With lower gas prices, hybrid math doesn’t add up

If you own a hybrid car, the comparatively low price of gasoline is doing a number on your “payback” years.

There are more reasons to own a hybrid than merely the amount of money one saves in gasoline, of course, but when purchasing the vehicles, you might have done some napkin math to figure out how long it would take for the vehicle to pay for the premium attached to hybids,

According to the Associated Press, if energy prices don’t move much — and, yes, we know they will — then the payback period now is longer than the life expectancy of the car.

AP took the two popular hybrids — the Toyota Prius and the Nissan Leaf — and compared the payback period from July to now.

Toyota Prius
Approximate price premium: $4,300
Annual fuel savings based on July gas price: $534
Payback years: 8.1

Annual fuel savings based on current gas price: $313
Payback years: 13.7

Nissan Leaf
Approximate price premium, including electric vehicle tax credit: $7,330
Annual gasoline savings based on July gas price: $796
Payback years: 9.2

Annual gasoline savings based on current gas price: $281
Payback years: 25.8

In short, the lower cost is making it more difficult to justify the higher sticker price of the car.

  • kevinfromminneapolis

    I was just reading a study saying by 2017 less than half of new cars sold worldwide will run on gas.

    • Robert Moffitt

      Some parts of the world are using more CNG, diesel and propane in their vehicles than we do –yet. But that estimate sounds WAY too optimistic to me.

      • kevinfromminneapolis

        I think it meant traditional gasoline.

  • Robert Moffitt

    “There are more reasons to own a hybrid than merely the amount of money one saves in gasoline, of course”
    Yes, there are.
    Also, a Nissan Leaf is not a “hybrid.” It is an electric vehicle (EV). Big difference between a Prius and a Leaf, even when it is a “plug-in” Prius. No one calls an EV a hybrid. No one.

  • Robert Moffitt

    This would be a relevant question, if the owners of hybrids and EVs expected to be “paid back” in vehicle lifetime gasoline savings. I’m not sure that’s the case.
    I own a Honda Fit, one of the gasoline-burners mentioned in the article. I could have bought a Prius, or a Leaf, or maybe even a Tesla (provided I gave up the idea of retirement). But a Fit best met my needs and budget. As it turns out, it was a pretty good deal.
    I would like to own a Leaf someday, as a second vehicle for the two of us. Perhaps after I retire. I won’t expect a pay back at the pump.

    UPDATE: I attended a meeting of the Drive Electric Minnesota group yesterday. Since I had quite a few EV owners in the room, I asked them if gasoline savings were a major decision in their purchase decision, and if they intended to be “paid back” in savings. They said that while many did the math before buying, saving money on gasoline wasn’t the primary factor in their decision. Concern for the environment was the #1 priority. They also noted that the low maintenance costs of EVs (no oil changes, few if any repairs) was a greater savings than they expected.

    • I also have a Honda Fit, but I’m intrigued by the idea of owning a Leaf or a Chevy Spark EV. The current range of ~80 miles for those is a bit lower than I’d like as a one-car household, but if that can be extended, I’d certainly consider one. If the new Chevy Bolt announced today can reach the promised 200-mile range and while keeping a sticker price of $30K, that would be my ideal. Bear in mind that an all-electric vehicle not only saves you on gas, but you also no longer have oil changes and a lot of that sort of maintenance to pay for during the life of the vehicle.

      We have a couple of Chevy Volts in my office fleet that I’ve driven and those would need some serious redesign before I’d consider one. They feel very cramped even for someone like me who is under 6 feet tall.

      • Robert Moffitt

        It is also worth noting that a new Ford F-150, the most popular vehicle in Minnesota, costs a little more than a new Prius.
        While the Boston Globe article only looked at traditional petroleum fuels at “national average” prices, we all know there are other fuels out there, and that gas prices vary widely by region. Minnesota, for example, is enjoying some of the lowest prices on gasoline in the nation. Alternatives like E85 are even cheaper than gas. There’s a station in Alexandria, MN that has been selling E85 for less than a dollar a gallon.

      • One thing I’ve always wondered. How LONG does it take to charge a Leaf? Or any other electric car?

        • It depends on whether you are using a 120-volt or 240-volt outlet. According to pluginamerica.org, here’s what you can expect for a Leaf and a Volt:

          “To recharge a completely empty car battery from an ordinary 120-volt socket, the Chevy Volt plug-in hybrid would need 10 hours and the Nissan Leaf EV would need 20 hours.

          Using a faster 240-volt outlet and a charging station, the Volt recharges in about 4 hours and the Leaf in 8 hours.”

          • kevinfromminneapolis

            I would love a hybrid or an EV, but driving less than 5,000 miles a year it’s completely impractical to pay the premium. Plus living in a condo Id have nowhere to charge and EV.

          • Robert Moffitt

            Good point, Kevin. We are working with apartment and condo owners right now to get EV charging (the 240 volt type) in places like where you live.

          • kevinfromminneapolis

            I’m sure people are and that’s cool. But, I don’t want to pay for the electricity that charges anyones car any more than I want to pay for their gas, so hopefully there’s a way to do it in a way that makes the user pay for it.

