Cost Analysis of Hybrid and Electric Cars

Ugh. This is a picture of what it cost me to fill up my car the other day. You’d think that a sensible girl like me with a knack for saving money would be rushing out to trade in my gas guzzling SUV for a hybrid or electric car. I’m not. And I don’t think you should either.

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I bet you didn’t expect me to say that. It goes against everything the media has been telling us over the last eight years since the first hybrid car was mass produced.

Don’t get me wrong, the idea of a hybrid or electric car is a good idea. Any kind of car that reduces our dependence on foreign oil is a good thing.

But as with any new technology, being an early adopter is an expensive hobby. The people that bought the first home computer, cell phone, digital camera, mp3 player etc. all paid a premium to be among the first to own one. As with any first edition the company behind the product is still working out all the bugs, the next one will be better.

It’s the same story with hybrid and electric cars. Even though they’ve been around for almost a decade now the technology is still in its infancy. We have not seen how far the car manufacturers can push these alternatively fuelled vehicles yet. That’s why if your only motivating factor to purchase one of these cars is money, hold off on buying one.

The big question is whether a hybrid or electric vehicle’s premium price is worth it given the amount of fuel you’ll save. Generally, hybrid and electric cars are about 20% more expensive than their gasoline powered counterparts. So is it worth it to pay more upfront to offset more of a savings at the pump? Let’s do a comparison. All of the following data I found on Honda.com.

A 2011 Honda Civic Sedan has a MSRP (manufacturer’s suggested retail price) of $15, 805. It gets 28 mpg (miles per gallon) in the city and 39 mpg on the highway.

The 2011 Honda Civic Hybrid has a MSRP of $24,050 while boasting an impressive 44 mpg on the highway.

The average person drives 15,000 miles a year and we’ll say that gas costs $3.90 a gallon for both scenarios. Knowing this and the fact that the Honda Civic Sedan gets 39 mpg on the highway we can calculate that the annual fuel costs for this owner will be $1,500 a year or $125 a month.

The hybrid version of the Civic gets 44 mpg. Using the same figures as above we find out that the Honda Civic Hybrid will only cost you $1,329.54 a year in gas or about $110 a month.

That means the hybrid will save you about $15 a month or $180 a year in gas. But it costs you about $8200 more to purchase this version. That means it would take over 45 years for the gas savings to pay you back for the difference in price of the car. That’s clearly not a wise investment.

Beyond price, hybrid and electric cars have the problem of limited driving range. Gas powered vehicles with good fuel economy can go about 500 miles before needing to be refueled. Most electric cars can only go 200-300 miles before needing to be recharged. The average time to fully recharge an electric cars battery is between four and eight hours.

If you plan to use an electric or hybrid car to commute back and forth from your job combined with running a few errands than their limited driving range should not hinder your lifestyle. It’s when you do those holiday trips to visit family back East or vacations that span multiple days that you run into problems with driving range and where to recharge at. Not many cities across the U.S. offer recharging stations currently.  And even if you could find a place to recharge your cars battery what would you do during those four to eight hours of wait time?

Another factor that keeps me from buying a hybrid car is the worry about maintenance. If my current car gets into an accident or breaks down unexpectedly there are a million and one mechanics that can fix it up. There are virtually no car mechanics that know how to fix an electric or hybrid vehicle. And the costs to replace those specialized parts are bound to be more costly than parts to fix standard, gas powered vehicles.

Advancements in technology over the next ten to twenty years will cause the price of hybrid and electric cars to fall. As with any new technology the longer you wait to purchase yours the faster, more fuel efficient, and inexpensive it will be.

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Keeping Money in Your Pocket,

Nancy Patterson

9 Responses

  1. TXGal

    Yup – thanks for the calculations Nancy…I have heard from fairly good authority that the cost to replace the battery in a Toyota Prius is upwards of $3000 vs. $90 for a regular vehicle AND they do NOT last as long as the $90 one. They may be good in places that are not very spread out, but it was only a year ago I was putting 350 miles on my vehicle every week, just commuting back & forth to work!

