Million Dollar Journey

1. 1. The Financial Blogger

   It doesn’t seem to be a great deal after all!
   Even with the Civic or the Escape (6 and 7 years or recuperations), chances are that you will have reached over 100,000 km with your car and I am sure that dealership would charge “extra” maintenance fee when you do your inspection and repairs. Therefore, you probably would have to add another year to your recuperation cost.

   Since this technology is still evolving, I guess that the depreciation would be bigger as the energy efficiency increase.

   I wish they could do hybrid or electric car at a cheaper cost or that is more energy efficient so you can get your money back.

   Jun 9th, 2008 @ 7:12 am

2. 2. Al

   I’ve wondered about the benefit of having a small motorcycle or scooter as a means of saving on the cost of fuel. The stipulation is that I can’t get rid of the car because of winter and the need to move stuff sometimes.

   So, it’s the savings in fuel against the cost of the bike, maintenance, licensing and insurance. Insurance (the big cost) runs about $400 per year for an experienced rider on a low CC bike, and say another $100 for everything else giving a total cost of $500 per year. With a riding season of around 30 weeks in Ottawa, you’d have to save around $17/week on fuel.

   This doesn’t seem to bad except that the start up costs are really high. Insurance is about double at the beginning and takes a few years to come down. There are several tests (didn’t cost this out) and it sounds like it is a good idea to take a course as well. As a non-rider, the upfront costs make it inpractical to go this route. It would be nice to see some initiatives to lower these costs and make this environmental choice more economical too.

   Jun 9th, 2008 @ 9:53 am

3. 3. AndyS

   Great analysis. I think choosing your car should first depend on how much you expect to commute over the next 3-5 yeras AND how long you plan to keep your car (I like to get a new or upgraded car every 5 years). Given paybacks of hybrids ar more than 6 years, it would be hard for me to justify purchasing one right now. However with the price of oil going up so fast, hybrids will start get mass produced by all manufatcturers sooner rather than later. This will bring prices down and change the cost/benefit ratio. I wrote a recent post on wheter a car is a liability or an asset - - and this would be an interesting evaluation for this question.

   Jun 9th, 2008 @ 11:14 am

4. 4. Personal Tax & Financial Planning

   I was going to blog the same topic but you beat me to the punch ;)

   My current plan with my 1998 Escort is to drive the thing until either it costs more to fix it than to buy a new one or it dies altogether. I think I can get another 2-3 years out the beast (it already has 215,000 km on it). If I can reliably get 12-13 years out of my existing car and the technology is proven is it reasonable to assume a hybrid will last as long? What are the maintenance costs?

   Jun 9th, 2008 @ 11:26 am

5. 5. A Hybrid Owner

   Talk to real hybrid owners sometime. Your flawed research yields faulty conclusion. Prices for hybrids you quoted are way off base, at least for the models I’m familiar with.

   Here’s one hybrid owners experience at 3 years ->
   http://www.greenhybrid.com/discuss/f26/three-years-feh-ownership-gh-7677/

   Jun 9th, 2008 @ 11:59 am

6. 6. Daniel

   I have a Toyota that is almost paid-off and in great condition. The gas millage is adequate and my wife and I are using our bicycles in good weather so the high price of gas has not had a huge effect on our budget yet.

   But next year when we build our new house we will need a 2nd vehicle. I also looked at the hybrids but I do not like the high costs associated with the “gas savings”.

   The other option is the Zenn car. They plan to introduce a highway capable electric car in 2009. I would really consider this option.

   Jun 9th, 2008 @ 12:11 pm

7. 7. nobleea

   Whoops, just deleted my well thought out comment.

   Here it is again, condensed.

   Civic hybrid gets over 60 mpg in city and hwy, very impressive. Is the LX more comparable to the hybrid options? You can get a civic base for under 20K all in.

   The Prius is a roomy car. It falls somewhere between the camry and corolla, so comparing it to a corolla is probably not fair.

   The other thing to consider is that hybrids sell for close to MSRP, while regular cars can be negotiated for a discount. This would worsen the payback time.

   I’m sure you could pop up a graph with gas price versus payoff, as some of us are already paying more than $1.30 a litre.

   The Zenn car is good (but you have to consider the potential for electricity to increase in price too) and that trike they are selling now (classified as a car, not a bike I think).

   Jun 9th, 2008 @ 12:31 pm

8. 8. Curt

   How about the new Aptera?
   http://www.aptera.com/

   The years to payback is about 5 years. The biggest limitation is that they are only selling in California.

   Jun 9th, 2008 @ 12:35 pm

9. 9. Flora

   I see the Hybrid thing to be a capital vs operating costs scenario:

   If one is to spend 35k capital on a car, then the Prius is a great option because it’s operating cost from Day1 will be lower than all other 35k cars. If one is going to spend 25k, then the Prius would not be an option. It’s not fair to compare the pay back time using Corolla as a base case because a Corolla buyer wasn’t going to buy a Prius. A corolla buyer would, however, potentially be interested in a Civic hybrid due to the less price difference.

   Honda is to come up with a new subcompact and hopefully economical hybrid next year. That will be addressed to those in the mid to low 20k range car-shoppers.