          • Robert Moffitt

            When I lived in an apartment years ago, I paid a flat fee during the winter months for access to their outdoor outlets so I could use the engine block heater. That’s one way to do it. Separate metering is another. With a few exceptions, most public charging stations charge the user for the electricity used.

          • David P.

            The parking meter charging stations I saw in Norway all had credit card readers. I didn’t take a close look at the hotel’s or shopping mall’s charging ports.
            Has there been any advancement in electro-magnetic charging pads?

          • Robert Moffitt

            I recently saw one of those electro-magnetic charging pads being tested at the Argonne National Laboratory near Chicago. It literally blew my mind. Some hotels are paying for guests EV charging, which to me makes a lot of sense. If you own an EV, you likely have some extra cash to spend — that’s the type of guests hotels like. None of the area shopping malls over free charging, that I know of. Also, there are LOTS of charging stations at the airport ramps and in Minneapolis downtown ramps: http://www.mprnews.org/story/2014/05/07/mpls-to-install-39-charging-stations-for-electric-cars

        • Matthew

          Charge time strongly depends on the power capacity of the charging circuitry. Charge time also negatively relates to long-term battery health (slower charging is healthier).

          Using a 110 volt AC circuit with 12 amp draw, you can add about 5 miles of range per hour (from the Leaf wikipedia page). This is intended only for emergencies they say.

          Most people will install a 240 volt charging station in their garage to decrease the time. I work with a guy who connected his Leaf charger into a secondary power meter so he can take advantage of dirty-cheap power rates during the overnight hours.

          Using a high-voltage DC charger (like the Tesla Supercharger stations) is much faster (80% capacity in 30 minutes, for the Leaf). This will reduce your battery’s long-term health though, if it is your primary recharging system.

      • joetron2030

        Not sure if the interior dimensions have changed much, but Chevy announced the redesigned 2016 Volt at the North American Int’l Auto Show today. I think it looks nicer than the current Volt if nothing else.

        http://www.autoblog.com/2015/01/12/2016-chevy-volt-zaps-detroit-2015/

  • joetron2030

    With the Leaf I think that pay back computation should also have included the cost of the electricity used to recharge the vehicle. Unlike the hybrid Prius, where you’re still spending some money on gasoline, with the Leaf you’ve completely moved any gas money spent to additional electricity costs.

    • John

      I’m pretty sure it did. The gas savings listed are considerably less than I’d spend on gas in a given year (and I note that the savings on the Leaf are lower than those on the Prius)

  • David P.

    The payback calculation should be against the life of the batteries, not the life of the car. I’ve been told by various dealers to expect about 100,000 miles in battery life. Then it’s another $4 or $5K to replace them.
    So, just as I’m getting closer to breaking even, I have to buy new batteries. The reality is I’ll never catch up.
    Another issue is it may not be worth putting $5K into a car with 100,000 miles. Yet a hybrid with spent batteries doesn’t have much resale value.
    Then, where do the old batteries go? I was told by multiple dealers they get shipped to China. I can imagine what happens next.

    • jon

      I can’t speak for all electric cars, but there is more to the calculation than just the battery life (cause batters CAN be replaced, and the old batteries are being “recycled” or stripped for precious metals, or used at their 80% capacity for UPS systems in buildings and such, as more of them become available from used electric cars, we’ll be seeing more uses for them).

      So 100,000 miles on a battery, but no oil changes, for that matter in many cars 100k would be a clutch or a transmission job, which is going to run you a few grand… no spark plugs or air filters to change either.

      It’s going to take some math to add all of that up.

      I did it when I got my motorcycle (I was very tempted by the electric motorcycles) ultimately I ended up with an efficient gas power bike, because even with all the maintenance it’s going to be cheaper for the first 100-200k on the gas bike (and 100-200k is a long way on a bike).

      Math didn’t work out for electric when I got my cars, but lots of new options since then… I’m not looking to replace a car just yet, but when I do I’m going to have to break out the spread sheets to figure that out.

    • Robert Moffitt

      The true is that EVs just haven’t been on the market to know for certain how long batteries will last after years of real-world driving. It’s worth noting that many thought hybrid batteries wouldn’t last long when they were first introduced. They were wrong on that one…

    • David P.

      My comments were regarding my investigation of hybrid cars when car shopping a while back. I ended up buying a Toyota Matrix. I did not consider EV cars, due to range issues and charging logistics.

      I am hopeful for a great leap forward in battery and charging technology and charging station distribution. The idea of a virtually maintenance free motor with the reduced emissions of an EV are very attractive.

      In my European travels, especially in Norway, EV cars are very common. About 25% of the parking meters are charging stations, every large parking lot had a row of charging stations. I found natural gas cars to be common in Norway, Germany and Italy. In the cities I visited, most every refuel station had gasoline, diesel and natural gas pumps.

