April 08, 2012
Long Payoff Time For Most Hybrids And Electric Cars
The New York Times and TrueCar.com take a look at payback times for hybrid and other higher cost but more efficient drive trains.
Except for two hybrids, the Prius and Lincoln MKZ, and the diesel-powered Volkswagen Jetta TDI, the added cost of the fuel-efficient technologies is so high that it would take the average driver many years — in some cases more than a decade — to save money over comparable new models with conventional internal-combustion engines.
The full article gives a number of combinations of car models and gasoline prices with estimated payback times. What's surprising is just how high gas prices have to go for many of the hybrids, pluggable hybrids, and pure electrics to start making economic sense.
Hybrids have a number of appeals beyond the dollars saved over X years. Some people simply like being more efficient and less polluting. I can't argue with that. Less pollution is good.
Driving range matters too, especially if you place a high value on your time and the convenience of not having to think about refueling for long periods of time. For some cars the hybrid version has a substantially higher driving range. Check out the Ford Fusion and Buick Lacrosse in hybrid and non-hybrid versions. The Fusion has just as big a fuel tank in its non-hybrid counterpart. So the hybrid version goes over 200 miles further on average than the non-hybrid version. I personally find that very appealing. I spend money in a variety of ways to lower my overhead of chores and to free up my mind to do more mental work both at my job and at home (e.g. to write blog posts). I want my next car to have higher range than what I drive now.
The Lacrosse has a smaller tank in its mild hybrid version. Yet the hybrid still manages to go 70 miles further per tank. Note that the mild hybrid is actually cheaper than the 6 cylinder version. GM needs to sell more high MPG cars to meet rising CAFE standards. So pricing of cars to meet regulatory mandates is going to narrow the gap between conventional and hybrids, most likely by taking higher prices for conventional drive train cars to provide cash to lower the prices of hybrids.
They cheated on the Prius by comparing it with a Camry, which is a much bigger and more luxurious car. The correct comparison for the Prius would have been with its platform mate, the corolla, which is several thousand dollars less.
It is important to differentiate between hybrids and pure electric vehicles because a pure electric vehicle would last at least twice as much as a gasoline or hybrid car, since it has very few moving parts and the electric motors get swapped easily just like batteries. Pure electric cars do not have complicated gear boxes, transmissions, engine oil, air filters, exhausts, complex cooling mechanisms, etc. An electric car can easily last 30 years because the cheap electric motors get swapped easily like wheels, while most gasoline cars are recycled after 15 years. Thus a pure electric car that costs $40,000 would have the same "annual price of ownership" as a $20,000 gasoline car. But in addition, note that the cost of maintaining an electric car is significantly lower than the cost of maintaining a gasoline car. There are a lot less repairs, no need to change air and oil filters, no repairs for transmissions, exhaust pipes, radiators, etc. This is also in important factor in calculating the annual cost of driving the car. So the correct way to compare pure electric and gasoline cars is to take into account the longevity of the car plus the annual expenses of maintaining the car, in addition to comparing the annual cost of gasoline and electricity. At least for another 5 years electric cars will not be sufficiently competitive, but by the end of this decade the major improvements that will materialize in battery technology will be a game changer.
Driving range matters too, especially if you place a high value on your time and the convenience of not having to think about refueling for long periods of time.
One of the nicest things about driving an electric car is the time/hastle saved by not needing to stop at the gas station every week. As long as your lifestyle is within the range of an EV, then the limited range is a non-issue. Don't underestimate the utility of refueling your car overnight from home until you've tried it for a few weeks...
That was not a cheat, Fat Man. The interior passenger space on the Prius and Camry are very close. In fact, the EPA classifies the Prius as a Md-Size, with the Camry, while a Corolla is a Compact. It's actually kind of frustrating to keep pointing this out for six years, since 2005, when I made my right and proper decision to buy the Prius ;-). I've got 105,000 miles on mine, and still get 48 mpg on every tank.
(It is kind of weird, that the Prius looks small from the outside, and is big once you get in. Maybe it's a Tardis .. or maybe our brains are just programmed to think of the shape as the shape of a small car.)
Wolf-Dog - all of those life-cycle costs should be reflected in the TrueCar.com comparison. But since we don't have it to review, who knows.
I looked for calculations at truecar.com, but couldn't find them. It looks like they made really basic errors.
Let's say the additional cost of a hybrid version is $5k, and the hybrid saves $500/year at current prices. Is that a 10 year payback??
Each year the vehicle depreciates by very, very roughly 10%. That means that in the second year the hybrid premium is only $450, and the driver is saving money (and savings get bigger as time goes by).