   Jun 9th, 2008 @ 12:48 pm

10. 10. FrugalTrader

    Note guys that the prices quoted are Canadian prices which are usually higher than what it would cost to buy in the U.S.

    Anyone know anything about the Aptera? I cannot imagine driving one of those things in the snow. :)

    Nobleea, yes, I chose the model car that best resembles the hybrid version. I didn’t know that the Prius was actually fairly roomy. I would figure that they were comparable to the new Corollas as they seem a bit larger as well.

    Jun 9th, 2008 @ 12:49 pm

11. 11. Mike M

    My comment was deleted, too! Annoying…

    The Prius is classified as a midsize car, not a compact car. The closest comparison is the Camry LE, not the Corolla LE. It has 96 cubic feet if interior space, vs 86 for the Corolla and 100 for the Camry.

    Using the numbers from the graph above to do a comparison to the Camry, the difference in price is $2068, the difference in gas is $975, leaving a payback period of 2.12 years.

    Hybrids depreciate LESS than normal cars, and the maintenance costs are not any higher. I bought by hybrid for $2000 under MSRP, so it can be done. Gas prices will always go up, shortening the payback period.

    This is a serious question…Does anyone out there actually buy a car based on a careful financial analysis of gas price payback of one model vs another? If you buy a Chevy Tahoe, do you feel the need to “justify” the purchase? Why should the same apply to hybrids? Buy the car you want to buy.

    Then there are the green reasons…

    Jun 9th, 2008 @ 12:52 pm

12. 12. Telly

    I’ve oftened considered a hybrid but my current small car keeps ticking so I’ll wait. My personal reasons for wanting to buy a hybrid was never that it would necessarily save money over the non-hybrid version, but rather, I like the idea of supporting the technology. Maybe it’s the geeky engineer in me.

    Hybrids are expensive because they are fairly new technology. As more of them are sold, the price should come down and the engineering should be improved (especially things like battery life). Development costs on a hybrid are significantly higher than your standard vehicle.

    Jun 9th, 2008 @ 12:56 pm

13. 13. David@The Good Human

    If you are not counting in the “green” aspect, you are leaving out a lot of the “worth” of the car, which sways any results based only on cost. Half the car’s reason for being is to be “green”…

    Jun 9th, 2008 @ 1:32 pm

14. 14. MikeG

    I used to have a 1990 prelude and now have a 2007 corolla CE, the purchase was almost a no brainer for me because
    A) The corolla would “pay” for itself in 6 years by fuel efficiency
    and b) the 2007 corolla is almost certainly more reliable than my 18yr old car.

    Hows this for fuel efficiency:

    Cycling to and from work burns about 1450 calories, or about $1.40 if I eat it as pasta. btw: this is 20kms ea. way. This takes me 2 hours 10 mins. total. Plus I have to maintain my bike, but I doubt it costs more than 60c per day. I also can cancel my gym membership ($40 a month) because Im exercising 2 hours a day now :).

    Driving to and from work @ about 25c/km (the estimated cost of my corolla) is about $10 and takes about 1 hour and 20 mins total.

    Busing to work is $5.00 per day and takes 2 hours.

    In reality, its way cheaper to just not own/need a car. If you can get away without a car, do it.. If you can get away with just 1 car in your family.. do it.
    Better for the environment, better for the wallet.

    -MikeG

    Jun 9th, 2008 @ 1:36 pm

15. 15. Nicolas

    As the prices quoted are for a cash purchases or a 0% financing, it would be interesting to calculate savings when you pay the car over a period of 2-3-4-5 years. Since hybrids are more expensive, the total price with interests would make for an even bigger payback number.

    Jun 9th, 2008 @ 2:07 pm

16. 16. FearLES

    The Lemonaid book has a good right up on hybrids. Summary: not worth it.
    form lemonaidcars.com
    Hybrid Hype
    We don’t recommend electric and gasoline engine hybrids because their fuel economy can be 40 percent worse than the automakers report, their long-term reliability is unknown, battery replacement cost is estimated to run as high as $8,000 (U.S.), expensive electric motors are predicted to have a higfh failure rate from corrosion, their retail prices are incredibly high, and the potential resale value is no better than similar vehicles equipped with a conventional engine. For example, a 2001 Prius that originally sold for $29,990 is now valued at a disappointing $12,000 (and we’re only two years away from the expiration of that $8,000 battery warranty). Compare that to the price of a fully-equipped 2001 Camry CE V6, that sells for about $1,000 more–with no battery worries.

    Also don’t forget that money today is worth more than tomorrow (inflation) and that you could be investing those dollars.

    Better to buy a gas efficient and space efficient car like a Honda Fit (you have to see it to believe all the things that it can do).

    Jun 9th, 2008 @ 2:30 pm

17. 17. Finance_Addict

    A few thoughts:

    Nobleea I would argue the Corolla is roomier than the Prius. I have a Corolla and my neighbor has the Prius. It’s a fair comparison.

    These comments I hear about taking the bus or bike just don’t cut for most due to weather, distance, kids, routes etc.

