In case you missed my last article detailing my passionate hatred for the latest bit of consumer stupidity, known as hybrid automobiles, I’m back with a sequel piece. Here I’ll be employing the mighty power known as algebra to explain why buying a hybrid automobile makes no economic sense, except in what would be best classified as a nightmare scenario. To illustrate this, I want to compare the Toyota Prius with (in my opinion at least) one of the best inexpensive cars on the market, the Toyota Corolla. The cars are of a similar size and equal seating capacity (5). So what makes the humble Corolla more than a match for the mighty Prius from an economic perspective? The answer is simple: cost.
Consider the following vital stats about the two automobiles:
| Car | City MPG | Highway MPG | MSRP Range |
| 2008 Prius | 48 | 45 | $21,100 — $23,370 |
| 2008 Corolla | 28 | 37 | $14,405 — $16,415 |
According to Uncle Sam, it’s plausible to assume that the average driver puts about 15k miles on a car every year. Likewise, according to the DOT, the average American keeps their car about 4.5 years. That’s not a whole lot of time to recover the cost of the vastly more expensive Prius. But with the price of gas these days, it has to be a good deal, right? Wrong.
Assuming that the cars depreciate at an equal rate (or you just crash them into a tree and get nothing from your insurance company) and that inflation (now pushing 4% per year) drops to zero, here’s where the Prius becomes cheaper as determined by the price of gas (here we only consider the lowest end model of each car):
| When the Prius | Price of Gasoline (per gallon) | ||||
| Costs Less | $2.00 | $3.26 | $5.00 | $8.00 | $10.00 |
| Years | 22.8 | 14.1 | 9.1 | 5.7 | 4.6 |
So for a Prius to be more economically sensible for the “average” American, gas has to cost $10.00 a gallon. And this is assuming 0% inflation. The numbers get worse when you factor in a 3% inflation rate. Assume that the gas price listed is the price today and that the cost of gas increases inline with the 3% inflation rate (Ben Bernanke and I are both being hopeful). Then the crossover point looks like:
| When the Prius | Price of Gasoline (per gallon) | ||||
| Costs Less | $2.00 | $3.26 | $5.00 | $8.00 | $10.00 |
| Years | 36 | 18 | 11 | 6 | 5 |
So unless we assume that gas prices are going to head up significantly faster than the inflation rate, it’ll still take $10.00 per gallon gasoline to make the mightly Prius cost-competitive with the humble Corolla. Perhaps that’s something to think about the next time you head to visit the Toyota dealer…
April 16, 2008 at 10:42 am
Some observations we were chewing on in email yesterday:
-The Prius is rather “tricked out” and thus probably should be compared to a similarly luxurious version of the Corolla, not the basic model, or else to a different car.
-“Economically rational” != “Pays back in gas mileage.” If this were so, no one would every buy the moon roof and better CD player.
-Early adopters of cars like the Prius (or many other products) in effect fund the development of a broader consumer technology. Since third gen hybrid systems are likely to be MUCH cheaper, smaller, more effective, and otherwise better, we might consider THANKING the smug bastards! 🙂
April 16, 2008 at 11:31 am
The point of a vehicle being a hybrid isn’t about being inexpensive, it’s about emitting less CO2. Maybe that’s not important to you. Fine.
Maybe you could write about something that is.
April 16, 2008 at 11:37 am
Domenick: Hybrids are, at best a drop in the bucket when it comes to CO2. Since a Prius — the best of the bunch — reduces CO2 emissions by *at most* 25%. Other hybrid models are much less useful.
If you seriously care about CO2, buy a Kawasaki Ninja, not a Prius.
April 16, 2008 at 12:57 pm
MPA: Yes, thank you for pointing out an obvious apples-to-oranges comparison. The best idea might be to compare a hybrid Camry to a non-hybrid Camry with the same optional features, since that’s about as similar as two cars are going to get. At the very least, please compare a Camry (mid-sized) to a Prius (mid-sized) instead of a Corolla (small-sized).
