The Real Costs of Owning a Hybrid

Do Fuel Savings Offset a Higher Price?


  • 2013 Toyota Prius Hatchback

    2013 Toyota Prius Hatchback

    Toyota's 50-mpg Prius has no gasoline-only version, so Toyota doesn't have to worry much about price comparisons. | September 09, 2013

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A decade ago there were two hybrid car models available in the U.S. market. Today there are close to 50. The number continues to grow as automakers turn to hybrids as a way to meet tough new federal fuel economy goals and to appeal to consumers who seek them out for their fuel efficiency, low emissions and high-tech features.

What once was a niche vehicle with a decidedly small audience of early adopters has slowly entered the mainstream. But let's face it: In most cases the sticker price of a hybrid vehicle is higher than that of its gasoline-powered counterpart, sometimes significantly so.

Does the improved fuel economy offset the extra cost? What happens if the hybrid drivetrain breaks, or the battery wears out?

We looked at a variety of issues and talked with hybrid owners, mechanics and manufacturers to learn the real costs of owning these high-tech cars.

Price Premium vs. Incentives
Hybrid cars, SUVs and trucks, including the plug-in hybrids that began appearing in the market in 2012, often can cost from several thousand dollars less to $13,000 more than gasoline-only versions of the same vehicles.

There are exceptions to the rule. At the low end of the premium scale, the 2013 Mercedes-Benz S400 Hybrid sedan comes in at $2,650 less than the S550 sedan. And both the 2013 Lincoln MKZ hybrid and the 2013 Buick Regal Hybrid are priced the same as their gasoline counterparts.

At the high end, the base 2013 Volkswagen Touareg Hybrid SUV costs $13,190 more than the base Touareg VR6, while the Audi Q5 Hybrid SUV starts at $13,091 more than the gas-only Q5. Granted, the hybrid models in both cases come with a number of features as standard equipment that are either pricey options or aren't available on the base versions of the gasoline models, but there's still a considerable "hybrid technology premium" in their prices.

There's also the one-of-a-kind situation over at Lexus, where the ultra-luxe and rarely sold LS 600h L hybrid is priced almost $25,000 higher than its closest gas-only stablemate, the Lexus LS 460 L.

Edmunds.com's gas-guzzler trade-in tool can be used to calculate the price premium of any alternative-energy vehicle versus any gasoline or diesel model.

Buyers of plug-in hybrids can offset some of those premiums with a federal tax credit. The credit provides a dollar-for-dollar reduction in the owner's tax bill and while most plug-in hybrids have credits of $2,500-$3,750, they can go as high as $7,500, depending on the size of the vehicle's battery. The Department of Energy's Web site includes a list of vehicles that qualify for federal tax credits.

The plug-in hybrid credits were authorized in the Energy Improvement and Extension Act of 2008 and are lumped in with battery-electric vehicle tax credits. That means the credits for any particular model of plug-in won't expire until a year after its manufacturer has sold a total of 200,000 plug-in hybrid and battery-electric vehicles. So far, that's a sales figure no individual automaker has achieved.

Credits for conventional hybrids (those without external battery charging capability) were phased out at the end of 2010, and most state and regional incentives for hybrid purchases also have been phased out as the cars gained mainstream status.

The Energy Department maintains a list of remaining state incentives for hybrids and other alternative-fuel vehicles.

Insurance Changes
Some insurance companies believe that drivers of hybrid vehicles have a lower risk of being involved in an accident than drivers of non-hybrid vehicles. Others don't give any special credit to hybrids for modifying driver behavior. Thus, some insurers including Farmers Insurance and Travelers Insurance offer discounted premiums for hybrid models while others don't. Some insurers might actually charge more if their claims history shows that hybrid components cost more to fix if they're damaged.

So it's important to ask your agent about what to expect. If you insurer doesn't offer a hybrid discount, or even charges more, you may want to shop around for new coverage.

