Hybrid cars can potentially be more economical to drive than fuel-based cars, but it really depends on the type of hybrid you drive, how much you drive and how long you own your car. The overriding question is whether they are more economical in the long run. Unquestionably, you can realize immediate savings on fuel costs. In terms of total cost of ownership, it is important to do the math.
The simplest way to do the math is to calculate the break-even time – the point at which your fuel savings exceed the additional costs associated with owning a hybrid. The main factors to consider are the price premium paid on a hybrid, the cost of gas and how much you expect to drive the car.
The first consideration is the vehicle's cost. Because of their more sophisticated technologies, most hybrids are priced at a significant premium over their equivalent fuel-based cars – as much as $2,000 to $8,000 higher. While you might realize immediate savings in fuel costs, you could be paying several hundred dollars more a year in financing costs. Your break-even point is longer if you pay a higher premium for a hybrid.
For example, the price premium between a Honda Accord Hybrid and a Honda Accord Sport is about $5,000 with a break-even point of eight years. The premium between a Ford Fusion Hybrid and the fuel-based version is under $2,000 with a break-even of just under five years.
During periods of rising gas prices, hybrid cars grow in popularity. However, more expensive hybrids, such as the Cadillac Escalade, would not reach their break-even points until gas prices climbed to $15 a gallon. Less expensive hybrids, such as the Ford Escape, are breaking even at just $2.50 a gallon. Decreasing gas prices extend the break-even points of hybrids.
If you drive more, your break-even time becomes shorter due to the amount of fuel you would have otherwise used. Conversely, if you don't drive many miles, it would take you longer to break even.
Because hybrids run on fuel cells part of the time, there may be less overall wear and tear on the engine, which could reduce your maintenance and repair costs. However, hybrid batteries, as with any type of battery, can lose their charge over time. Although hybrid batteries can be expected to last for up to 200,000 miles, they could lose as much as half of their charge over an eight-month to one-year period, and that can affect the operation of the vehicle. The cost to replace a hybrid battery can be as much as $8,000.
How Long Will You Keep Your Hybrid?
How long you expect to own your car doesn't necessarily affect the break-even time; however, it will ultimately determine how economical your choice of vehicle was. Most car buyers, on average, keep their cars for six years, and the average break-even time for hybrids is eight years (based on current gas prices). Unless you plan to keep your new hybrid vehicle past the break-even point, it may not be the most economical choice.
It’s Not Always about Economics
For some people, owning a hybrid is as much about their concern for the environment as it is about saving money on fuel. So, they may receive more of an intangible value by going green without the actual cost savings. Some people even feel empowerment over gas station dependency.
However, if you are simply trying to save fuel costs, you need to do the math. You are likely to save more money by buying a high-mileage, fuel-based car.