    Just buy a small gas car (corolla, yaris, echo, civic, smart, mini etc.) don’t drive to aggressive, hedge your gas bill by buying a oil\gas income trust and smile when you pull up beside those huge SUV’s.

    FT great job pointing out the raw deal on hybrids.

    Jun 9th, 2008 @ 2:37 pm

18. 18. Chuck

    Another fact to consider is the upward trend in gas prices.

    When I bought my matrix in 2005, a fillup was about $32. Now its $45. Should this trend continue you will have a much shorter payback on the hybrid.

    Also its not wholly apples to apples comparison. A lot of the hybrids also have trims and features that you cannot get in the gas-based model. For example the now-defunct Accord Hybrid was also the “fully loaded” Accord. Even for the camry the Hybrid is closer to the XLE v6 model than the LE in terms of features - and the XLE has an MSRP of 5k more than the Hybrid.

    Jun 9th, 2008 @ 3:06 pm

19. 19. Cow

    I have to agree on noting that the upward trend in gas prices means it’s more likely to be an even shorter period–although 13 years on the Prius is still too long, imho.

    My primary vehicle is the Vancouver SkyTrain, which gets 0L/100km. :D

    Jun 9th, 2008 @ 3:14 pm

20. 20. PatMunits

    FrugalTrader, please consider adding another column to the table: “kms to payback”. 20 KKm is an unrealistic number for tons of Canadians who now live in suburbs, and who are the first people to get concerned about rising refill costs. I put about 35,000 KMs annually and my commute is just 40 mins each way to work, which is not much at all by GTA standards.

    Re: motorbikes/scooter - I think that one’s existing life insurance would have to be reworked because riding a bike puts insured into a higher risk group. Thus higher premiums on life insurance take some of the gas saving benefits away too.

    Jun 9th, 2008 @ 3:45 pm

21. 21. James

    Hybrids are not green. Its a common misconception. While from the day you drive them off the lot they are more green than a regular car the mining and transport of the car offsets the benefits. For some cars the metals in the batteries are mined in Canada, shipped to Europe then to Japan then shipped back to Canada once the car is built. That is a whole bunch of green house gasses emitted. There was a study done in the last year that looked at this. To get the most green friendly car you should drive one that was manufactured as close to where you live as possible with the best milage possible (non-hybrid).

    Jun 9th, 2008 @ 4:12 pm

22. 22. Mike

    One thing to consider would be that hybrids will maintain a higher value over time - so if you may sell the car eventually, some of the extra cost vs. a gas vehicle will go back into your pocket. Money you spend on gas, on the other hand, is money thrown away!

    Jun 9th, 2008 @ 4:50 pm

23. 23. Tyler

    This is useful information. One factor that isn’t accounted for is that the price of gas will likely go up.

    Jun 9th, 2008 @ 5:13 pm

24. 24. 45free

    The big variable for me (outside of gas prices) as L/Yr. Your analysis assumes 20,000 KM’s per year. I actually put about 2.5 times that on my car in a year. That shaves the payback to 2.5 years on the Civic.

    Jun 9th, 2008 @ 6:09 pm

25. 25. Calvin

    My understanding is that if you can still get your hands on a 2008 Civic Hybrid, you can qualify for $2000 from the Federal Government and $2000 from the Provincial government in Eco Rebates. That’s $4000 that would wipe the difference.

    I say IF you can still get your hands on one as I understand a lot of people were hoping to cash in on that rebate before it goes away.

    Jun 9th, 2008 @ 6:49 pm

26. 26. FrugalTrader

    Calvin, do you have more information on the provincial ecorebates? All figures in the table account for the federal ecoRebate.

    Jun 9th, 2008 @ 6:53 pm

27. 27. Drew

    I’m confused. You show the Toyota Prius priced at nearly $33,000. I paid $24,000 for mine last September (including mid range accessories). Prius does not come in a non-hybrid version, so i don’t understand the “comparison” column listing for it. My average mileage (city and highway combination) is about 47 miles to the gallon. It’s probably about 50 mpg in the city and closer to 40 mpg on the highway (where it uses only its gasoline engine.) My wife and I are very pleased with the car, which has plenty of power, excellent maneuverability and a whole raft of special features (keyless electronic entry and startup, touch screen control of radio and a/c, backupcamera) It is remarkably roomy and comfortable.

    So whoever concocted the ratings regarding the Prius above seems to have pulled them out of the air.

    Jun 9th, 2008 @ 6:56 pm

28. 28. Cash Instinct

    Drew: Are you American or Canadian?

    Prices shown in the article are probably Canadian prices, and you can be sure that Canadians pay more for the same cars compared to the price paid by an American.

    Jun 9th, 2008 @ 9:42 pm

29. 29. Potato

    I went through a similar analysis starting last year as I’m shopping around for cars to replace my ‘97 Accord, and figured the Prius, Camry Hybrid and Civic Hybrid were close enough in value to let other factors (emissions, fear of rising gas prices, technocoolness) sway the decision. Then the federal rebates got added in and it seemed to be a slam dunk in my reckoning.