Batteries and Repairs: No Worries
Hybrid critics warn of potentially expensive repairs associated with the hybrid-specific parts, such as battery packs. "I was a little concerned initially," said Lydia Segal of Alexandria, Virginia, who owns a Lexus RX 400h, "but Toyota's had its hybrid technology out for quite a while now. Plus, I did a lot of research on the Internet and couldn't find anyone who had a problem with the hybrid system."

And there doesn't seem much reason to worry. All the hybrid-specific components in every hybrid vehicle currently on the market are covered under warranty for eight years/100,000 miles or 10 years/150,000 miles, depending on the state, but these components have been shown to have a much longer lifespan in testing and in real-world conditions.

Toyota, for example, reports that its battery packs have lasted for more than 180,000 miles in testing. A large number of Ford Escape Hybrid and Toyota Prius taxicabs in New York and San Francisco have logged well over 200,000 miles on their original battery packs and are still running well.

Additionally, the price of the nickel-metal hydride batteries used in most conventional hybrids is dropping as increased volume lowers production costs. Toyota sells batteries for the popular 2004-'09 Prius for less than $2,200, and replacement battery packs for 2005-'11 Honda Civic hybrids are now about $1,700, down from $2,400 in 2009.

Another factor in battery prices is battery recyclability. More recycling means lower costs because the raw materials for batteries don't have to be mined and refined each time. Hybrid battery recycling is still in its infancy. There simply haven't been all that many battery packs surrendered for recycling, which is a testament to the batteries' longevity.

Every hybrid manufacturer reports that it has conducted testing of hybrid components in extreme temperatures and with repeated charge/discharge cycles, with no ill effects on the hybrid system.

Regular Maintenance Costs Are a Draw
Most hybrid cars do not require any additional regular maintenance on the hybrid-specific components. An exception is the air filter on the battery system of the now-discontinued Ford Escape Hybrid, which needs to be replaced every 40,000 miles.

The gasoline engine in a hybrid vehicle requires the same maintenance that it would if it were the only power source driving the vehicle. That means regular tune-ups and oil changes every 5,000-10,000 miles, depending on the vehicle and the driving conditions.

One important hybrid benefit is that ordinary vehicles need to have their brake pads changed regularly. But hybrids' regenerative braking systems eliminate much of the wear on the mechanical brakes, so their brake pads typically last much longer, says Carolyn Coquillette, owner and lead mechanic of Luscious Garage in San Francisco, and a hybrid vehicle specialist.

Fuel Economy Is the Hybrid's Strength
The hybrid vehicle's reason for being is to reduce gasoline use. Toyota's Prius hatchback, for instance, is now rated at 50 mpg in combined city and highway driving. The larger 2013 Prius V wagon is rated at 42 mpg. Ford's Fusion hybrid is rated at 47 mpg.

Those ratings, issued by the EPA and included on all new passenger vehicles' window stickers, have never been spot-on for every car. Mileage varies for a variety of reasons, and one reason is that the EPA test protocol is optimized for conventional gasoline vehicles.

Hybrids deliver their best fuel economy at low speeds and in stop-and-go conditions, when the electric-drive system does a lot of the work. The hybrid advantage largely goes away for sustained highway speeds.

Thus the EPA admits that even after its most recent revision of fuel economy test procedures, which took place in 2008, the ratings for hybrids can easily be 20-30 percent higher than most drivers will experience in real-world conditions.

Ford Motor Co., for instance, has been stung by complaints that its hybrids aren't delivering anything close to their EPA-rated 47 mpg. Ford has announced a series of upgrades designed to bring its hybrids' real-world fuel efficiency closer to the official ratings.

Add to that the fact that hybrids, just like other cars, are sensitive to factors such as speed, hard braking, quick acceleration, cargo loads and use of air-conditioning and it's easy to see that while EPA fuel economy ratings are a valuable guide, they shouldn't be considered a promise.

Nonetheless, the cost of fueling a hybrid will always be lower than for its gas-only counterpart. The difference is more significant for some models than others, so even if you reduce the fuel economy ratings by 30 percent for the hybrid and 10 percent for its non-hybrid competitor, do look at the EPA ratings when comparing.

