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Hybrids Save Gas -- But Will They Save You Money?

By John O'Dell, Edmunds.com  

As gas prices go, so goes interest in hybrids. Right now, that means interest is up - sales data shows that hybrid sales accounted for 3.2 percent of the new-car market in April, the highest level ever.

Toyota's Prius, the car that defines hybrid for many, was the month's 10th best-selling model of any type, right up there with the regular leaders of the pack such as the conventional Honda Accord and Ford F-150 pickups.

The rise is interesting because hybrids still cost more than their conventional counterparts. So are people buying despite the price difference, their interest centered on driving greener rather than saving money? Or have rising fuel prices offset the so-called hybrid premium in many minds?

I'd like to think it was a case of people valuing environment over economy, but most signs point to the other alternative - rising gas prices are helping hybrids make economic sense to more buyers. That's not a negative though. It is, after all, helping build the market for greener vehicles.

Just a year or so ago, the Prius was the only hybrid with a reasonable chance of providing sufficient fuel savings to pay back the hybrid premium - the price a hybrid purchaser pays to get a car or SUV with two power trains and enough complex electronics linking them together to make a NASA engineer jealous.

Speedier Payback

A new study by Edmunds.com, though, shows that there are several hybrids in the market now that can pay back the premium in the three to five years that most people hang onto a car.

"Environmentally conscious consumers have been drawn to hybrid vehicles since day one, and were willing to pay a premium for them," said Jesse Toprak, Edmund's senior industry analyst. "But now, as a result of lower price premiums, higher gas prices and, in some cases, tax credits, it won't take long for consumers to offset the price premium and actually save money by buying a hybrid - depending on which one they choose."

Edmunds' analysts looked at 13 hybrid models on sale today and found that, using a national average gas cost of $3.61 per gallon and figuring 15,000 miles a year of travel, two models would pay back the premium in less than three years. Two more would hit pay-back during the fourth year of ownership.

All of the cars are 2008 models with four-cylinder engines and automatic transmissions, unless otherwise noted.

The Top

The leader of the payback pack is the Toyota Camry Hybrid. It costs $889 more than the comparably equipped Camry XLE four-door, but averages 34 miles per gallon versus the gas-powered model's 25 mpg. That means fuel savings would pay back the premium in 1.6 years.

Chevrolet's Malibu Hybrid, which averages only two miles per gallon better fuel economy than the Malibu LT (27 versus 25) but has a premium of only $438, would take 2.7 years to achieve payback.

Nissan's 34 mpg Altima Hybrid costs $1,561 more than the comparable Altima 2.5 S, which averages 26 mpg, and hits payback in 3.2 years.

In fourth place is the 46 mpg Prius, when compared to the 25 mpg Camry LE. It has a hefty $3,489 premium, but pays it back in 3.5 years of operation.

The Bottom

At the other end of the list is the Lexus LS600h, a hybrid that will almost assuredly never repay its owner the actual cash difference. Sales must rely on a psychic payback that is to die for.

Thanks to loads of extra features, this V8-powered, uber-luxurious hybrid costs $18,630 more than the closest conventional competitor in the Lexus lineup, the LS460L.

The 600h's combined city-highway fuel economy rating of 21 mpg is just a tad better than the 460L's 19 mpg, and it would take about one million miles of driving, or 68.6 years, for the hybrid to earn its keep.

Others in the "don't hold your breath" category are the Saturn Aura Greenline hybrid - 16.2 years to pay back the $2,602 premium over the Aura XA --- and Toyota's V-6 Highlander Hybrid SUV - 12 years to repay the $7,495 premium over the V-6 equipped Highlander Ltd. Model.

The Middle

There are six others that will pay you back if you keep your cars long enough (or, if gas prices continue to rise, by commanding big premiums over thirstier non-hybrid models when times comes to sell):

Honda Civic Hybrid, 4.8 years, $2,803 premium over Civic LX
Mercury Mariner Hybrid, 6.4 years, $4,904 premium over standard Mariner
Lexus' V-6 powered RX 400h hybrid SUV, 6.4 years, $4,407 premium over conventional V-6 powered RX350
Saturn Vue Greenline, 7.1 years, $4,770 over Vue XE
Ford Escape Hybrid, 7.3 years, $4,161 over Escape XLT
V-6 Lexus GS450h, 7.7 years, $2,722 over V-8 powered GS460.

Hybrids, it's easy to see, aren't the cheapest way to cut fuel costs. And while most have pretty clean emissions, they aren't a lot cleaner - except in reduced CO2 output - than their non-hybrid counterparts. But many buyers justify the purchase as a socially responsible move: Using less gas, even if it costs more to do so, helps reduce the nation's dependence on imported oil, much of it coming from countries that don't particularly care for the U.S.

And that's not a bad reason to consider fuel economy the next time you go car shopping.

To help do the math if you are shopping- which vehicles cost the least to own and operate - check out Edmunds.com's True Cost to Own calculator. And you can use Edmunds' True Market Value feature to see what others in your area are paying for the same types of vehicles.

I welcome your questions and comments at greenerdriver@greenforgood.com.

John O'Dell has been Senior Editor at Edmunds.com since 2007. Before joining the Edmunds editorial team, he worked for the Los Angeles Times, where he had served as reporter and occasional editor since 1980. His 35-year career as a journalist has been marked by numerous awards for professional excellence in writing, research and project development. At Edmunds, O'Dell focuses on an area of great personal interest: The automotive industry's environmental efforts and undertakings. His GreenCarAdvisor.com blog and other editorial contributions address topics such as hybrid cars, alternative fuels, technological developments and gas-saving tips.

SOURCE: http://www.greenforgood.com/info/?View=entry&EntryID=377