There’s no doubt that consumers save money at the pump after they purchase a vehicle that relies on powertrain technology or design features that improve fuel economy. If your goal is to spend the least amount of money during the lifetime of the vehicle, however, many of today’s fuel-saving technologies drive up the purchase price so much that you likely never will get that money back unless gasoline prices permanently exceed $6 per gallon.
So if you shop for a new vehicle in 2013, you should pause before you pounce on a hybrid, a plug-in hybrid or an electric vehicle (EV). We came to this conclusion after we interviewed 33 automotive experts and reviewed 17 reports on automobile cost, technology and fuel economy.
What we discovered is that you’ll be hard-pressed to find savings over the life of the vehicle on models that derive power from anything that isn’t purely gasoline. At today’s fuel prices, the time that it would take to recover the extra amount that you pay to purchase such a vehicle generally exceeds 10 years, and it approaches 20 years in some cases. In addition, when you purchase a plug-in hybrid or an EV, you incur the risk the battery will perform at the low end of manufacturers’ projections or even worse, as some drivers have experienced, which is an inconvenience that can cost you a lot of money.
Even if you choose a more mature technology, such as a conventional hybrid, you could open yourself to higher maintenance and repair bills down the road than is typical with a gasoline vehicle. These are hidden costs that go above and beyond the difference in the basic sticker price between these models and comparable gasoline-powered vehicles.
Unfortunately, short of a surge in purchases of plug-in hybrids and EVs that would allow automakers to achieve economies of scale that reduce their costs, neither automakers nor government agencies that regulate fuel economy can estimate when (or whether) consumers likely will see any significant decrease in purchase prices.
As automakers race to meet federal fuel-economy requirements that raise the fleet average to 34.1 mpg in the 2016 model year from 30.5 mpg in 2013, you will encounter an increasing number of hybrids, plug-in hybrids and EVs. Meeting the 2016 mileage standard, however, will increase the cost of the average vehicle by at least $1,300 based on federal-government estimates and perhaps by as much as $4,000 based on automobile-industry estimates, says Mike Omotoso of LMC Automotive, which is a market-research company. In general, automotive experts agree that your smartest move in 2013 is the gasoline-powered vehicle, which appears destined to remain the bread and butter of the automobile industry.
HANDLING HYBRIDS. To understand why hybrids generally still can’t be a better bet than a conventional gasoline-powered vehicle that has a good fuel-economy rating, you just have to do a little math. For instance, compare the 2013 Toyota Prius Two hybrid with the similar-size Toyota Corolla. The Prius Two has an MSRP of $24,200 and a fuel-economy rating of 51 mpg city/48 mpg highway. The Corolla has an MSRP of $16,230 and a fuel-economy rating of 27 mpg city/34 mpg highway. Assuming that you encounter typical mileage and gasoline prices, you would have to drive the Prius Two for 17 years, 4 months to recoup in fuel-cost savings the extra $7,970 that you would pay for the vehicle when compared with the Corolla. In other words, the Corolla costs less overall than does the Prius Two.