How Hybrids Improve Fuel Economy
The boost in fuel efficiency that a hybrid delivers is the result of drivetrain technology that combines the best of the gasoline engine and the electric motor. Vehicles that use only electric motors are incredibly fuel efficient, but have limited range and long recharge times. Gasoline engines aren't very efficient: Only about 25 percent of the fuel they burn is turned into energy that drives the wheels, and most of the time they are running, they need only a small portion of the power they produce.

To resolve those issues, a hybrid uses a smaller gas engine than a car of its size would typically need and augments it with an electric drive system that delivers extra power when needed without burning additional gasoline. There's no time lost plugging in hybrids to recharge the batteries: The car generates its own electricity through the gas engine and the regenerative braking system. (This is different for plug-in hybrids, as their name suggests.) And there's no range issue because a hybrid will keep going as long as there's gasoline available.

For a deeper dive on this subject, please read "What Are Hybrid Cars and How Do They Work?".

Hybrid Costs vs. Benefits
On the surface, it appears that the added costs of purchasing a hybrid are at least partially offset by reduced fuel costs and, in some cases, lower insurance rates. Thus far, maintenance and repair costs for hybrid cars seem to be a wash. Of course, much depends on the vehicle you choose, where you live, your insurer and your driving habits. Overall, about a third of the hybrid models in the market in 2013 will earn back their price premiums in five years or less through fuel savings alone.

The number and variety of hybrid models in the market will increase. That's a given, thanks to the upcoming federal fuel efficiency goal of 54.5 mpg by 2025. As that happens, economies of scale in manufacturing and raw materials purchasing should continue to erode the so-called hybrid premium.

Rising fuel prices also would help slash the premium. At $3.50 a gallon and 15,000 miles a year, it would take 6.6 years on fuel savings alone to earn back the premium for a hybrid that gets 35 mpg and costs $4,000 more than a gas-only car that gets 25 mpg.

But if gas were $4.50 a gallon, it would take just 5.2 years for the hybrid to earn back its premium over the 25-mpg car. The higher that gasoline prices go, and the wider the gap in fuel efficiency between a gas-only vehicle and a hybrid, the quicker the payback.

For some people, however, the reasons to buy a hybrid go beyond dollars and cents. Hybrid owners cite such reasons as their desire to reduce emissions, help wean the nation of its gasoline dependency and make a "green" statement. Many also are attracted by the top-of-the-market technologies typically found in hybrids. Finally, many talk about the sheer joy of bypassing that gas station that they used to have to visit once or twice a week.

Comments

  • null_3 null_3 Posts:

    How much does it cost to replace the battery pack? Can they be charged with 110 outlet? What about the Mitsubishi pick up truck Hybrid, where is it? Where are the used hybrids to be found?

  • r0n724 r0n724 Posts:

    My nephews girlfriend owns an 08 saturn vue hybrid. It gets great mileage. It's quiet. It's comfortable. It's now dead! I went out to dinner with them the other night when all of a sudden the gas engine started going on and off...power stearing went.. no dash lights.. no headlights or tail lights...everything electrical was dead.. with the gas enging constantly turning on and off. She had it towed to a Chevy dealer who says the hybrid system is toast! Luckily the car is still under warranty and will be repaired. However, if this car wasnt under warranty she would be stuck with anything from 4000.00 plus for the repair.. according to the dealership. Sometimes hybrids arent all that good to own.

  • sceptick sceptick Posts:

    This article is mis - named and appears to be a promo for the hybrid industry. Show the math; do what the article title states and list the comparative costs, in numbers. Previous studies show that buying a new fuel-saving economy car costs a LOT more than continuing to drive your paid-for gas guzzler. How, then, does paying 2X and more for a hybrid ever save money?

  • basavage basavage Posts:

    I've talked to many hybrid owners. There is a worry that many have that is not mentioned or ignored in this article. That being how expensive will the battery packs be when they do eventually wear out after the warranty expires. While the manufacturers are improving I've met several who've used their battery pack warranty in the first year or two. That means they got stranded. While the owners love the gas milage in town, some have complained about their gas milage on their first trip. Remember that a hybrids milage is much higher in city driving because they use the electrical side more, it is lower on the freeway because the engine is worked harder. Just an FYI.

