With gasoline prices as high as they’ve been recently, it’s no surprise that more and more people are turning to hybrid cars in hopes of lessening the hit their wallets take at the pump. A new Toyota Prius—the top-selling hybrid in America—spends, on average, only five days on the lot before being sold, according to research by J.D. Power and Associates, a global marketing information firm that conducts product surveys. Often there are long waitlists to receive hybrid vehicles, and consumers eager to ease their gas budget have no problem waiting weeks, or even months, for their new car.
But just how cost-efficient are hybrid cars? Do they really offer consumers the opportunity to travel more while spending less, or do their higher initial price tags negate their gas savings? Let’s look at information about a couple of these gas-sipping cars and see how the numbers add up.
The 2009 Toyota Camry is available both as a hybrid and as a regular vehicle, so it provides a good basis for cost comparison between the models. The Manufacturer’s Suggested Retail Price (MSRP) for a basic Toyota Camry with a five-speed manual transmission is $18,920. For the hybrid model, the MSRP is $25,650. Right at the outset, that’s a cost difference of $6,730, not including additional taxes on the car’s purchase price.
The popular Prius is no longer eligible for tax credits
At one time, there were tax credits available for consumers purchasing hybrid cars, but those only remain in effect until the manufacturer sells 60,000 qualifying vehicles, according to
The Los Angeles Times. Toyota has already passed that number, thanks in large part to the Prius’s popularity, so the tax credit no longer applies to Toyota’s vehicles.
The hybrid Camry has a combined fuel efficiency of 34 miles per gallon, while the regular model averages a combined 25 miles per gallon, according to the U.S. government. The average cost of gasoline in the U.S. was $3.809 as of Aug. 11, and the average passenger vehicle drives approximately 12,000 miles per year, according to the Environmental Protection Agency (EPA). At these rates, the yearly cost of fueling a non-hybrid Camry is $1,828.32 per year. The cost of fueling the hybrid model is $1,344.35 per year, $484.97 less than the non-hybrid Camry. At this rate, it would take 13.8 years to negate the $6,730 initial cost difference between the two cars, and that is not taking into account additional taxes or potential investment income one could earn on the savings.
The 2008 Nissan Altima also offers both hybrid and non-hybrid models. The MSRP for a basic model with a five-speed manual transmission is $20,470 while the MSRP for the hybrid is $25,480. The initial cost difference between the two cars is $5,010, not including taxes.
But in the Altima’s case the tax credit is still in effect, which means that consumers will effectively receive a delayed $2,350 discount come tax time, according to The Los Angeles Times. Once the credit has been subtracted from the hybrid’s price, the cost difference becomes $2,660. Using the same average fuel costs and miles driven per year as stated earlier, the non-hybrid Altima racks up $1,758 in fuel each year. In contrast, gas for the hybrid Altima costs $1,344.35, which is $413.65 less than the non-hybrid model. At this rate, it would take approximately 6.4 years to negate the initial $2,660 cost difference between the cars.
Ultimately, whether or not purchasing a hybrid vehicle is “worth it” depends predominately on the motivations of the buyer. Consumers whose primary motivation is environmental awareness are more likely to be satisfied with a hybrid whether or not it proves to be more affordable than a less fuel efficient model. But buyers who want to help the environment could also consider buying a non-hybrid car—there are several less expensive models that get very good gas mileage—and instead donate the difference in price to an environment-focused charity or use it to purchase carbon credits that will decrease their carbon footprints.
Of course, there are other variables that can affect cost in addition to those addressed in this simple analysis. A non-hybrid car with an automatic transmission and a few extra bells and whistles will have a smaller price gap when compared with a basic hybrid. Also, some states offer their own tax incentives for owners of hybrid cars; in Oregon, for example, there is a $1,500 state income tax credit for those who purchase hybrids, regardless of whether or not the car is eligible for the federal tax credit. Buyers would be wise to look into the incentives available to them before moving ahead with a car purchase.
There are other hybrid models that still qualify for the full federal tax credit as well, such as the Chevy Malibu and the Ford Escape. The Honda Civic hybrid is still eligible for a reduced tax credit of $525, brought down from $1,050, but this will phase out by the beginning of 2009. Honda also offers a version of the Civic—called the Civic GX—that runs on natural gas and is eligible for a $4,000 alternative fuel tax break, according to The Los Angeles Times. Some of these models may be excellent options for car buyers interested in bringing home a more fuel-efficient vehicle at a decent price.
