Plug-in Vehicles Benefit California Buyers the Most | Edmunds

Plug-in Vehicles Benefit California Buyers the Most

SOUTHFIELD, Michigan — Is a standard hybrid, a plug-in hybrid or a pure electric vehicle worth the added cost when gasoline is as plentiful and inexpensive as it has been this year?  IHS Automotive says no. says maybe — if you live in California.

In a presentation here in late March, IHS analyst Henner Lehne estimated that standard hybrid technology, which combines an electric motor and an internal combustion engine, costs the buyer about $3,000 and provides up to a 25-percent increase in fuel economy. But the break-even point for a hybrid driving 15,000 miles annually is 12.3 years if gasoline is selling at $2 per gallon.

But there is a special benefit linked to electrification technologies for California residents, a benefit that outweighs the high cost for some drivers, according to

Jessica Caldwell, senior analyst at, said hybrids may not make sense for some drivers, "but there are benefits that some of these technologies bring."

"For instance, in California you can ride in the carpool lane if you have a plug-in hybrid or an electric vehicle. For some people, that is more than worth whatever premium you are going to pay," Caldwell said.

Using data from IHS Automotive and the California Cars Initiative, Lehne said higher gasoline prices reduce the payback period, but it still takes a long time to break even with standard hybrids: 8.2 years at $3 per gallon and 6.1 years at $4 a gallon.

Lehne said the length of the payback period for hybrid and electric vehicles is too long for most customers to accept.

"From a rational point of view, it is hard to put (such) fuel savings options into a consumer's mind," said Lehne, who is senior director for global light vehicle forecasting. "From a day-to-day point of view, driving, commuting to work, looking for a cheap way of transportation, it is quite hard to make the argument" to purchase the technology.

The Ford Fusion Hybrid, Lexus ES 300h hybrid and Volkswagen Jetta Hybrid are among the vehicles that offer standard hybrid technologies.

IHS analyzed other electrification technologies and the cost versus savings for a car traveling 15,000 miles annually and gasoline prices at $2, $3 or $4 per gallon. However, none of the examples offered a reasonable break-even point, he said.

Lehne said the technology for a plug-in hybrid adds about $10,000 to the cost of the vehicle and provides about 40 miles of travel between charges in pure electric mode and more than 50 mpg in equivalent fuel economy. He said the payback takes 10.6 years at $2 per gallon; 6.4 years at $3 per gallon, and 4.6 years at $4 per gallon.

Among the plug-in hybrids in the market are the Chevrolet Volt, Ford Fusion Energi and Porsche Cayenne S E-Hybrid.

A pure electric vehicle makes the least economic sense, he said. The technology adds about $20,000 to the cost of a vehicle. The break-even point is 27.0 years at $2 per gallon; 14.7 years at $3 per gallon, and 10.1 years at $4 per gallon.

The Ford Focus Electric, Kia Soul EV and Volkswagen e-Golf are among the pure electric vehicles in the market.

"The pure electric vehicle in this low gasoline (price) environment doesn't make much sense," he said. "It is quite expensive. It is more a philosophical decision (by the driver). It is more a statement than a rational choice."

Edmunds says: Higher gasoline prices and higher federal and state incentives may be needed for buyers to view standard hybrid, plug-in hybrid and pure electric vehicles as a logical choice.

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