  • Only one problem. You have to make $250,000 a year on your W2 form to receive the taxcredit. If you and the wife are GS-15 0r college professors you probably can get the credit......For the average American you are out of luck.....................

  • WHAT is a FOUR YEAR OLD article doing here?? An all electric car requires OIL-FIRED generation of electricity which equates to 47 mpg. The real SNAKE-OIL is the ethanol, heavily subsidized, taking almost as much energy as it produces. To be commercially viable, e-85 fuel should sell for 30% less than gasoline due to it's 30% less energy; That means $2.50 a gallon compared to $3.60 gasoline today.

  • meridian62 meridian62 Posts:

    Please explain the cost of charging the batteries regardless of voltage 110 V vs 220 V, Watts is what is important. In NYC the actual cost for electricity is approximately 30 cents per KWh, that includes supply charges, power cost and taxes plus all the freebees mandated by government!

  • kev66us1 kev66us1 Posts:

    Volkswagon Golf Bluemotion crushes all these hybrids. Too bad our government will not allow them to be sold here. 75 mpg is pretty damn good. Ford also has cars in Europe that top 70 mpg which again, are not allowed to be sold here. Don't buy the pollution lie they try to sell you either, do the math....

  • dand4 dand4 Posts:

    There's quite a bit missing in this. 1) I didn't find any hybrid vehicle which was only $1,700 above the price of a similar vehicle when I was searching for a vehicle. 2) Dealers are much more willing to negotiate a much lower price on a traditional car rather than a hybrid vehicle. 3) Interest charges for paying all that extra money up front are discussed. And if you pay for it all in cash, the lost interest. 4) The extra costs of replacing a battery or charging system when it needs to be replaced. (The first car I bought in lieu of a hybrid is still running past 180,000 miles and I don't have that extra huge expense to keep using it. With a hybrid, I would have probably needed to buy a new vehicle again by now) 5) Extra charge of fitting your garage with a charging station (not necessary, but probably a good idea if you are doing hybrids) 6) There are other cars available which just as good of gas mileage and are not hybrids.

  • $1,326.00 (based on an estimated 100 mile charge at a cost of $2.75 per charge times 365 days of the year) is the average difference of the EXTENDED costs of fuel for a hybrid vs a regular gas fed car. As we know, electricity prices are sky rocketing as the Administration and EPA impose more taxes and other fees to the cost of electricity to the average home. In addition, what people aren't seeing is that we really AREN'T helping the environment by buying Hybrids. Let me explain why. We receive our electricity in our homes in various ways, mostly through coal, nuclear and petroleum sources. So to supply that extra electric to charge these cars, actually increases pollution in the long run because you have to burn regular fuels in order to generate the electricity (that no one wants to add to the fuel costs on these cars because it isn't 'PC' to do so) That negates the whole 'Planet' saving idea in a nutshell! In addition, when it comes to disposing of the batteries in these cars, there is NO recycle program set up yet! With the 2004 hybrid batteries just now hitting the recycle stage, with more expected each year, what does THAT say about polluting our planet? So, add the extra costs of these cars in purchase dollars, the additional costs of the electric used to propel them (for very short distances of 50 miles a battery Avg.) and what really is the difference? None! You are actually paying more for the 'privilege’ to run a 'supposedly' (and extremely untrue) planet saving vehicle! Add to that the fact that the added pollution in terms of creating the extra electricity you need to run these vehicles as well as the fast approaching emergency of what to do about the inability to properly recycle the batteries, and you are actually adding MORE pollution to the environment then if you simply drove a reg. fueled car which has all of the pollution features required by law and is in proper working order. I love when the government and environmental agencies try and shove ‘new’ and ‘better’ ideas down the public’s throat. They will stoop to any available low in order to push their agenda and you can pretty much figure that it is generally full of lies and holes and will cost you more then the prior established. Wind farms are not only not feasible as a steady, reliable (they have to have wind so can’t be used in most areas of the country) energy source. Coal plants are our main source of electricity but with the Administration and Environmentalists influenced “war’ on coal is (closing coal plants at an alarming rate and consequently) driving up the price of coal causing electricity prices to soar around the country. If you are lucky enough to have energy supplied by a nuclear plant, that’s great, but the costs of building and maintenance of a nuclear plant are always offset by increased electricity rates for the consumers. Environmentalists claim that we all leave a carbon footprint which is detrimental to our planet. We leave less of a footprint today then they will admit and not much more then we have for thousands of years on this planet because of all of the environmental laws in effect today! So their idea that man is bad for earth and therefore has no right to walk on earth is absurd. People need to wake up, stop listening to governments, which are highly influenced by large business, lobbyists and their own pocketbooks, AND environmental groups with their inefficient, expensive and ridiculous ideas, and start using common sense. Google for facts and you will find them. Do your own homework and don’t rely on skewered ‘Government’ websites for your figures, because I guarantee that these sites stats ARE skewered…to meet someone else’s agenda and rob you of more money while making you feel ‘good’ about the robbery through misinformation, in the process.