Domenick: You’re right, and whatever ANM might say, estimates of the emissions savings for a Prius vary from 72% (http://john1701a.com/prius/prius-misconceptions.htm) to 90% (http://www.msnbc.msn.com/id/3540844/). I’m not sure where the heck ANM got his 25% figure from, but considering that a Prius is burning MORE than than 25% less gasoline than a comparable car (even by ANM’s skewed notion of “comparable”), you would be reducing emissions by more than 25% even if the Prius DIDN’T have many features designed specifically to reduce emissions even at the expense of gas mileage (which it does).
ANM: How in the heck am I supposed to replace my family sedan with a “donorcycle”, anyway? Thanks, but I like breathing and intend to keep doing so for as long as possible.
It’s always good to challenge popular ideas, particularly when it comes to scientific matters where the media and public are notoriously ignorant. In this case, however, things actually do add up along the same lines that the public believes. Once you compare a Prius with a comparably-sized, comparably-featured vehicle and consider not only fuel costs but also tax breaks (the government’s atypically smart way of rewarding you for your 90% reduction in emissions) and the significant reduction in repair costs (remember how much it cost the last time you had to replace your brake pads?), then you do end up either breaking even or coming out ahead in spite of the higher MSRP and the anticipated cost of battery replacement.
And this, of course, is all assuming that money is all that matters and that you don’t give a damn about how much smog your fellow human beings have to breathe every day…
April 16, 2008 at 1:32 pm
Well, if you really cared about reducing carbon emissions you’d be backing a massive project to switch the US grid over to nuclear fission. The total emissions from all motor vehicles (many of which are diesel trucks which aren’t changing any time soon) are less than 1/3 of total US CO2 emissions. Residential, commercial, and industrial production dominate, and much of that is due to power generation. (See the DOE’s Emissions of Greenhouse Gasses Report.)
Rather than draining the swamp with a thimble by buying a Prius, help to dig an irrigation trench by reversing the irrational bias against safe, clean, zero-emissions nuclear power!
April 16, 2008 at 1:36 pm
Also, advocate for your local public transportation fleet to switch over to electric, hydrogen, etc. Instead of replacing a relatively efficient small car with a more efficient small car, target the massively inefficient busses.
Though, as with the pro-nuclear power option, you won’t be able to drive around the block displaying your Goreon commitment to the admiring public!
April 16, 2008 at 1:40 pm
AV: Sorry, you’re right, the gas consumption varies by 30.85%, not my 25%. But the Prius has lower emissions than that, you assert. Sure it does. But that has nothing to do with that fact that it’s a hybrid and a ton to do with the fact that it’s an impressive feat of engineering. Ergo, my overall response to Domenick is correct: The effect of hybrid engineering on CO2 emissions is not the huge planet-saver Toyota’s marketing machine and the filthy-filthy hippies would have you believe. And I call BS on the maintenence cost argument — the Corolla has a stellar maintence record and the Prius, carrying two engines instead of one, has many more parts to break.
MPA: Camry-on-Camry action would be a fairer comparison. I just felt like taking aim at the iconic Prius, and the yuppy-hippy-hybrids that drive them. A Camry-on-Camry comparison that would actually illustrate the above point quite well — the difference in CO2 emissions between a Camry and Camry hybrid are almost entirely due to decreased gas consumption and is about 25%. The ROI at current gas prices w/o inflation for the Camry Hybrid is just over a decade.
All: One last point. Besides the obvious point that I’m a serious booster for the Corolla, the Prius is a really odd size — it’s halfway beween the “compact” Corolla and the “mid-size” Camry when it comes to passenger volume. No comparison would be “fair.”
April 16, 2008 at 4:11 pm
AOC: You’ll get no argument from me about nuclear power nor about cleaner and more efficient power sources for buses. You may call me a commie socialist for envying the way Europeans handle social or economic matters, but I also give places like France a big thumbs-up for having 59 nuclear power plants, which generate close to 80% of their electricity. Meanwhile, as a good bicycle-riding hippie, I have to breathe in a hell of a lot of carbon monoxide every time I get stuck in traffic behind a bus. The sooner those big diesel beasts get converted over to something a little more eco-friendly, the easier I’ll be able to breathe.
