| November | December 2005 Volume 79 Issue 6 |
|
AutoTalk Hybrid Economics
Hybrid cars have been widely touted in these times of high gas prices. Indisputably more fuel-efficient than gasoline-only vehicles, hybrids combine a gasoline engine with an electric motor to provide decent performance and better mileage on a minimum of fuel—and they're more environmentally friendly, producing one-third to one-half the pollutants of comparable gasoline-only vehicles. Okay. But will it save you money? There's an obvious extra cost: a hybrid car's higher price tag. No conventional vehicles are equivalent to the Toyota Prius or the Honda Insight, but the Honda Civic hybrid has a nearly identical gasoline-only twin, the Civic EX, which costs about $2,300 less. And the Ford Escape hybrid costs approximately $2,000 more than its gasoline-only counterpart. The IRS offers a federal tax break to help offset the difference. Taking delivery of a new hybrid before December 31 qualifies you for a $2,000 tax deduction. That's a deduction, not a credit, so your actual savings depend on your tax bracket—$560 for the 28% bracket, for example. Even if the tax break isn't overwhelming, hybrid owners save on gas, right? Well, yes, but it's not quite that simple. A survey by EVWorld.com shows that most hybrid owners average less than the spectacular 50- or 60-mpg ratings given to some hybrids by the EPA. Let's say you get 47 mpg from your Civic Hybrid, compared with 34 mpg for the Civic EX. At 15,000 miles a year and $2 a gallon, it'll take about nine years to recoup the sticker-price difference between those two cars. Even with gas at $5 a gallon, it would take about four years. Of course, the time would be shortened if a hybrid owner had switched from a vehicle that was much less fuel-efficient than a gasoline Honda Civic. There are other costs as well. Auto research firm IntelliChoice Inc. says depreciation is a bit higher for the Civic Hybrid during the first five years of ownership. But insurance costs are nearly the same for the Hybrid and EX, as are maintenance and repair costs—until a hybrid car's battery pack needs to be replaced. Current estimates are that a battery pack will cost $2,000 to $3,000 in 10 years, when most hybrid owners will need to replace them. Potential buyers should not make their decision based solely on the hope of saving gas money. Other factors to be considered include environmental concerns, supporting the development of fuel-efficient vehicles, and making a small move toward decreasing our reliance on oil. Overall, there is an extra price to pay for driving a hybrid, although it's not steep. Automakers are betting an increasing number of consumers will pay that price.
|