      • Robert Moffitt

        David, there are 504 alternative fuel stations in the state of Minnesota, according to the Alternative Fuels Data Center. It’s one of the best government websites I have ever seen, in terms of ease of use and information provided. I had the pleasure of meeting the people who run it during a Dept. of Energy meeting in Denver in December. Here’s a link: http://www.afdc.energy.gov/

        • David P.

          Thanks Robert –
          Good to see the growth in electric charging stations. I look forward to the day when the charge technology allows one to travel across the country (or at least to Chicago) with an EV.
          I see Kwik Trip has made the commitment to CNG fueling stations. I understand they are converting their delivery fleet to CNG, too. Both technologies make sense, especially if we get to a system that applies a tax or fee to fuel pollutants.

          • Robert Moffitt

            Yes, Kwik Trip is a major player in CNG in the Midwest now. You are right about their fleet — they have many CNG (and a couple of LNG) vehicles in service right now. Holiday has put its toe in the CNG pool too, with a CNG station in Duluth that opened a few months ago. Special hat tip to St. Cloud, with has added CNG-fueled buses to its fleet.

  • KTN

    So, there is this car, the Tesla P85D, which will accelerate from 0-60 in 3.2 seconds, and it runs on electricity. It costs about $120,000, and it will haul 4 people.. The few other cars in the world that quick cost lots more, have two doors, and they run on gas (and in the case of Audi, on diesel).
    I can’t yet go across country in that car very easily, but soon I will, and unless cars powered on petroleum suddenly match the performance of what electrical motors have, the fact there is little payback is moot. The payback is driving the car, and mashing the peddle to the floor and knowing that while back in the day we called this “clearing out the carbon”, this time there are insignificant environmental issues, but a whole lot of fun.
    I’m not sure what Prius drivers have to say, but I’m sure they are thrilled with their cars too.

    • Robert Moffitt

      Actually, thanks to a nationwide network of Superchargers built on Tesla’s dime, you can now go cross country in one of their cars. I know a guy who used them to drive from St. Paul to LA and back — not a drop of gas.

      • Ralphy

        I am very hopeful that the Tesla investment in battery development and their knowledge sharing will drive the cost of batteries down and the performance up.

  • davehoug

    Before deciding to go with E85 for the sake of the environment, figure your own personal dollars per mile and compare to regular. There are good and valid reasons to be gentle to the environment, but do it with eyes wide open.

    • Robert Moffitt

      Yes, E85 does get fewer miles per gallon than gasoline. Likewise, gasoline gets fewer mpg than diesel. At the prices we are seeing for E85 vs. gasoline in Minnesota, you’ll still come out ahead, in spite of the decreased mpg.

      • Jerry

        It’s good at least one person can justify commenting on Newscut while at work today.

  • Duke Powell

    The hyrid math doesn’t add up because the ones who did the calculations are the same people who said Bachmann’s 2008 “Drill, baby, Drill” campaign slogan wouldn’t bring gas prices down below two dollars a gallon.

    Just sayin.

    • I believe her $2.prediction was based on opening up ANWR and federal land for drilling. Pretty sure we haven’t done that.

      • Duke Powell

        True. Of course that has nothing to do with the fact that the press and Democrats were saying that increased production wouldn’t lower gas prices.

        • David P.

          According to the DOE, the EIA, Yale University, Rand Corporation and Shell Oil:
          US continental shale oil reserves are at least 3.9 Trillion barrels and natural gas equivalent combined.
          Anwr reserves are estimated at about 7.5 Billion barrels of oil and natural gas equivalent combined.
          Anwr has development to market delivery time line of 20+ years. Continental US shale oil takes 4 to 6 weeks from the first boring to delivering oil to market.
          Anwr oil would cost at least twice as much to produce and bring to market as continental shale oil per boe.
          If the US had followed Bachman’s (and others) advice, there would be close to $200 Billion invested in Anwr for oil that would lose over $60 for every barrel brought to market (and wouldn’t be in the marketplace for another 15 – 20 years).
          Environmentally, Anwr is a global treasure and extremely environmentally sensitive in an extremely hostile climate and logistically complex.
          In summary Anwr has 1/500th as much oil as continental shale, would take 200 times longer, cost 2 times as much per barrel, be significantly more difficult and environmentally risky.
          There is not one energy company that was or is willing to take on Anwr.
          Drill Baby Drill, while a catchy slogan, is a really, really, really bad policy idea.

        • Ralphy

          Nobody was talking about shale oil then. Not the GOP, the Tea Party, the Democrats, the press nor Michele Bachmann. “Drill Baby Drill” was referencing Anwr and deep water. The oil in Anwr is a bug on the windshield, and 20 years away. Shale oil has virtually doubled the oil reserves and flooded the market.
          After the gulf disaster, Bachmann also pimped for BP, claiming that their lost business was punishment enough, advising that they should just pull out and leave the clean-up costs for others. Shelly also said gas would soon hit $9/gallon if BP was required to pay for the clean-up and compensate the gulf residents. She was, as usual, spot on.

  • wickedscholar

    How long do you think oil prices are going to stay low. Good grief, by summer they’ll probably right back up. The shortsightedness of some people is truly astonishing.