More importantly, though, as an engineer I have to be aware of Amdahl’s Law, which says that if I only tackle a small part of a problem, I can never get more than a small overall improvement. So, even though switching to a hybrid vehicle can make a big difference for a single driver and even though the personal automobile holds a singularly important place in the American consciousness, we still need to address all aspects of energy use if we are actually going to make a difference on a national (energy dependence) or international (global warming) scale.
April 16, 2008 at 5:09 pm
While I’m no fan of the French overall, their track record for acting rationally in what they believe to be their self-interest is justly renowned. And their power generation policy is a great example of that.
Personally, I agree with many that the US needs a sort of “New Manhattan Project” to explore a long-term solution to energy needs. This should include developing viable replacements for the internal combustion engine and for current 100+ megawatt oil or coal power plants.
As a critical part of this, and to move immediately away from an oil- and coal-based power economy, we need to design and build nuclear plants according to a proven, tested, and refined design using modern technology and quality assurance methods. In particular, there should be one design replicated everywhere, rather than the incredible number of “slightly” different designs which make maintenance and training a nightmare currently.
As the U.S. Navy shows, it is perfectly possible to operate large numbers of nuclear fission plants for many years without accidents—as long as the plants and personnel are focused equally on safety and reliability!
April 16, 2008 at 6:55 pm
AOC wrote:
While I’m no fan of the French overall
Now that’s an understatement. 🙂
Personally, I agree with many that the US needs a sort of “New Manhattan Project” to explore a long-term solution to energy needs.
I’ve long said this. In fact I recall saying this to AOC (and others) sometime around 2001. It’s another of those “Nixon goes to China” moments squandered: An administration of two oil men, two conservatives, etc.—they could have stood up and said “we’ve got to change.” It didn’t happen. Why exactly is, doubtless complex, involving political weakness of the 2000 election and a desire to do the popular thing to be re-elected, varying priorities, fear of NIMBYism, but also a distinct lack of vision.
People like Amory Lovins largely think government is simply not going to do what needs to be done and I suppose he might well be right.
In particular, there should be one design replicated everywhere, rather than the incredible number of “slightly” different designs which make maintenance and training a nightmare currently.
Interestingly, this was attempted—the designs commonly used were civilian adaptations of US Navy designs. But it went off the rails somewhere. I don’t believe anyone ever thought the early plants would last as long as they did, either.
April 17, 2008 at 9:26 am
Well, I won’t say that either Bush or Cheney pushed as hard as they could have for change, but Bush did highlight the need to transition more than once. He got basically zero support from Congress, especially from the GOP. As with his attempts to reform immigration (which he really pushed) and Social Security (which he put some effort into) he found that Congress had no interest.
The GOP also got derailed into things like drilling in ANWR (which would never solve the underlying issue). But, I agree, an opportunity lost, especially right after 9/11 when the nation would have easily backed a move away from “the lifeblood of terrorism.”
Interestingly, this was attempted—the designs commonly used were civilian adaptations of US Navy designs. But it went off the rails somewhere.
I suspect part of the problem was the standard bid process. Instead of having a single design and using it without modification, once you start opening things to lowest bid and “cost-cutting” measures you may have proliferation of “slight” modifications.
Normally that would be great, because you could then see which ones work well and which ones fail horribly. But allowing nuclear plants to “fail horribly” seems unwise. And even the actual case of many of them “failing in small ways constantly” pretty much destroyed the industry. Perhaps the market for nuclear power plants was just too small to support a real market for designs?
I don’t believe anyone ever thought the early plants would last as long as they did, either.
That’s certainly an excellent point. We are basically still using the “latest and greatest” technology of the late 1950s and early 1960s…it’s not surprising it shows its age!