  2. Ed

    Yes, you’re correct about the cost of replacing batteries. You will have to do so every 3 -5 years. Plus if it’s a hybrid, you have the battery cost and the regular engine cost. If you factor that in then the number of years you’d have to keep the hybrid or electric car would require it to be willed to your children. At the present time, they have reported that aprroximately 60 garages at peoples homes have burnt down due to insufficient wiring to handle recharging those hybrids and electric vehicles. Add that cost in if you live in an older home. Take a guess at how much it will cost you to install a powerline into your garage just to accomodate that vehicle. Suddenly these hybrid/eelectric cars aren’t such a good deal after all. I drive a total of 50 miles a day for my commute. Even if I wanted one of these vehicles there are several models that would be eliminated out of hand since they only get 40 miles to a charge. No bargain there.

  3. wilsecs

    Hey Nancy, Great article. Yep, that’s about the same conclusion I came up with. While it’s all very fine to have these vehicles, you can’t really save anything if you are paying out so much for them. What they need to do, is to sell these cars @ around $10,000.00, and while they may lose in the short run, there will be more people buying and using them. Anyway, that’s my theory

  4. Allistair Da Briggs

    The apparently “slow” (or “late”) development/advancement on electric cars is one of the things that have me very upset with the way our “system” works.

    The truth is, we could (should) have had Electric (and Hybrid) cars as the MAIN type of (civilian) transportation today. But the development/advancement of alternatives to fossil fuel was DELIBERATELY held back for more than 20 years so that a FEW people can become very rich by extracting/selling fossil fuel.

    The matter with the electric car – i.e. what GM did with the electric car and GM selling of a practical advanced battery technology to Chevron – so that Chevron would do NOTHING with it (at least, for many years) is a concrete example of what is fundamentally wrong with our “system”.

    Thank you for reading.

  5. John

    Well Nancy, Hybrid and electric vehicles should be discussed separately. The electric vehicle technology is over 100 years old. My 2000 Ford Ranger EV is over 10 years old. Most electric vehicles get around 100 miles per charge, not the 200-300 you said. 100 miles per charge is fine for most folks before returning home. Your Hybrid mileage comparison is only valid if all that 15,000 miles is highway driven. The hybrid has the big mileage advantage in town as it gets nearly the same mileage in town as on the highway. You also do not mention the tax benefits for these ‘early adopters’. Both Hybrid and electric vehicles may be a good choice as a second car for commuting to work or shopping, which is how cars like this are mostly used. John

  6. Murray

    Nancy, It would be nice to get fuel that cheap again.
    Down under we are paying $1.60AUD per lt which equates to $140.65 USD for the same tank full.
    Apparently it is to do with “world parity pricing”.
    Sorry if this is another topic.

  7. Ray Dye

    Nancy, I love how you think. We are so often blinded by the noise of public relations. Sense is so simple if we approach it as such: Simple and direct.

  8. Hi Everyone,
    Thanks for all the great feedback. To me it just doesn’t add up yet for the consumer. If you want a hybrid or electric car wait for it to come down in price. John, you bring up a good point on the tax credits. For most it’s about $2,500. Though for some cars like the Volt it’s $7,500. However the Volt is selling for around $42k plus the cost of buying and installing a home charging station is around $2k.

    Nancy

  9. Allistair Da Briggs

    It is true, that at this time, hybrid/electric cars are not as cost effective as we want it to be. However, every time we explain why we should wait to buy a hybrid/electric car (because it is indeed currently NOT cost effective) we are (inadvertently) giving power to the FEW who want to keep us “trapped” into using fossil fuel cars “forever”.

    Again, while we are explaining (discussing) why hybrid/electric cars are not currently cost-effective, we should not forget that the REAL reason we are having this discussion today is because of the actions of those who DELIBERATELY “killed” the electric car over 20 years ago.

    Finally, observe where we are (first) using our brightest minds and most advanced technology. Imagine if we were to divert that immense talent and energy towards developing viable/practical and cost-effective alternatives to fossil fuel cars. In fact, imagine that talent and energy being used to fulfil the REAL NEEDS of society.

    Again, the issue with hybrid/electric cars is really linked to what is fundamentally wrong with our “system”.


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