That doesn't even include reduced maintenance costs, time saved at the pump, reduced "fuel anxiety", pollution reductions, status benefits, etc, etc.
Just to sharpen that point,
If they hybrid is sold at 5 years, depreciation would have cost about $2,050, and the driver would have saved $2,500 on fuel alone.
That assumes stable fuel prices: if prices go up, savings increase and depreciation goes down (used hybrids would be more valuable than other cars).
Nick - I think it might be hard to guess depreciation, because it is tied to hybrid supply and gas prices. I had essentially no deprecation on my 2005 Prius for 3-4 years. Well, having the carpool sticker helped.
Another factor is the honest "what would you have bought instead?" question and answer.
The Prius (running from around $24K to $30 in various model trim packages) kind of spans the median price for a new car in the US. My previous cars, a Honda S-2000 and a Subaru WRX wagon, would not be considered equivalent in any way. The Honda was a bit more expensive than the Prius, though Subaru was almost exactly the same price. Switching didn't cost me more than any "expected" replacement. It was just different. And instead of the 6 sec 0-60's I enjoyed with the the other two, I enjoy 48 mpg.
The worst thing to tell me is that I should compare my car against a Corolla (as per FM above), because that car was never on my radar. I did look at diesel VWs though ...
I have a 2004 Camry with 186k miles on it. The largest expense over the life of the vehicle has been new tires followed by oil changes. Repairs have only been about $2000 with the significant ones being a rear strut, rear tie rod, and front wheel bearings.
Pure electric cars do not have complicated gear boxes, transmissions, engine oil, air filters, exhausts, complex cooling mechanisms, etc.
With the exception of the air filter and oil changes none of the above have cost me a penny. The major repairs I have done are all systems common to both electric and IC vehicles. Even exhaust system on my car is the original.
An electric car can easily last 30 years…
The batteries which are most likely most expensive part to replace won’t last anywhere near 30 years. The north east climate I live in would shorten the life of the car significantly. Its a thing called rust.
Thus a pure electric car that costs $40,000 would have the same "annual price of ownership" as a $20,000 gasoline car.
I doubt it. At least where I live. It is none the less an apples and oranges comparison. The range on an electric vehicle pretty much dictates it will be a second car. Since it is all electric its winter driving range will be significantly reduced due to the windows needing defrosting. The headlights would also need to be defrosted as the LED headlights do not generate enough heat to melt snow off of them.
There is also the issue of paying interest on an additional $20,000 which, unless you have 40k sitting in the bank, is going to add to the cost.
Cars are bought for status. And a Volt is still a $40k car. So if you compare it with another $40k car, which is what you should do, than it is cheap.
There is also the issue that if you are a dot-com millionaire you can drive around in a Volt but people will talk behind your back if you would start to drive a BMW 3 instead of 7 you used to drive
Driven the Prius as a rental car several times to check out hybrids. It sucks.
Love my Fusion Hybrid. Less MPG but still over 40 and it's a car, not a shell. I also own an old Toyota Camry and NFW is the Prius comparable to the Camry. It's a cheap equivalent to the Corolla at best.
"That was not a cheat, Fat Man. The interior passenger space on the Prius and Camry are very close."
Yes, but interior space is not the only metric. The Prius is built on the Corolla platform, but has a hatchback body. Toyota does not sell a Corolla hatchback in the US. The Camry platform is bigger and heavier. The difference will be felt in ride quality and quiet.
Hybrid powertrains make the most sense in large mass vehicles that have a lot of start/stop cycles. When/if it becomes truly economical without the subsidy or tree-hugging appeal, it will first make economic sense in buses, garbage trucks, postal delivery vehicles, and construction equipment. I think the Buick Lacrosse approach is a step in the right direction for a realistic hybrid technology and many larger vehicles could probably benefit from this approach.
I've also heard from specialists in the field that many of the hybrid vehicles on the market now significantly "hide" the battery degradation and over time (most automotive-rated battery technologies can't reliably do more than several hundred charge/discharge cycles) - what happens is that the hybrid over time just slowly degrades to use the gas engine a lot more and the vehicle just gets slightly more sluggish and less efficient.
If you look at Edmunds.com, you'll find that they estimate maintenance costs at a much higher level than that. Unfortunately, Edmunds doesn't break down their maintenance cost estimates, and they don't look very sophisticated to me (they tend to not vary as much from vehicle to vehicle as I would expect in the real world).
Has anyone seen a good source of maintenance costs, especially after the first 5 years?