    So to reiterate a few points already made above, I also had the provincial PST rebates included. For Ontario, that’s a $2000 rebate of the PST paid on the car (new or used or imported from the states). If you have a valuable trade-in and pay less PST, you will get only up to as much PST as you paid (the Federal ecoauto rebate is $2000 for the Prius and HCH and is not tied to the GST even though some news reports call it a GST rebate). I believe BC ($2k-4k, depending on age of trade-in), QC ($2k?), MB ($2k) and PEI ($1k?) also have provincial rebates.

    I compared the Prius to the Accord LX w/ auto trans (I could have used the Camry, but honestly if I was to go with a non-hybrid mid-sized, I would probably choose the Accord again). The Prius kind of falls in between the Corolla and Camry for size, but I really thought it was more comparable to the Camry (it’s narrower, but you have even more rear leg room than even the Camry, so it’s a way more comfortable fit for 4 adults than a Corolla).

    Whether or not there’s an additional difference with “actual” price between cars is a good question. Last year when I was shopping, the Civic Hybrid, Prius, Accord, and Civic LX all had comparable discounts via APA pre-negotiated pricing. After the current gas shock now though, the hybrids may be an MSRP-only vehicle due to demand.

    I assumed gas would very shortly be at $1/L (and how shortly it was!) and would rise 10 cents/year for 10 years of ownership — rather than looking at length of payback time, I looked at how much money I would have after 10 years of ownership. I of course thought that would be a pretty realistic estimate for the increase in gas prices, but it might have been too conservative seeing where we are just a year later! The reason I wanted to see how much I would have saved is that I worried that the skeptics might be right, and the battery system would need replacement at $3000 after 10 years. However, I found that there was a good chance that over that time, I’d have saved up about $3000 (beyond the initial “hybrid premium”) so if the battery did die, I could just buy one out of the gas savings. If it didn’t, I’d be way ahead. (Remember: the break-even time is one thing, but then you get to make that savings all over again every break-even period. If the break-even time is less than half the expected lifetime of the car, I figure it’s a sweet deal)

    The maintenance costs should about even out: the hybrids may require more expensive routine maintenance and repairs since one might only be comfortable going to a dealership rather than an independent shop; however, the hybrids have fewer wear items (the beauty of having enough electric power available to get rid of starter motors, to improve air conditioner compressors, electric power steering, etc) and also have vastly longer lasting brake pads due to regenerative braking.

    To some of the other comments: yes, hybrids don’t get their rated mileage. Neither, however, does any other car on the road unless driven exactly the way the mileage tests are conducted. It’s just that the hybrids have the big in-your-face instantaneous readouts so some people noticed and complained (ok, the hybrids do take a bigger proportional hit for <1km cold-start trips and winter stop-and-go driving… but take less of a proportional hit in stop-and-go heatwave city driving). For resale value, look at a 2004+ Prius or a 2006+ HCH; the 2001 Prius was a completely different car with first-generation technology. The current models are holding their resale value exceptionally well. At the very least, it is a fair assumption that the “hybrid premium” will be maintained and you can pass on the share of it to the next owner if you sell. #21: pure FUD. Every car is made with metals mined/refined at a great distance; bulk shipping is pretty cheap and fuel-efficient; it makes no impact relative to the fuel used during the car’s lifetime. Consider also the lead-acid battery in every car. Hybrids have tiny ones just to start the computers and run 12V loads when the car is off, but the engine and everything else is started off the high-voltage lifetime battery. Search for the threads on greenhybrid or priuschat for the calculations, but basically the Prius will use about 1/3 of the amount of lead over its lifetime and about the same amount of total battery metal as a pickup truck (but the nickel hybrid batteries are fully and profitably recyclable while the lead is less so).

    Finally, the comparison depends a lot on what type of driving you do — notice how vastly improved the hybrid city mileage can be. If you rack on the vast majority of your mileage in city driving (and stop-and-go rushhour commuting on the 401/DVP/QEW is city driving even if you’re technically on a highway ;) then that also skews the comparison towards the hybrids. If you’re thinking of buying a hybrid, then I suggest you figure out what your actual fuel consumption is like in your current vehicle, then see if you can find someone on Priuschat or greenhybrid or any other owner with a similar-ish commute/driving style and see what their real-world mileage is like.

    http://www.rev.gov.on.ca/english/refund/vpaf/index.html
    The Ontario tax credit

    http://www.cbc.ca/canada/british-columbia/story/2008/06/04/bc-clean-air-day.html
    BC tax credit now even better

    Jun 9th, 2008 @ 10:19 pm

30. 30. Sarlock

    This is based on 20,000 km/year, also. I drive about 12-15,000 km per year, so a hybrid certainly does not make economical sense even with gas prices so high.

    Fuel economy is significantly impacted by the type of driving you do, too. Hybrids perform better in the city than they do on the highway while a gas engine is the opposite. Given that many of the longer distance commuters (the ones who drive 20-30k or more per year) do a lot of highway miles, it may work out that a hybrid is rarely economically feasible for the average driver. For someone who does 20k of inner city driving, however, the hybrid may pay for itself very quickly.

    Great analysis, FT!

