Why Buying A Hybrid Might NOT Save You Money

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If you're planning to buy a hybrid car to save on gas mileage, you might want to reconsider.

Hybrids have been touted as money-savers, but are they a good car bargain? Many drivers would be better off getting a smaller, lighter car such as a gas-powered Honda (HMC) Civic.

Jalopnik.com road-test editor Wes Siler says the hybrid trend is more about feeling like you're making a difference -- instead of actually making one.

Last month, Toyota (TM) announced that the Prius had broken the one-million-sold mark, truly a milestone for the poster child of the hybrid car movement.

With those sales numbers, you'd think that the hybrids are saving people money, but the deeper figures suggest that the trend toward green isn't about saving money or gas at all Machines.

As one example, Chevrolet (GM) recently released the Tahoe Hybrid SUV. The company reports that the V8 four-wheel-drive hybrid model gets an estimated gas mileage of 21 city/22 highway, while the regular gas four-wheel-drive Tahoe with the same sized engine gets mileage of 14 city/20 highway.

According to the latest pricing from Chevy, a standard Tahoe Hybrid at MSRP will cost about $48,100. Furthermore, owners will qualify for a $2,200 tax credit because there have been less than 60,000 of the model sold. That would put the average final price of the Tahoe hybrid at about $46,800.

The gas-powered Tahoe, on the other hand, will cost about $35,800 for the closest matching vehicle, making the hybrid version a full $11,000 more expensive than the matching standard model.

Assuming an average of 15,000 miles driven per year and the current national average of four dollars a gallon for gas, the Tahoe Hybrid would take almost 14 years to pay back its owner in fuel savings what was spent on the extra initial cost.

Also, note that the highway mileage isn't that much different. That's because at high speeds, the gas engine kicks in on the hybrid, because the battery can't provide that much power. The battery is heavy, which means the hybrid has to use more gas to propel the car.

So the people who are most likely to benefit from owning a hybrid are those who do mainly city driving at lower speeds and those who get stuck in traffic jams.

People who find themselves doing more highway driving would be best off just getting a smaller regular car, as would people considering hybrid SUVs. (Do you really need all that bulk, anyway?)

One of the most-frequent arguments in favor of the hybrid is its better resale value. While it's true that hybrids depreciate much more slowly and thus typically have a better trade-in value than standard gas cars, the numbers show that they still aren't the money-savers they initially appear to be.

For example, according to car-appraisal company Kelly Blue Book, a 2003 Honda Civic Hybrid in good condition has a resale value of about $10,000. By comparison, the comparable gas model of the 2003 Civic resells for about $7,500. That $2,500 difference still is less than the $3,600 premium initially paid on the Civic Hybrid, which means it would still take almost two years to break even on the hybrid, even if you got the full trade-in value at the time of selling.

That's assuming you only keep your car for five years, a period so short it wouldn't be worth buying the hybrid to save money in the first place. You'd be getting another car before the first one had even paid itself off in gas savings.

Recent sales figures from Edmunds.com show that hybrid car sales this year account for just over 2.5% of the total car market -- but that's an increase of 500% over just four years ago.

Jessica Caldwell, manager of industry analysis at Edmunds, says that the hybrids continue to sell in spite of the negative price figures because they provide a short-term solution.

"It's a big psychological effect, when people are emptying their wallets at the pump," says Caldwell. "By saving on gas right now, you feel better even if it's not helping in the long run."

Caldwell says the rise in hybrid sales will continue, but if you want to save money in the long-term, there are some nonhybrid cars that make more sense.

"If you want to make a legitimate change, not just on gas but on the environment too, you can't feel too great about driving around in a Tahoe or Yukon hybrid," she says.

The very fact that car companies are offering full-sized SUVs and road-hogging sedans -- like Lexus' massive six-figure LS model -- seems to be proof that the automotive higher-ups have grown wise to the mentality that anything labeled "hybrid" will sell.

In fact, the Lexus LS hybrid's mileage is actually rated for two miles per gallon worse on the highway than its standard gas counterpart.
The biggest sign that the hybrid is more of a trend than an actual solution lies in the emissions numbers. According to the Environmental Protection Agency's ratings, the four-wheel-drive Chevy Tahoe Hybrid produces 9.2 tons of greenhouse gas emissions per year, and the Lexus LS Hybrid produces 8.7. By comparison, the standard nonhybrid Honda Civic produces 6.3 tons per year.

While the Civic has nowhere near the same size or power as the Tahoe or Lexus LS, the numbers still call into question how much one is doing for the environment by buying a huge SUV, even if it is a hybrid.

"People want to point to the badge on their car that says hybrid and make it feel like they're doing some good -- that's where the selling point comes from," says Siler.

"You can save just as much gas by slowing down a bit and not driving like a maniac. But people still want to say they have that hybrid, and the auto makers certainly know that."

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