  • jdm63 jdm63 Posts:

    Toyota may be somewhat optimistic regarding their battery replacement data. My parent's Prius, at 75K miles started having battery issues and they were quoted $6k to replace the HV Battery assembly by the dealership. They were made a generous trade offer on a new Prius though. They turned it down and traded in on another manufacturer. My neighbor also owns a Prius and her battery began to weaken substantially at around 65K miles, this dealership quoted her $5,800 for replacement, more than what the car books at. Hybrid design is a fantastic concept and is truly a green product that helps reduce our output of greenhouse gases, but don't go into one thinking its going to save you money,

  • tinalemos tinalemos Posts:

    Hybrid car has many options with minimizing fuel expenses and better pollution control options, which I have heard with some car owners in my area. However, some Prius owners express their thoughts on its higher cost of maintenance and repairs. However, they have found some of the cheap options that drastically reduce their expanses on any car maintenance. They gather some valuable tips from online sites like HiPerformer.com and then follow them properly.

  • royagb royagb Posts:

    @ emeraldisles, Much of what you say is true and worthy of consideration but it's my understanding you don't plug in a hybrid.

  • olmstw olmstw Posts:

    @emeraldisles What are you talking about???? I have owned several hybrids and I have NEVER "plugged" one in.... So.... Aside from turning on the lights in the garage to be able to see my way to the car, I've never used even 1 WH for my car.

  • olmstw olmstw Posts:

    @ jdm63 That's why you purchase an extended warrantee when you purchase the car..... My battery is covered for 10 years or 100K miles.... Actually, the hybrid is cheaper to maintain and, what repairs are required, are less expensive...

  • olmstw olmstw Posts:

    @ backtothefutur... Why are you discussing "OIL-FIRED generation of electricity"??? Modern hybrids DO NOT "plug in" to AC power... My Prius averages 48mpg. And no, I don't work for Toyota ^_*

  • mikec65 mikec65 Posts:

    Emeraldisles, you're an... well, let me be nice. You have no idea what you're talking about. This article is about gas-electric hybrids, not plug in hybrids. Gas-electric hybrids (like the regular Prius, the Toyota Camry Hybrid, the Ford Fusion Hybrid, and the Hyundai Sonata Hybrid) are not charged externally; that is, they are never plugged in. All their energy comes from burning gasoline, and that includes the creation of the electricity used to charge the batteries. Therefore, all your talk of where electricity in the home comes from is irrelevant to a non plug-in gas-electric hybrid, as is your calculation of cost savings. The reason why gas-electric hybrids are more efficient than conventional powertrains is that the ability to store energy generated by burning gasoline in batteries for later use enables the gas engine to be utilized more efficiently. With a gas-electric hybrid, the gas engine can run in a more efficient range, but generating more power than is needed at a particular time to move the car, and the excess power can be stored in the batteries and used later. Thus, overall, the vehicle is more efficient. Other things that make the vehicle more efficient are the ability to store energy that otherwise would have been lost to braking in the batteries (regenerative braking), and the engine stop-start system that turns off the engine when the vehicle is stopped. All these things increase the efficiency of the vehicle. Externally generated electricity and where it comes from is completely irrelevant to a gas-electric non plug-in hybrid.

