Car Buying Articles
Why Hybrids and Diesels Don't Always Save You Money
And Why You Shouldn't Cross Them Off Your Shopping List
Hybrids and clean diesels offer impressive fuel savings over their gas counterparts. But hybrid and diesel technologies aren't cheap and often add thousands of dollars to a car's sticker price. As recently as 2010, the federal government offered tax credits that helped soften the financial impact. That spurred sales and encouraged consumers to adopt this new technology. But those tax credits stopped on January 1, 2011. With their expiration and the frequent, unpredictable spikes in gas prices comes a good question for consumers: Are hybrids and diesels a good value?
Depending on how long you keep a new car, you may not own it long enough to realize any savings based solely on the money you save by buying less gas. If you're like the average person, you hold onto a new car for about six years. After that, you've already moved on to your next car. Unless you keep the hybrid or diesel past its "break-even" period (the amount of time it would take you to save enough money on gas to offset the additional expense of buying the hybrid) it's not the most economical choice.
Keep in mind that the break-even times are a reference tool for new car shoppers. Here, we are comparing a new hybrid or diesel vehicle to a new gasoline vehicle. Since everyone drives different cars, we aren't able to list the payback time for every vehicle. If you are trying to determine whether you should trade in your vehicle for something more fuel efficient, the Edmunds gas-guzzler calculator can easily give you the answer.
The three charts below show the break-even times of the best-selling hybrids and diesels. This data assumes the driver averages 15,000 miles per year and that the national gasoline price is $3.57 per gallon for regular, $3.88 for premium and $3.93 for diesel. Keep in mind that these numbers aren't set in stone. If you drive fewer miles per year or the price of gas drops, the payback time increases. If the price of fuel goes up, the payback times get shorter. To illustrate this, we also ran the numbers for fuel at a cost of $5 per gallon.
This first list is pretty straightforward. It is an apples-to-apples comparison of hybrids with their gasoline-model equivalents. The number in parentheses represents a theoretical payback time for $5-per-gallon gasoline.
Top-Selling Hybrids vs. Their Gasoline Equivalents
Toyota Camry Hybrid: 6.2 years (4.4)
Ford Fusion Hybrid: 3.9 years (2.8)
Toyota Avalon Hybrid: 5.3 years (3.8)
Lexus ES 300h: 8.1 years (5.6)
Chevrolet Malibu Eco: 5.5 years (4.0)
The more popular hybrids tend to be ones that do not have equivalent gasoline models. For some people, part of the appeal of a hybrid is its unique look. In an effort to have some point of reference for the cars on this second list, we compared the top-selling unique hybrids to similar models based on size and price within the same brand. In the case of the Chevrolet Volt, which is actually a plug-in hybrid without a comparable match in the Chevrolet brand, we used the Chevrolet Cruze, since it was the Chevrolet model most likely to be considered by Volt shoppers, according to Edmunds data.
Top-Selling Unique Hybrids vs. Similar Gasoline-Powered Cars
Toyota Prius vs. Toyota Corolla: 7.5 years (5.4)
Toyota Prius C vs. Toyota Yaris: 5.8 years (4.1)
Toyota Prius V vs. Toyota Matrix: 9.9 years (7.1)
Ford C-Max Hybrid vs. Ford Focus: 8.5 years (6.1)
Chevrolet Volt vs. Chevrolet Cruze: 8.8 years (6.0)
Diesel-powered vehicles have increased in popularity, but still do not share the same level of success, in terms of sales, as hybrids. As the chart below shows, some diesel cars require a hefty payback period. The negative number means that the diesel vehicle is actually less expensive than the gasoline version.
Top-Selling Diesels (excludes heavy-duty trucks)
Volkswagen Jetta TDI: 9.5 years (4.4)
Volkswagen Passat TDI: 8.2 years (4.1)
Mercedes-Benz GL350 Bluetec: -0.5 year (-0.4)
Volkswagen Golf TDI: 20.3 years (9.4)
Porsche Cayenne Diesel: 4.8 years (3.6)
Clearly, these break-even times are all over the map. It really depends on the model you are interested in and what you are comparing it to. And in the unfortunate event that gas does reach $5 per gallon, it still may not be worth buying a hybrid or diesel, if you don't keep your car long enough to realize the cost savings.
In general, hybrids and diesels still command a premium. Hybrids have been around for more than 10 years, but while the technology keeps improving, the prices haven't. Advanced batteries, electric motors and development costs all add to the price you see on the window.
Finally, the hybrid or diesel version of a vehicle is often positioned as the brand's high-tech model, and as such, it's loaded with more features than would normally be found in the gasoline equivalent. Buyers aren't just paying more for the clean-fuel technology, but also for foglights, unique wheels, added navigation or automatic climate control.
The Case for Hybrids and Diesels
It's easy to get fooled by advertising and think that as soon as you purchase a hybrid or diesel vehicle you will start saving money. That's not always true, but there are still reasons why people choose these cars:
- Reduced greenhouse gas emissions: People buy hybrids because they want a vehicle that uses less gasoline and thus reduces their carbon footprint. For them, the choice of car isn't based on saving money, but on reducing their impact on the environment.
- Fewer trips to the gas station: Not having to fill your car with gas on a weekly basis is such a liberating feeling that many people buy hybrids or diesels just to delay those inevitable trips to the gas station.
- The prospect of steeper gas prices: The break-even numbers in this article can change. They are snapshots of current gas prices and assume that a person drives 15,000 miles per year. If gas prices go up, the break-even times shorten. That's also the case for owners who drive more than the 15,000-mile average in these examples.
Hybrid and Diesel Alternatives
If you are put off by the break-even times on new hybrids and diesels but want to save money on fuel, there are a number of alternate routes to take:
- Keep your car: In most cases, you'll save money by simply hanging on to your current vehicle. The cost of buying a new car has to be offset before it can start saving you money on gas. Use our gas-guzzler calculator to determine whether the jump to a new car would make sense. You can also change the way you drive and improve your fuel economy by about 38 percent, with these tips.
- Consider a new fuel-efficient conventional car: The Honda Civic HF, Mazda 3 Skyactiv and other cars in the 40 mpg club are a few examples of the new breed of compact cars that can get hybrid-like fuel economy.
- Shop for a used fuel-sipper: If a new fuel-efficient car is beyond your budget, consider buying a used car that gets good mileage. A 2009 Honda Civic, for example, averages about 29 mpg in mixed driving. A quick search of used-car listings shows that a 5- or 6-year-old Civic can be had for thousands less than a new Civic Hybrid, which averages about 44 mpg in mixed driving. Those savings can pay for a lot of gas. Buying a used hybrid car is another option.
Seeing Through Hybrid and Diesel Hype
Hybrids and diesels get a lot of media attention. But the fact is that they constitute less than 3 percent of all cars sold. Price is likely one reason for those meager sales figures. If you want to reduce your carbon footprint or take advantage of some of the non-economic benefits of hybrids and diesels, you might be willing to pay more to do so. But if your primary interest in a hybrid or diesel is saving money on fuel, it makes sense to check out other options.