    Jun 10th, 2008 @ 12:21 am

31. 31. Jon B

    There is a difference between being the right thing to do and being an economical thing to do. “IF everyone” converted to hybrids - autosales would increase, the recession would slow down or reverse, and we would see prices drop for fuel, and we would extend our supplies, andw we would not even think about drilling in ANWR for 6 months of fuel.

    ANWR is not the ANsWeR.

    Jun 10th, 2008 @ 11:21 am

32. 32. Mr.Ed

    With all the recent talk about gas prices, fuel economy, and hybrid cars, why not consider the VW tdi??? Seems it’s always forgotten. Although diesel fuel is more expensive than gas (right now), they get GREAT fuel economy. I have a 2000 VW Golf tdi and I can get 1100 km to a 60 L fuel tank city driving (~55mpg). Generally I can get ~5.6l / 100km. They’re zippy little cars, and roomy too. Not much HP (90hp) but loads of torque (115 ft/lbs). All the power you’ll ever need. Yes they are slightly more to buy, and maintain, but if fuel economy is what you want, check out the v-dubs. I wouldn’t trade mine for a smart car, or a hybrid any day!!!!

    Jun 10th, 2008 @ 3:31 pm

33. 33. BAMBAMVAN

    http://www.autobloggreen.com/2007/11/13/diesel-vs-hybrid-vs-ethanol-which-is-best/

    I agree that diesel may be the best now, and diesel engines seem to “run forever”. Your spreadsheet has to include resale values or the up front cost is meaningless. A sensitivity analysis of gasoline price would also make the comparison more accurate, as gas prices have gone up over 50% in 4 years.

    Jun 10th, 2008 @ 5:25 pm

34. 34. Nicolas

    Mr. Ed, I’m all with you on the TDI. It’s the one I got and it’s great. Can’t wait for the next generation of TDI’s to come out.

    Jun 10th, 2008 @ 7:57 pm

35. 35. Slan

    No one seem to talk about insurances. How do they differ ?? When owning a car those recurrent cost can make a very big difference !

    (They dont have hybrids but try to compare a Hyundai to a Mazda/Toyota/Honda !)

    Jun 11th, 2008 @ 12:10 am

36. 36. jb

    I had to buy a car just a few months ago. You’re analysis confirms that I made the right choice in buying a non-hybrid car.

    Consider the following:
    * Its easier to find a good one or two year old used non-hybrid, and save that much more money.
    * The least expensive non-hybrid car listed above was $24k, but its easy to find even a new car for much less than $24k.
    * There’s the time value of money issue. Since you pay so much more upfront for a hybrid, you either pay interest or lose liquidity and interest/earnings that you would have if you saved and invested that money.
    * Insurance and taxes are that much more. (Taxes are explicit in gas prices, but hidden in car purchase prices.)
    * Maintenance on a non-hybrid is cheaper.
    * Even if you plan to keep the car for 8-12 years, you’re pretty much screwed if something happens and the hybrid is totaled after 5 years. (Even if you still have collision insurance, the book value is bound to be worthless.)

    Just a few months ago, I bought a one-year-old Saturn Ion for just under $10k. Even though I drive roughly 30k miles/year, I’m pretty sure that was a good financial decision. (Of course, I could change my tune if gas prices multiply 3x again over the next 10 years.)

    Jun 11th, 2008 @ 11:57 am

37. 37. deepali

    I think the “green” factor (aka, externalities not being account for above) is important as well. Early investment in sustainable technologies might not seem economical right now, but as we approach the tipping point, it will be more beneficial (and cheaper) in the long run. And we really have to start thinking more long-term and less short-term.
    The investment in a hybrid is not just in terms of gas savings, it’s also planet savings. The planet might still be fine when I die, but it won’t be when your kids are my age.

    Of course, this assumes that most parents care about the legacy they leave for their kids. Sometimes I do wonder….

    Jun 11th, 2008 @ 12:37 pm

38. 38. childfreelife

    Your estimate is good as long as gasoline settles around 4.91 per gallon and doesn’t continue to go up in price over the next few years quickly.

    A trade in of your old car could easily pay for the difference between the old car and the new car.

    However, I think that hydrogen is the future. We shouldn’t be using any fossil fuels in our cars.

    Jun 11th, 2008 @ 1:26 pm

39. 39. felix

    One thing I noticed is the average efficiency column on the table is merely adding the highway efficiency to the city efficiency and divide the sum by 2. This means that you use your car as much on the highway as you are in a city. Generally, this isn’t true for most people, who spend most of their time driving in a city.

    Jun 11th, 2008 @ 2:45 pm

40. 40. R Bitrator

    this reminds me of the smug episode on southpark, you treehuggers should be using the extra $4000 - $8000 for something a little more productive.

    Also no one seems to mention the $5000 battery replacement that you will need to do in 5 years - choke on that exhaust smoke.

    Jun 11th, 2008 @ 3:53 pm

41. 41. Martha Beddoe

    Gee - we paid $23.5 for our Prius in 2005. The place we bought it from is listing its 2008’s at comparable prices. That should change your analysis somewhat.

    It is possible to convert this car to a “plug-in” vehicle, using aftermarket technology (and yes, it voids the warranty). Further into ownership, a conversion once the car is out from warranty could further impact the analysis.

