Comparison of Hybrid vs. Normal Cars: Which Saves Money?
More than 40 different 2011 models of hybrid cars vied for U.S. market share, including not only compacts, but sedans, SUVs, crossovers and pickup trucks. With fuel economy figures for hybrids ranging from a high of 51 city/48 highway miles per gallon, to a low of 17 city/21 highway, the money you stand to save by choosing a hybrid depends on the model. (See References 1) By comparing initial price and fuel savings, you can determine whether a particular hybrid is more economical than its standard counterpart.
The manufacturer's suggested retail price (MSRP) for a vehicle is the basic criterion for comparison shopping. When considering the purchase of a crossover-style car, for example, compare the standard, fuel-powered model with the manufacturer's corresponding hybrid model, if possible, to make a side-by-side comparison of cost. For the sake of illustration, take a base model with a MSRP of $38,375, and compare it to the same model with a hybrid engine offered by the same manufacturer at a base MSRP of $43,935. The hybrid model costs $5560 more.
Consumers who purchased a hybrid vehicle between Dec. 31, 2005 and Mar. 31, 2010 were eligible for up to $3,400 in federal tax credits. The amount of the credit depended on how many hybrids the automaker of a given vehicle sold. Once a manufacturer's hybrid sales topped 60,000, the government reduced the tax credit available to subsequent purchasers by 50 percent, and then later by an additional 25 percent, until the incentive disappeared altogether. (See References 2) Hybrids eligible for this tax incentive in effect cost less than their MSRP. In the above example, the crossover hybrid's purchase price would have been reduced to just $2160 more than the standard model --- if the buyer received the full credit.
When you purchase a hybrid, you would expect to save gasoline, since the vehicle operates partially on electricity. In the above example, the standard, two-wheel-drive 2011 model's combined highway and city estimated fuel usage is 21 miles per gallon. The same model with a hybrid engine has an estimated combined gas mileage of 30 miles per gallon (see References 3). If you plan to keep the hybrid for several years, your gas savings would likely compensate for the higher sticker price, particularly with that year's rapid increase in gasoline prices.
Gas Savings in Dollars and Cents
To determine the actual fuel savings over a typical year of driving, compare the operating cost of a hybrid versus a standard model. A U.S. Department of Transportation summary, dated February 2003, reports the average American driver between the ages of 34 and 55 drives 15,291 miles annually (see References 4). Divide this annual mileage figure by 21 miles to the gallon for the standard model, and you will find that you would buy about 728 gallons of gasoline a year. In contrast, if you divide the annual miles figure by 30 for the hybrid, you would determine that the annual gas purchase would be of about 510 gallons. You would save 218 gallons of gas a year with the hybrid. Multiply this by a conservative $3.50 a gallon for a dollar savings of $763. By selecting the hybrid over the standard model, you would make up for the $5,560 difference in sticker price in seven to eight years. Subtract the maximum tax incentive and you could recoup the $2,160 difference in less than three years. Thus, in this example, you would save money either by paying full price and driving your hybrid for more than eight years, or by driving it for more than three years with a tax credit.
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