Fuel Economy

Edmunds Study: Do Hybrids Make Financial Sense Yet?

With rising gas prices and attractive tax credits, many consumers feel they are making a frugal choice when they buy a hybrid car or SUV. Right? Well, not exactly.

Sure, there are a lot of good reasons to buy a hybrid, such as reduced emissions and the conservation of limited oil reserves. However, from a strictly financial point of view it will take years before a hybrid will save a consumer enough money to pay for the added expense of buying one.

Edmunds has crunched the numbers, and has determined just how long it would take for buyers of new hybrids to break even (save enough money on gas to offset the additional expense of buying a hybrid). The results are surprising: Of vehicles that have an equivalent hybrid version, the Chrysler Aspen Hybrid has the earliest break-even point. However, it still takes 5.5 years to save an Aspen Hybrid's owner enough money to break even when compared to the cost of a standard Aspen Limited. Other highlights show the Toyota Camry Hybrid takes 6.5 years to break even compared to the loaded four-cylinder Camry XLE. The Lexus LS 600h takes a whopping 143.5 years to break even with the Lexus LS 460 L.

Calculations were based on Edmunds' True Market Value for each vehicle, 15,000 miles per year combined city and highway driving, the average national price of gas ($2.91 per gallon on October 23), rebates and 2008-2009 federal tax credits. We sought the most equivalent model from within the carmakers' lineups. Where necessary, we added options, such as the touring package on the Lexus LS 460 L, in order to make the hybrid-to-gas model comparison as close as possible.

What about the Toyota Prius? This category creator doesn't have an equivalent gas-only version, so we compared it to both the Toyota Corolla LE and the gas-only Camry LE. This comparison skews the numbers dramatically: It takes the Prius a shocking 16.2 years to catch up with the Corolla. Comparing the Prius to the Camry LE, though, makes it a scene-stealer: only 4.2 years to break even, the shortest of any of our comparisons.

Commuters who put an average 25,000 miles on their vehicle will find their break-even times dramatically shortened (see chart below); those who drive significantly less than 15,000 miles per year will find it takes even longer to reach the break-even point.

Of course, it's not all about how much gas money your fuel-efficient hybrid will save. The myriad reasons why people buy hybrids include a desire to lower emissions, fascination with whizbang technology, wanting to reduce foreign oil dependency, and prestige, among others. Before choosing, though, it's important to know the real costs of owning a hybrid, including any potential differences in insurance or repairs, by using our True Cost To Own calculator.

Below is an at-a-glance chart of five popular models, which summarizes our findings, based on vehicle purchases; leases weren't included because they don't qualify for federal tax credits. These specific numbers are good at the time of publication, but will change based on the fluctuating price of gas, sales and incentives. Click on the mileage numbers for more detail, including EPA mpg estimates, pricing and annual gas savings for all vehicles in the study.

15,000 miles/year analysis

25,000 miles/year analysis