    So far, maintenance costs are equivalent to a non-hybrid car; nothing too spectacular and we are up to 60K on the vehicle. Insuring it has not cost any more than a normal car.

    I noticed a bit of a**hattery above about the battery replacement supposedly needed in five years; well, the jury’s out on it still. Some of them seem to go for quite a bit longer than 5 years. Also, the battery is recyclable; most normal tailpipe smokers aren’t so much.

    Jun 11th, 2008 @ 9:38 pm

42. 42. Emily @ Taking Charge

    Yeah, several months ago I needed a new car, and I had just graduated college so my dad bought it for me. We had been really interested in a hybrid, , specifically a Prius, both for the lower amount of gas that would be used and the environmental aspect. But we talked to a family friend who used to work at Toyota and he said it would not be a good investment. He said at this point, hybrid cars are extremely expensive to fix if something in the hybrid system breaks. Also, he said we’d be paying so much extra up front for the hybrid over a regular car, it would take so long to pay off the difference, I actually wouldn’t be saving on gas. We looked at the Corolla but ended up going with a Saturn Ion, which was less expensive and much sleeker. I love it and have had no problems, and get pretty good mileage. Now that gas prices are getting so high, though, I’m considering getting a Vespa so I can use my car less.

    Jun 12th, 2008 @ 11:16 am

43. 43. Irene

    I wonder how you arrived at the cost of the gas per year? What’s the assumption on the price of gas per gallon?

    Jun 12th, 2008 @ 3:12 pm

44. 44. Bert

    It gets somewhat worse if you factor in the investment income you could make from the cash savings at purchase. $5k invested at 5% over 6 years is an extra $1700 you would have to make up with gas savings

    Jun 13th, 2008 @ 1:01 pm

45. 45. OBD-II Trouble Codes

    I realize there are already a number of comments on the Prius vs Corolla debate. I bought a new Prius a few months ago (I’m CDN so I paid the price you posted). I wouldn’t be caught driving a Corolla. It’s not a good fit for my values and it is smaller than the Prius. The hatch in the Prius makes a WORLD of difference in interior room. Let’s not forget the base Prius in Canada is $29,500, not $32K. Maybe it would be better to use that price in your comparison.

    It doesn’t appear that you took into account the $2,000 eco-auto rebate. As well, where I live SGI gives you a 20% rebate on your annual licensing/insurance. That’s a rebate available only to hybrid vehicle owners.

    The other issue I have with this comparison is the fact that no one buys a vehicle solely based on fuel economy. Sure I bought a Prius, the most fuel efficient car on the market. But I bought it because:
    - It’s a good fit for our family of 4
    - I support Toyota and their track record of hybrid technology development
    - $2,000 eco-auto rebate
    - It’s more environmentally friendly than regular gas cars
    - Features, features, features! Auto climate control, Smart Key System, Homelink garage door opener, etc., etc.
    - Toyota quality reputation
    - Oh yeah, the good fuel economy :-)

    Don’t take my rant personally, it’s not meant to be an attack toward you. I am bugged by the number of people that compare the Prius to vehicles not in the same class. IMHO the only car you can truly compare the Prius to is the Civic hybrid. All other comparisons are not apples-to-apples.

    Maybe you should crunch the numbers again using $1.399/L gas (that’s $5.29/gallon for you US folks). That’s what it is now.

    Jun 13th, 2008 @ 2:00 pm

46. 46. FrugalTrader

    OBD, all prices include taxes/fees straight from the Toyota website. The $2k ecorebate was then subtracted from the total. The article was not meant to compare every feature, it was simply meant to see if the gas savings of a hybrid is worth the extra cost. I agree that the prius compared to the corolla may not be a 100% fair comparison, but it was the closest that I could find.

    Yes, as mentioned above, if gas prices increase dramatically, the hybrid camp will become more appealing.

    Jun 13th, 2008 @ 2:23 pm

47. 47. Aleks

    As far as I’m concerned, hybrids are an unnecessary intermediary step between gas cars and whatever comes next. Not only is it a new, untested and unreliable technology that will be more expensive to maintain, but it’s unlikely to last long enough to get all the bugs worked out.

    On top of that, it’s only a “green” solution if your analysis ignores everything except the fuel burned in the car. Batteries are incredibly harmful to the environment and require a tremendous amount of energy to make, energy that currently comes from fossil fuels. And when those batteries die after five or ten years, they have to be disposed of.

    The hybrid craze is similar to the push for ethanol in gasoline. It only makes sense if your environmental impact analysis ignores the majority of the supply chain. CO2 emissions are only one pollutant, ignoring the rest is myopic.

    Jun 13th, 2008 @ 5:26 pm

48. 48. Tim

    The other aspect of hybrids is the engine automatically shuts off whenever the car stops its forward motion. If you live a city like I do, you spend a lot of traffic time stopped at red lights, etc. I think you’d have to factor an extra 2-4% over standard automobiles to account for savings due to idling.

    Jun 14th, 2008 @ 12:59 pm

49. 49. nobleea

    It’s quite easy to shut your regular gas engine off at lights. I do it for all lights/stops over 10 seconds. That’s the breakeven point for newer vehicles.

