Thinking about buying hybrid automobile?

Hybrids are all the rage whenever there's a spike in gasoline prices.

But while they might save you some gas, are they really saving you money? Afterall, isn't "saving money" usually the real reason why people want better gas mileage?

So lets see if a hybrid car really does saves us money or not.

There's a lot of things that go into the expense of operating an automobile. Its original cost, insurance, fuel, maintenance, etc. The sum of all of these is around 41 cents per mile, as per IRS tax law provisions (for non-cash donations to charity, etc). But I'm going to simplify things and only look at two of the variables, assuming that the others aren't going to change much.

The two I'm going to look at is the differences in fuel and maintenance expenses.

Fuel seems obvious...miles per gallon. Yup, its that simple, but I'm going to flip it over, to "cents per mile".

But maintenance isn't so straightforward, because Hybrid vehicle technology is more complicated than conventional automotive engines (including diesels). Simplistically, it is a conventional engine, "plus some other stuff" to pay to maintain. Without getting down into the weeds, I'm just going to consider two main components, the electric motor and the battery pack.

Let's get started:

The battery pack: when the Toyota Prius first came out, one of the pieces of information that was also released was the engineering acknowledgment that batteries don't last forever, and that having a bigger battery is going to cost more to replace than that single one that all cars have under the hood. At the time, Toyota estimated that the battery pack would last 100,000 miles, whereupon the cost to replace would be around $3,000. These numbers have probably since been updated, but I'm going to stick with these because they were real numbers and they serve as a good illustration of the cost comparison process: when we amortize this $3000 expense over its 100,000 lifespan, we get ($3,000/100,000) = 3 cents per mile.

The electric motor: its maintenance is hopefully zero, but some will break and need repairs that won't be cheap, plus it will eventually wear out. I don't really want to claim numbers because I've not researched any. However, if its similar to a clutch and/or transmission rebuild, we can probably expect half of a fleet will need such a service done by 100,000 miles and that it will cost at least $1,000. If you do the math, that works out to (1 cent per mile per vehicle)(50% service rate) = 0.5 cent/mile. For sake of keeping this analysis simple, we can assume that this is the lower limit for the sum of a bunch of the new electrical system components , such as the accompanying high voltage harness, etc. Keep in mind that the exact value isn't as important as how it is then used in the cost evaluation process.

And before I go on, it is true that we don't see these costs on a day-to-day basis: they show up when the car eventually gets service or repair, or by when we sell or trade-in the car before the repair is needed: more wear is invariably be reflected in a lower resale price, just like how you'll get a higher price after you've just made repairs, new tires, etc.


Okay, so the simple summary of the above essentially is that a hybrid costs more to keep maintained, and based on just these two factors, our estimate of this these expenses are (3 + 0.5) cents per mile driven.

And what this means is ~46 MPG (Prius) isn't the whole story: its 46MPG with a 3.5 cent/mile handicap that needs to be better, and we need to figure out the math to see if that's the case or not.

Assume: Regular Gasoline at $3.00/gal

46 MPG is thus: $3.00 / 46 miles = 6.5 cents per mile (direct fuel cost).

6.5 cents/mile + 3.5 cents/mile hybrid higher costs = 10 cents/mile (incremental hybrid cost)

Converting 10 cents/mile back into MPG: ($3.00/0.10) = 30 MPG

Thus, a Prius that's actually getting 46 MPG is the same as a normal car that's getting 30 MPG after we factor in the hybrid's higher incremental maintenance costs.

And since there's diesels that can do better than 30 MPG (even after we handicap their fuel cost), the simple bottom line is that a hybrid doesn't have the lowest cost per mile.

Do feel free to update & refine my numbers to make them more accurate.  However, you can't violate the general process of accounting for all operating expenses, and in particular the simple fact that a more complicated machine inevitably costs more to maintain.

-hh