  • edub5 edub5 Posts:

    In response to emeraldisles comment: This article appears to be about hybrid vehicles, which receive their charge not from the power grid/coal/solar, etc. These vehicles generate their own power, and store it locally, the power generation and storage don't rely on coal or the power grid. You may have been thinking about a plug in hybrid, which is a different type of vehicle. Yes, any type of hybrid may be bad for the environment due to the production and eventual disposal of all those batteries.

  • megamiles megamiles Posts:

    Time for a reality check. I am a high mileage driver as I commute 120 miles a day or an average of 650/miles a week. So at 2 years and 8 months I had accumulated 96000 plus miles. At that time I had an AMI warning light which indicated complete failure of the battery pack. First my Honda dealer indicated that the battery pack was only covered for 80,000 miles. Since the cost to replace the battery pack I was quoted was $4500 I complained and asked my dealer to contact Honda. The warranty was then extended to 100,000 miles but then Honda corporate decided not to replace the battery pack but add a software patch to spread the charge across the surviving Lithium cells. I found that this patch dropped my mileage from my usual 44/gal to less than 38/gal. The culprit being that cycle time was greatly compressed as the gas engine would be engaged for longer and more frequent times to charge the remaining cells. My research on line uncovered others with the similar problem. So if you do the math to compare the cost savings to the cost of replacing the battery pack it doesn't add up.

  • factual factual Posts:

    emeraldisles bringa up some good points, however hybreds are not usually plugged in. Some of the conclusions are therefore not correct.

  • Just one thing. You don't plug hybrids in. That's what the gasoline engine is for. To charge the car's battery. You plug all-electric (no gas motor) in.

  • j_mac j_mac Posts:

    This lengthy discourse is about the economic and environmental costs of grid-supplied electricity and should not be confused with the non-plug-in hybrids. The mechanical or gasoline engine portion of the hybrid is subject to the same EPA environmental control standards as a non-hybrid engine, so that doesn't apply. Only the discussion of battery disposal is valid with a gas/electric combined hybrid.

  • vahybrid vahybrid Posts:

    This article is nonsense. Check out the pages of complaints on hybrid systems in Highlanders dying at 120,000-130,000 miles and the owners getting stuck with $10,000 repair bills, or a hunk of metal that won't move. Vahybrid

  • fergusonfry fergusonfry Posts:

    Wow, people are firing off comments without reading. Some here are asking what is the price of the batteries? It tells you in the article. In my experience engines cost more than batteries and in euro diesels the commonly failing gearboxes are the biggest cost to worry about. emeraldisles, the word you are looking for is skewed meaning leaning one way, not skewered meaning to have a rod poked though. Don't be afraid of education. You seem to be talking about electric cars. the article is about hybrid cars. Hybrids make electricity by converting kinetic energy into electricity when the vehicle is slowing down. Normally the brakes of a conventional vehicle convert kinetic energy to heat via friction. Energy can not be destroyed, it is converted from one form to another. Hence, hybrids use energy normally wasted and use it for low speed travel and to power the functions of airconditioning when the car is stationary. Hence the engine doesn't have to idle. hence, you save fuel and reduce emissions.

  • guitarrista guitarrista Posts:

    After reading this article and the other comment, I felt a need to add my 2 cents. If you don't drive many miles, or drive mostly on the freeway, a hybrid may not be a money saver for you. However, If you drive hundreds of miles every week and spend some time in stop-and-crawl traffic every day, a hybrid will probably be a money saver. It comes down to figuring your fuel cost savings compared to the fuel cost for another car you might drive, as well as the purchase prices of the cars you are comparing.

  • chas2205 chas2205 Posts:

    @Emeraldisles, your post is not correct. In fact, it is so misleading that I suspect you are paid to disseminate disinformation. Electricity is MUCH, MUCH less polluting than gasoline. By a factor of 10, and that's if your state produces all of it's el

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