Two year payback on hybrids?

In my WA neighborhood, I see more than five G3 Prii parked on the street on a 30 minute evening walk. That doesn't count any garaged ones hidden on the same route.

 

Why I

Why I purchased a Prius. I wanted to present myself the gift of disillusion but to my surprise I was disappointed again as the Prius may have exceeded my expectations and managed to break down the will of the upper middle class as I gat more for less.

 

What are you figuring for the price of new planet?

 

I was probably unclear:
Product A costs X over it's lifetime
Product B costs X over it's lifetime, but pollutes more than A.

It should be a no-brainer to pick product 'A', but somehow Americans have decided that they will only pick 'A' if it saves them money over 'B'

 

They found one with a similar distance to the Sun as Earth, however it will take 3 generations of space travel to get there and no guarantee it can support life. So if you go your great grand children will see the planet. :-(

 

I think the Automotive magazines put that in there head. Funny how they do not talk about pollution or global warming or clean energy.there are 3 types now.
1) they understand and purchase a EV
2) they think pollution and gas gusslers is there right
3) those who do not understand the EV or are miss understanding.

 

4) they wish they could get by with an EV, but choose a hybrid as it meets their daily distance needs.

 

Somehow reasoning has become off track.

To the writers there is a meme that hybrids perform worse and are no as fun to drive. A hybrid should therefore have a lower TCO.

CR and other magazines have commented the honda fit is a better economy car than a prius.

Then more recently a prius c was compared.

Its not that the payoff should be 2 years, but that there should be something improved.

 

My last car I purchased a BMW and it was a money pit. So when I compared the Prius I compared it to my Bimmer. Prius was more room, better mileage, lower payment, lower gas prices, lower insurance, and less of a Robert liability, and more car data, and overall mor reliable car. If I could improve the planet sign me up.

 

I will bite, what is a Robert liability?

 

If I may misuse Aleckin's example to illustrate a point:
Yes, after 7.4 years Aleckin would have the same amount of cash sitting in the bank with either car. However, with the Prius he would have a more valuable car sitting in the driveway in addition to that. That "payback" calculation only takes cash in hand into account, and completely ignores the value of other material assets.

So that is not the real break-even point, because if at that point he sold the car, part of the "hybrid premium" would then be recouped, and he would then have more cash in hand after driving a Prius.

The method by which the payback time to break even fallacy is made, is that while the value of the gasoline is measured from the beginning of the time period to the end of the time period, the value of the hybrid premium is only measured at the beginning of the time period and not at the end of the time period. This is as if the Prius would depreciate by $3,500 more than the other car the very instant it is bought. Obviously this makes no sense.

If one calculates the fuel cost savings per year, then one should also calculate the hybrid premium cost per year. Assuming very pessimistically a Prius lifetime of only 12 years, then the cost of the $3500 hybrid premium is $291.67 per year. Subtracting that from Aleckin's $472.50 fuel savings per year gives $180.83 net savings per year, every year from the very first, compared to the non hybrid.

That $180.83 per year is the return on the $3,500 hybrid premium investment over and above the initial investment being recuped. That's 5.2% of the initial investment per year, or roughly the equivalent of a 4% annually compounded interest rate for 12 years. And that's probably worst case. For me, that's better than money in the bank.

Here's another example with a slightly different way of calculating to illustrate the same principle: If after six years (half of the life of the car) Aleckin sells his car for half of what he bought it for, then he would save $2,835 on fuel with the prius, but he would lose 1,750 more on depreciation of the higer priced Prius compared to the other car (the difference between half of the new price of each car). That puts him $1,085 ahead with the Prius after only six years, even though conventional wisdom says that his break even point is only after 7.4 years.

As the math turns out, assuming constant rate of use of the car, and all else being equal (which it isn't, but the issue here is the basic principle), as long as the hybrid premium is less than the fuel savings for the lifetime of the car, then no matter what point is chosen, the savings in fuel costs will always be more than the increase in depreciation costs due to the hybrid premium.

If there must be a break even point, then one could say that would be the day that the car was bought. After that, with every mile the fuel savings are outweighing the hybrid premium, and adding up in favor of the Prius.

 

^^ Pretty analysis, but it assumes linear depreciation.

 

Yes, but it doesn't necessarily have to. It also works fairly well just asssuming same depreciation rate curve for both cars. But I like linear because it is simpler and more logical.

The main thing is the basic priciple.

 

Straight line is a poor assumption since depreciation is front loaded.

I would expect a 10 year old gen I prius to have depreciated a larger percent than a 10 year old civic because of allowances for battery replacement. Since lithium is expected in the future, nimh battery replacements may stay expensive.

Luckily there is less of a hybrid premium built into the gen III prius then the gen I, still its hard to get a handle on how much more it will depreciate than say a fit or a mazda 3. YMMV. The question is whether you appriate using less gas or the toyota benefits versus the fun to drive of a fit or mazda 3.

• 
  
  I wouldn't put much stock in that list, but it is interesting that CR seems to hate the prius c, but their readers seem to like it. I see bias on the part of reporters there.

I think many would rather drive that low end fit than prius c, especially in 2014 when they start making them in north america.

My brother is a road warrior but lives in IL. He as a camry hybrid as his compromise car. The more comfortable seat and locking trunk were what sold him. TCO is much lower than the infinity G35 he used to have, but he gave us a lot of luxury and performance

 

Would I get the same curves as the second example with $3 a gallon gas* and 30,000 miles anually?

* Not that I will have $3 gas in 10 years

 

I am on my wife's laptop, not my desktop; I used it as spare parts monday for a client. I do not seem to be able to read the ZIP file, is it good for others?

I do NOT want to blame her laptop if possible!

 

That works!