within the LEAF's range).
Over the year the driver would save approximately $1,600 at present gas
prices, minus the additional cost of electricity.
Assuming about $400 of the electricity based on $0.11 per kWh [source], this would work out to
$1,200 saved a year. Thus it would take nearly 9 years to recoup the cost
of investment -- and lo and behold, you might even come out ahead.
Of course this only is thanks to the $7,500 tax credit.
III. The Future -- Hope for the Hybrid?
is producing a lot of
Prii, currently (or was
pre-tsunami). But it still has a way to go before it sells as many as
its best-selling models like the Camry. Once this volume is reached,
costs should drop, which should help to justify the payback.
The real question is how to convince buyers to purchase enough hybrid vehicles
to get to that point at a time when the vehicles don't necessarily make sense
One answer may lie in smaller hybrids. Toyota is contemplating releasing
a mini-Prius, dubbed the
Prius-C. Ford Motor Comp.'s (F) plug-in
C-Max Energi, due out in 2012 will fill a similar niche. These
smaller hybrids will likely be more affordable, and are expected to get even
better gas mileage.
Of course they will be competing against smaller cars that are themselves far
cheaper and more fuel efficient, so this strategy may not be as easy as one
At the end of the day the pricing is predictable -- EVs are most expensive,
then hybrids, then traditional gas vehicles. EVs are the best deal
price-wise with tax credits, but without them they're the worst.
As the technology advances hybrids and electric vehicles may become the best
buy. But for now expect diesel vehicles and efficient gas-only sedans to
remain the most financially advantageous non-subsidized option.Updated: May 16, 2011 5:03 p.m.--As one reader points out, the base Elantra does not include air conditioning or an automatic transmission. The A/C upgrade costs an extra $1,250, while automatic trans. bumps the price $2,200. This would skew the figures slightly in favor of the Prius, but it's still very close. The return would be reduced to 7.5 years at current gas prices.This would still leave the EV even farther in the lead, so this conclusion is correct regardless of the comparison point.One thing to consider is that you'd only see returns on the Prius after 7.5 years, and would likely only see savings for ~ 2.5 years on average, as your battery would begin to deteriorate. Thus you'd be saving about $1,250 over a 10 year lifetime. That's less than an investment with 3 percent annual return over inflation, so it means even if you do save, it's not that "great" an investment for the amount of money you have to put in, up front.
quote: That said, the whole reason hybrids are advocated are due to external costs which are not factored into the cost of gasoline. e.g. smog, violence in the Middle East, acid rain, etc.
quote: Funny, how we are supposed to measure gas usage per GALLON, and not per YEAR.
quote: Bias much?
quote: Reread, please... it was $$ per year... I list how many years it would take to break even.
quote: The estimate was at $3.51 gas...
quote: In short you're comparing apples and oranges when it comes to your scenario versus the one in the article.
quote: If anyone is biased, it's you. You've given the use case of gas that's more expensive than the current average and someone who drives much more than the average user.
quote: So, using Gas Price A and Miles B is valid, but using Gas Price X and Miles Y isn't?
quote: I've had the same Camry for 15 years. Don't drive it much, but over time, its hit 200k [and counting]. I fail to see why expecting a newer car to last just as long is out of bounds.
quote: The car will last that long, but the hybrid battery pack likely won't. Even if miraculously is still chugging it will likely be reduced to practically nothing and your mpg will suffer greatly (as you no longer have a hybrid effectively)...
quote: Which is an irrelevent argument. The only factor should be "Which is cheaper over the lifetime of a car".
quote: Thats the entire point of the discussion: At what point is the break-even price?
quote: What about states where gas is at $4.50 right now? Likewise, what about two years down the road when gas prices peak due to the improved economy? Or price increases over the next decade due to declining production? As such, I'm using a number that is much more realistic to what one would see over the next 7-8 years. Over the next decade, $4/Gallon is far more realistic to what we'll see at the pump compared to just $3.50/Gallon.
quote: Using one set of numbers to argue the Prius isn't cost-efficent is outright idiotic. I mearly showed using more realistic numbers, the cost between the two is roughtly equivalent.
quote: If investment A makes more money in 20 years than investment B but investment A costs twice as much up front, that's half the amount of money you have available to invest elsewhere. So the comparison isn't simply A vs B. It's A + opportunity cost vs B + opportunity cost. If you're able to invest in C with the dollars you saved by purchasing B instead of A, over that same 20 years you might still come out ahead.As it relates to cars, it absolutely matters how long it takes to break even because that's how you determine the total cost (including opportunity cost) over the lifetime of the car.
quote: When you have a second, can you ask your crystal ball which stocks are going to skyrocket in the next 2-5 years (and then 10-20 years if you have time)?
quote: Using one set of number is outright idiotic...ok. So then why did you do the same thing?