    It shocks me that people continue to let their cars idle at train crossings.

    Search for hypermilers…it’s quite possible to get well above the manufacturer’s mileage for a gas engine. Close to 60mpg in a regular gas honda accord for example.

    Jun 14th, 2008 @ 1:07 pm

50. 50. kat

    Our 2001 Prius has almost 308,000 km on it. We’ve had fewer repairs on it than we’ve required on our 2003 Dodge Dakota. And trust me, it gets a heck of a lot less wear, due to the cost of driving.

    When we bought the Prius in 2001, the naysayers were spouting “You don’t save any money unless the price of gas passes $1/litre”. Shortly after buying it, the price of gas skyrocketed (!) to 81.5/litre (May 15, 2001)

    Yes, if the hybrid battery goes, it’s $4000. but I’m interested in seeing how long of a ride we can get out of her.

    Jun 16th, 2008 @ 12:40 pm

51. 51. Texas Independent

    I think this analysis is a bit flawed, I have an Acura that’s paid for with only 120,000 miles, hence, I see no need to buy a hybrid right now. But for my next car, it will be a hybrid. I have a friend that owns a Civic Hybrid and when it was in the shop (accident) for repairs he was given a corolla as a loner car and he complained for 2 weeks about the gas cost. I think the cost will come down and the gas price will continue to rise, making the hybrids even more attractive.

    The way for us in America to make an impact is to reduce our use of oil. As the speculation about the increase use by India nd China does not add up. We in the U.S. needs to conserve, India a country of 1.3 billion uses 2 million barrels a day, the U.S. a country of 3.8 milion uses 23 million barrels a day.

    I we conserve and can reduce our use by 20% (4.6 million barrels a day), the impact will send a message.

    We need to stop driving around the mall parking lot for 10 minutes to find a closer spot that’s about 20 feet closer to the mall. Spend 5 minutes in the drive thru line, I know when my sister is in the car with the baby the drive thru is a great convience but how many times do we see one or two adults in the car at the drive thru, there are so many ways to save and we will have to fight the urges to get ourselves off this addiction and send a message. I am as guilty as the rest of my country of these practices, I am no way excluding myself.

    Jun 16th, 2008 @ 8:13 pm

52. 52. Cannon_fodder

    I know the # of diesel models is still slim in Canada, but I think it should be a hybrid vs. diesel vs. gasoline vehicle comparison.

    I was just speaking with a person from the Netherlands and another from South Africa and we all remarked how diesel used to be so much cheaper than gasoline but it now is more expensive (in all 3 countries). I could only hypothesize that it is demand-driven. There must be more demand for diesel fuel now than in the 90’s and whether it is in Europe where diesels are much more popular or in NA where they have a bad reputation, the result is the same - everywhere diesel fuel has risen faster than the cost of gasoline.

    I’d seriously consider a diesel vehicle for my next purchase - if it were up to me.

    Jun 17th, 2008 @ 10:04 am

53. 53. Mike the Muffin

    Check out the Vancouver Sun article in Wednesday, June 18, 2008, at http://www.canada.com/vancouversun/news/story.html?id=f976656b-a484-431f-bc9a-cb6d4cb91469

    Jun 19th, 2008 @ 12:56 pm

54. 54. Rob

    I totally agree that hybrids are not worth the extra money. Especially when you consider the idea that hybrid batteries are only expected to last 6-10 years. They will then need to be replaced at $3000 - $5000, not too mention that the resale value of an older hybrid will significantly depreciate as nobody will want an older hybrid for fear of replacing those costly batteries. Add these figures into the higher starting prices and they are really a poor investment. A diesel powered car would be a much better investment in the long run.

    Jun 24th, 2008 @ 6:52 pm

55. 55. John Loch

    As I read this and make the necessary calculations, you are assuming ~ 20,000 kms being driven / year (i.e. 12 litre/100 km = 13 km/litre; multiply the # of “L/yr” by 13 and you get 20,000). If I understand your overall approach, if one drives 40,000 kms/year, it would take ½ of the “years to payback” that you are showing. The other thing you are doing is simply averaging city & highway ‘mileage’ without weighting one versus the other thereby assuming 50:50 distribution between the two. That isn’t the case for many people, certainly not me. I am not sure how this would bias your analysis but I think that it would further reduce the “payback time”.

    So, I think his analysis isn’t necessarily that relevant to people like me who drive on the highway a lot more than in the city and also drive a lot more than 20,000 kms/year (actually twice that).

    I further wonder why you felt that the depreciation rate would be greater for hybrids and also why you felt there would be more depreciation for hybrids.

    Jul 6th, 2008 @ 10:49 pm

56. 56. FrugalTrader

    Hey John, thanks for stopping by. It’s very difficult to please every, so I took the average of city and highway driving. If someone is doing primarily highway driving, then the gap between the hybrids and gasoline versions were be even greater as hybrid fuel economy typically decreases with highway driving.

    I estimate that hybrid depreciation is high because of the battery and hybrid system cost. From the comments above, once the hybrid battery dies (it eventually will), it will cost thousands to replace.

