Really? A Hybrid?

My dad’s 98 Expedition is about at the end of its useful life. He’s well into the 100ks and it’s about time for a new vehicle. My dad really felt the sting recently when gas was up over $4.00/gallon. The listed mileage for his truck is 12 city / 16 highway – and that’s before the EPA raised the standards and before he put a bill of miles on it. If you’re filling a 24 gallon tank every week, well, you do the math.

Long story short, my dad is now looking into buying a midsize SUV. He needs something capable of hauling our boat and some occasional lumber. No problem, shouldn’t be tough to find a midsize SUV that beats the Expedition for fuel economy right? Except my dad doesn’t want to stop there. He wants to buy a hybrid midsize SUV. Specifically, he wants to buy a Toyota Highlander Hybrid.

I don’t really have a problem with the highlander, but I just can’t get behind this hybrid thing. Let’s draw some comparisons here. For the sake of this little schpeel I’m going to compare the Highlander AWD V6 and the Highlander Hybrid base models. The two are virtually identical in standard equipment save the whole hybrid-y thing.

You can get another version of this little chart with more options and whatnot at Toyota’s site. I’m looking entirely at a price comparison. I’ve configured the two vehicles to be as similar as possible, including the available towing package. I’m ignoring continued maintenance costs because in both vehicles Toyota has a 100,000 mile full warranty which would include even the battery parts on the Hybrid. Note that in almost every way I’ve been generous to the hybrid here. I’m even ignoring the time-value of money, as any economist would argue is foolhardy.

	highlander awd v6	highlander hybrid
Price	$30,340	$36,159
City Mileage	20	27
Highway Mileage	27	25
Adjusted Mileage	22	26

All righty, now let’s do a little math. Let’s assume that my dad will drive 8000 miles a year. This is approximately 22 miles per day. That’s more than he really drives, but it probably evens out with a few odd trips. Plus, remember, I’m trying to be as generous to the hybrid as I possibly can here. I’ll also use a gas price that right now is above the average for our area

So,

Base:

Hybrid:

Obviously it’s cheaper to drive the hybrid. But, let’s take a closer look at this. That means in a single year we’ve saved $140 on gas. But we paid over $5800 more for the car! Let’s find out how long it’ll take before we pay that off:

But wait, you say, the price of gas will go up. All right, let’s dig in to my book of algebra tricks to find out how much the price of gas will have to be for the price difference to pay off in the reasonable life span of the car (10 years for the sake of argument).

Annual Savings:

So, assuming over the next 10 years you average $10.54 a gallon, your investment will have paid off after all! Those of you who are really clever are thinking “wait – don’t you get all kinds of incentives to buy a hybrid?”. And the answer is yes – you do. But not the Toyota Highlander, not anymore. Federal tax credits were based on the average fuel economy increase compared to its standard gasoline model, and were built to wane after 60,000 units were produced. In other words, once they start selling, the feds stop helping us buy them. The credit for the Highlander is now a whopping $0.

Minnesota has some tax incentives too that completely eliminate the sales tax for hybrids if they reach a certain fuel efficiency. Sorry though, it expired in January of this year.

I’ve looked at a lot of different hybrid SUVs and the numbers are all the same. You will not make your money back on the hybrid purchase in the lifetime of the vehicle. Buying a hybrid is like paying for any other option. I have a feeling in my dad’s case it’s not so much about making the money back as it is about sending the message to the automakers and whoever will notice your hybrid badge that you’re willing to pay a premium to save a little gas. You’re trying to say you don’t care that the performance is worse, that you can tow half as much. You’re willing to accept the downsides so that you can feel comfortable knowing that in 10 years you saved almost 12 whole barrels of crude oil.

And hey, if there are a million hybrids on the road, that’s 12 million barrels in 10 years. Unfortunately, that’s about half a day’s oil consumption in the United States. I understand the motivation, to try to encourage auto manufacturers to do more, saying “we’re with you here, keep at it”. But maybe all you’re telling them is that it’s good enough.

If you really want to send them a message, don’t buy a hybrid. Don’t buy a car at all. Go to Eric’s and buy a bicycle. If a few million people did that instead of buying new cars at a premium, I guarantee Toyota would get the message.