April 17, 2008 at 12:26 pm
Well Well Well, we have finally begun to realise the ploy that environmental groups and others with financial ties to the “green” industry have been playing. The benefits of these products to the environment are minimal, but the financial gain to the companies who get business from people buying these products is much greater. If you think that half of the people and companies are releasing these products for environmental reason you would be very wrong. Global warming is more of a scam to get money from people who feel guilty for driving their SUV than anything else. Why are we funding their empires with so many government mandated programs that in turn have more externalities than benefits? Stop the world’s greatest scam!
December 9, 2010 at 4:10 am
“The world’s greatest scam”–certainly so when compared to our glorious all-sustaining oil incumbants, huh? Half the replies in this read as if you all were paid off to shill the status quo in random blogs. Petroleum is not sustainable, and battery technology is advancing by leaps and bounds. If you believe global warming is a hoax, then congratulations, you have have been so thoroughly deceived that you would apparently trust an ultimate understanding of world climate to a bunch of pundits rather than scientists actually researching it. Climate change deniers ride a wave of pop-science nonsense.
April 17, 2008 at 12:41 pm
Sure, just like “fair trade” coffee: pass on $.05 extra to the farmer (if that) and jack up the retail price by $.50 – $1.00 (thanks Tim Hartford for the analysis!). One doesn’t have to claim that there are no benefits to claim that the price hike outweighs the benefits!
Of course, some fair trade supporters argue that buying fair trade coffee still helps move the market to a better place, even if the final price is a bad bargain. So, as AV points out, hybrid owners might be moving us towards better technologies.
But neither changes the issue of this article: hybrids make no economic sense!
April 17, 2008 at 1:10 pm
“So unless we assume that gas prices are going to head up significantly faster than the inflation rate,”
But we *can* pretty safely assume that the price of gas will increase faster than inflation. Low western-world birth rates are contributing to long-term low inflation, but oil and gas are finite resources that have growing demand so they absolutely will outpace inflation over the long-term, and might do so by quite a bit.
As for your thesis that hybrids make no economic sense, you are looking at it only from the perspective of an individual consumer. In the area I live (Greater Victoria, British Columbia, Canada), a growing number (possibly now a majority, if my admittedly anecdotal experience is anything to go by). I don’t think those taxi companies are being duped economically, and I don’t think they’re doing it out of the kindness of their hearts, I think they’re doing it based on solid numbers. When you’re driving a lot, and it’s almost all stop-and-go city driving like taxis, hybrids pay for themselves over the operating life of the vehicle.
April 17, 2008 at 4:37 pm
I’d be interested to hear your thoughts about what we will do with the following:
1. All of the non-hybrid used cars being shipped to 3rd world countries without the same emissions standards.
2. What we will do with all of the hybrid battery/fuel cells when they won’t hold a charge any longer (happens with all rechargable batteries sooner or later)?
3. What we will do with all of the bodies/shells of the hybrid cars when people decide they don’t want to buy an $8-10k replacement battery or fuel cell since they typical American replaces a vehicle every 4-6 years anyway?
Enviromentally sound thinking or good marketing?
April 17, 2008 at 8:41 pm
MY VW TDI gets 50% more mpg than that dumb ,overpriced, tax subsidized in Canada,overhyped Prius.
So why is the Prius considered “greener” than my VW?
Shows you how the public just endlessly swallows the silly green proganda of the reactionary tree huggers.
April 18, 2008 at 9:35 am
[…] Posted by Angry New Mexican under Uncategorized As you can tell by reading the comments, my article on hybrids generated a ton of interest and comment. On top of the actual comments, we’ve had a bunch of […]
July 3, 2008 at 12:37 pm
[…] has been towards hybrid cars for their vaunted mpg ratings. As we’ve covered here before with proper hard numbers analysis, the overall money-in-your-pocket savings is questionable, since putting two engines in a car is […]
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August 18, 2012 at 11:26 pm
This is BS. Simple maths. Some of us drive our car until 80k or 100k before selling or giving it to our kids or relatives. Right now gas is about 3.60. If I’m able to $0.50/gal for 80K that is a total of 40K on just gas. If you plan on selling it you will easily get half the original price on 80K hybrid. You may have a case but it’s no good case.
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