Everyone knows hybrids get better fuel economy and emit less CO2 than their conventional counterparts, but they also cost more because of the added technology. And that makes them a lousy value because you won’t recoup that added cost in fuel savings.
So say the people at CarGurus.com, who repeat a common argument against hybrids but back it up with some stats. They examined the purchase price and operating costs of 45 popular hybrid models and discovered the average petrol-electric automobiles costs 25 percent more to own and operate than its petrol-only sibling.
“The hybrid premium tends to considerably outweigh any savings you might see in reduced fuel costs,” said Langley Steinert, founder and CEO of CarGurus.com. “In 76 percent of the cars we examined, the cost of ownership was significantly higher than the cost of ownership of the same petrol-only model.”
Although hybrids have enjoyed growing popularity, they remain a tiny niche. Of the 10.5 million vehicles sold in the United States last year, 290,232 were hybrids. (Almost half were Prius hybrids [.pdf], by the way.). To put that in perspective, Toyota sold 356,824 Camrys in the United States last year, while Ford sold 413,625 F-series pickups.
CarGurus.com included 45 hybrids in its study, ranging from the 2004 Honda Civic Hybrid to the 2010 Toyota Camry Hybrid. It examined only those hybrids with a conventional counterpart -- the Ford Fusion Hybrid, for example -- so the bean counters could make “a direct apples-to-apples comparison,” Steinert said. For that reason, the Toyota Prius and Honda Insight aren’t included. They also compared the hybrids to siblings with similar features and options.
Steinert’s crew looked at the typical selling price of a used hybrid so they could consider depreciation in the cost of ownership. Steinert said including that data disproved the idea that higher resale values help offset the so-called “premium hybrid” paid when the car is new.
In determining the cost of ownership, they considered the manufacturer’s suggested retail price, the depreciation and the fuel cost of driving 12,000 miles annually. Then they compared the fuel economy of the hybrid and its conventional counterpart. The study examined only the economics of buying and owning a hybrid. There was no consideration given to any environmental benefits the cars might provide.
CarGurus.com found that the average hybrid vehicle costs almost $6,400 (£4,144) more than its gasoline-burning counterpart to purchase. And it costs more than $2,200 (£1,424) more to own and operate. The worst of the bunch were the 2008 Chevrolet Tahoe and GMC Yukon hybrid SUVs and the Honda Accord hybrid of 2007 and 2008. At the other end of the spectrum, late-model Ford Escape, Ford Fusion and Toyota Camry hybrids provided the best value.
“Value” being a relative term, Steinert said.
“In general, hybrids are not good investments,” he said. “But if you’re going to buy one, the two things to keep in mind are the hybrid premium and the MPG premium. Don’t overpay for the car, and if you aren’t getting significantly better fuel economy -- which in my book is north of 30 percent -- with the hybrid, you should think twice.”
Advocates of hybrid technology often lament the high cost of the cars. The Union of Concerned Scientists, in compiling its first Hybrid Scorecard, praises automakers for building a wide range of gas-electric vehicle but slams them for packing them with standard features that drive up the sticker price by an average of $3,000 (£1,942). That’s on top of the hybrid premium.
“This new study appears to come a similar conclusion (as the Hybrid Scorecard) -- that hybrid vehicle manufacturers need to offer consumers the best value by maximising fuel economy improvements of hybrid vehicles while making these vehicles more affordable by offering hybrids in the same base model configurations as non-hybrid models,” said Don Anair, a senior analyst in the Union of Concerned Scientists’ vehicles program.
There is reason to believe that premium could disappear. In an industry first, Ford killed it with the Lincoln MKZ Hybrid, which will cost the same as its V6 sibling. That’s a huge move, and although Ford won’t say if it will adopt the pricing strategy with other models, some EV advocates and industry analysts say it signals thebeginning of the end of the hybrid premium.
As noted, CarGurus.com did not make any consideration of the environmental benefits and other advantages ofhybrid vehicles, which are difficult to quantify and many consumers place a premium on. And for that reason, consumers may indeed consider them a good value.
“Most hybrids are still a good investment,” Anair said. “Most consumers aren’t looking at just the immediate cost savings of hybrid technology. They also want to use less oil, have a car that pollutes less and they like new technology. These are real benefits, but harder to put price tag on. It’s also hard to predict where gas prices will go in the short-term. The higher gas prices are, the more economic sense hybrids and other fuel efficient cars make.”
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