quote: Argument fail. Using that logic, I can argue the up front extra cost is made up for by the later on savings. So with the higher up front cost, I have more money to invest later, making up the difference again.
quote: To prove that using more realistic numbers leads to a differnet result, proving how idiotic cherry picking numbers is.
quote: The estimate was at $3.51 gas...
quote: At a gas price of $3.52 USD/gallon (the average price at the time of the report's publication)
quote: Every time you type stuff like this I have to replace my BS meter.
quote: No oil fights contamination, but modern oils such as the popular Mobil-1 contain DETERGENTS which are designed to break down soot and other particles that would otherwise form a layer of gunk within the engine. This is why the oil turns dark brown. When it is fresh it is about the same color as honey.
quote: If you have a modern car, like something 1990 or newer, and you are using a full synthetic...5,000 to 6,000 miles is a reasonable interval for oil changes assuming you do typical driving in an urban setting.
quote: Can you read? Those DETERGENTS are the same ones that regular oil uses, and they break down just the same. Once the additives and detergents break down, you no longer have adequate engine protection, synthetic or not.
quote: Yeah that's what I go for, around 5k, no longer. But 10 or 20k? That's just flat out bad for your car, period.
quote: Have you ever worked in the service or maintenance field? Trust me, manufacturers today are NOT highly invested in engineering long lasting products. These are the same people who use plastic on metal gears on your washing machine. Why? Because it's engineered to most likely fail after the warranty is expired. Auto manufacturers are, for the most part, no different. So sure, go 20k between oil changes. Going that long, you start losing the benefits of synthetic oil's superior engine protection.
quote: You enjoy your 10,000 mile oil changes. I'll ensure my car lasts and go no more than 5000.
quote: Hmm... Should I believe you or the company that actually designed and manufactured the vehicle? Do you work for one of those instant oil change places?
quote: It is a silly argument, because the biggest factor in how long your oil lasts is how contaminated the air is that goes into your engine.
quote: I ain't tradin' in my family's safety Just to save on a little gas
quote: You'd be better off asking what's going to happen in 10 years when gas is likely going to be over $6, perhaps even higher given recent trends?
quote: Then we get off our ass and finally make some new nuclear plants?
quote: Also, the defense against injuries in crashes is to drive safe.
quote: find the tone of this post to be incredibly insulting and moronic at the same time. you obviously know nothing about either physics or people. go home and watch your ecchi, otaku, reality is not your strong point.
quote: if you had the choice of having a 50/50 survival and an 80/2o in a crash, which would you pick?
quote: In collisions, the chances of survival are higher, no matter the conditions. (In other words, no, it doesn't depend on hitting smaller vehicles, you idiot.)
quote: I find the tone of this post to be incredibly insulting
quote: go home and watch your ecchi, otaku
quote: Yes, it does depend on hitting smaller vehicles. SUV's are not the safest car per mile driven. Large cars are safer, and minivans safer still. And both get in fewer accidents than SUV's as well. SUV's are prone to rollover, are unmaneuverable, and their mass ain't gonna help you when you hit a tree.
quote: Hmm, usually Jason is accused of being a liberal-lefty-so-and-so. If that's the case wouldn't he be backing the hybrids or skewing things in FAVOR of them?
quote: Reclaimer has accused me of being a "bleeding heart liberal" or something of that nature in recent history.
quote: I don't think the Prius is necessarily the best deal, but you really aren't doing a fair comparison here. The $14k Elantra is a manual without air conditioning. Add in AC and an automatic transmission (like most people would purchase) and you'd be looking at a $17k car.
quote: They still make cars that don't come standard with AC?
quote: In other climates, A/C might be a convenience but not be a requirement.
quote: Block heaters? Isn't that for diesel vehicles?
quote: That's foolish thinking. What if you move? What if the weather changes and you have a hot year? It happens. What if you go on a trip?
quote: The problem is, when you have people merging and changing lanes, causing people to slam on the brakes, it's almost like creating an obstruction in the road and when people don't attempt to smooth out that obstruction like traffic smoothers do, then everyone has to slow down at that exact spot.
quote: 1. hybrid technology used today uses batteries. batteries that cost a ton to change every 3-4 years. Throw that into the equations and the deal is even worse for hybrids
quote: +1Seriously, ugly stick beatings wouldn't be enough. This car drove through an ugly forest and ran over a few ugly trees.
quote: ALL MKZ EQUIPMENT PLUS:- Airbags – Driver Knee- Badge – Exterior (Hybrid Unique)- Battery 275V Sealed Nickel-Metal Hydride (NiMH)- Brakes – Regenerative Braking System- Engine – 2.5L 16V Atkinson I-4- Instrument Cluster – SmartGauge™ with EcoGuide- Permanent magnet electric motor- Seats – 2nd Row – Fixed (Due to battery placement - Gas MKZ has 60/40 folding)- Transmission – Aisin Powersplit E-CVT Automatic