    Jul 6th, 2008 @ 11:34 pm

57. 57. kyler

    Sorry but I didn’t get through all the posts — yet i have a burning question or 2 for the masses.

    ONe, is there a concern with the useful life of batteries in cars like the Prius ( that could affect its resale value past say 5 yrs ) ?

    Secondly, is there any time when it makes sense to lease a HYBRID car like the Prius for personal use ( ie not being able to write off lease payments ) ?

    Jul 7th, 2008 @ 12:12 am

58. 58. paul s

    FT…Not only do hybrid’s costs too much, their “value” as green cars is questionable too, if you look at “dust to dust” analysis.

    http://www.cnwmr. com

    Jul 7th, 2008 @ 12:12 am

59. 59. Assibatzen

    hi there,

    very good point paul s. that’s what i was thinking. hybrid cars aren’t really green, they just use less gas. the manufacturing of the hybrid unit, battery, etc might be bad for the environment as well. some people think hybrids run on love and hot air, but they use gas too and they’re blowing out co2. just like every other car. it’s the same with electric cars just because there aren’t any exhaust coming out of it, it doesn’t mean that they are green. electric energy is still generated by coal burning plant.
    sorry i’m biased here - i think it’s good to get a good import car like vw and drive it smart. don’t drag race at the traffic light, no drive thrus, look ahead, don’t break as much!

    Jul 7th, 2008 @ 1:11 am

60. 60. Potato

    Paul S, that’s pretty weak. There’s at least 3 or 4 other long-debunked myths you could be spewing. This is a Canadian blog, why not dredge up the Sudbury thing? I’m sure that’d go over like a nickel balloon. If you don’t want to make up your own FUD, you can do a Google search for debunked myths, or see the summary “Hybrid Cars: The Benefit of My Research“. For the CNW…thing…, see http://www.pacinst.org/topics/integrity_of_science/case_studies/hummer_vs_prius.pdf

    #59: Electric cars, even when powered by coal, put out less CO2 due to the efficiencies of the electric motor and the efficiencies of a large centralized plant vs small internal combustion engines. Even if it were a wash, there are definite smog/asthma benefits to not having each car haul a smokestack right into the heart of our downtowns and then sit there and idle in traffic.

    Kyler: I can’t answer your lease question. The battery question unfortunately doesn’t have a hugely satisfactory answer: we don’t know for sure. We DO know that the batteries are good for over 500,000 km of mileage. They seem to last as far as you care to drive them. We don’t know however if the batteries have some kind of decay over time whether they’re used or not. They’re warrantied for 8 years/160,000 km, and we’re just past 10 years of real-world data with the first generation of batteries, and almost 5 years with second-generation batteries. The time-based lifespan appears to be at least 15 years, probably 20-30. The failure rate on first-generation batteries is somewhere around 1% I believe. There are isolated reports of second-generation batteries failing, but so far most are in some way related to abuse (overheating/forced overdischarge/collision); even then the reported failure rate is 0.003%

    Jul 8th, 2008 @ 11:42 pm

61. 61. a.k.

    You prius drivers are VERY biased as well. Sorry, some people here don’t take your vehicle too seriously. PRIUS were and are being manufactured and sold WHILE VIOLATING AN INTERNATIONAL PATENT by Antonov Automotive. The person behind the magiCk is not getting a penny of toyota profits.
    Someone explain me now why you chose to pay them so much premium for an over-hyped car with questionable milage and treehugging claims. Haven’t they already screwed someone in the very beginning? Guess who is next.

    BATTERY: -heavy.
    -toxic (sealed or not, one day you recycle it).
    -efficiency and capacity decreases over
    time, just like in your cell phone battery.
    -expensive.

    MAINTENANCE: -expensive.
    -complicated and specialized.

    ENGINE: -high revving and running all by itself on a highway.

    DRIVETRAIN: -stolen.
    +genius.

    BODY: +very low air drag coefficient.
    -heavy for its dimensions.

    And one thing also, you want to save the nature, - just don’t have more than two children and use public transportation. So next time i zip by in my lightweight turbocharged ride, i want to see your pseudo-intelligent Prius face expressions gone.

    Jul 23rd, 2008 @ 9:40 am

62. 62. Peter

    Although the comparison is good it does not reflect the real life. People buy cars for more reasons than cost. It is a good guide for someone who considers the cost #1 issue.
    In case of Prius in particular it can not be compared to Corolla. Prius is a much better car in every respect, design, looks, handling you name it. It is simply few grades above Carolla, which by the way is a cheap ride if you ask me. So if you buy Prius as a fine car with excellent millage then it may not take any time to recover the cost,. This car is as good and as classy as any car costing the same or even few thousands more. From that pint of view it is the best hybrid on the market no doubt. Those cars that are just hybrid versions of “regular” can be compared and one can decide on that basis if they want to. The “smart” car companies will build hybrids and other alternative cars that are completely unique not versions of the same old same old. Toyota got it right with Prus from the very begining.
    Personally I would not by any hybrid that is a version of the “regular”: one. What is the point?

    Jul 23rd, 2008 @ 10:28 pm

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