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MY FAMILY WILL SOON be in the market for a new vehicle. With gas prices approaching $5 a gallon in California, my gut tells me that we should set our sights on a hybrid. Upon doing some math, however, I get a different answer.
I priced out a few different vehicles, including the Toyota Camry and the Honda CR-V. In both cases, you pay an all-in premium—including taxes—of about $4,500 to own a hybrid over a similarly equipped model with a conventional engine. As the Camry gets better gas mileage, I selected that vehicle to do some additional calculations.
A conventional Camry gets 34 miles per gallon (MPG) compared to an impressive 46 MPG for the hybrid model. Assuming the current California price per gallon of $4.50 holds, you’d need to drive about 130,000 miles to break even on the hybrid, given the premium price. Interestingly, this is about the same number of miles for which hybrid batteries carry a warranty. In other words, once you’ve broken even, you’ll likely incur several thousand dollars to replace the hybrid battery. The upshot: With a breakeven point of 130,000 miles, I don’t see the hybrid as a financially attractive option.
If fuel prices continue their ascent, however, the math could swing in favor of hybrids. For instance, if California prices hit $6.50 a gallon—which is conceivable given current inflationary pressures—you’d only need to drive 92,000 miles to break even with the hybrid and thereafter you’d pull ahead. While that’s quite a few miles, I know I’ll probably rack up that sort of mileage over the next five years.
One other factor to consider: If gas prices do rise, dealers will likely increase the premium on hybrid models. They know the math that folks like us—readers of HumbleDollar—are doing to determine if hybrid models are worth it, and there’s a chance they’ll stay a step ahead of us in their pricing.
“In other words, once you’ve broken even, you’ll likely incur several thousand dollars to replace the hybrid battery.”
As others have noted, there’s the flaw in your analysis. “Likely” is not at all the case.
I highly recommend you buy a barely used CPO (certified pre-owned) hybrid that’s coming off a 3 year lease. Vehicles in ‘perfect’ condition with less than 15,000 miles can be found at 50-60% of original selling price. Someone else has absorbed the depreciation hit and your cost for insurance will be a lot lower on a 3 year old car, too. Get a plug in hybrid and your running costs for the majority of your trips will electricity only. For 3+ years now, the costs to drive our 2015 BMW i3 have been 3.4 cents per mile plus 1 set of tires and insurance. Costs to drive our 2017 Honda pickup are much higher. 😉
When I bought my first Prius in 2006, I asked the Toyota dealers in the Phoenix area if they had replaced many Prius batteries and I couldn’t find any who had replaced the nickel metal drive motor batteries. The Prius also has a small lead acid battery in the rear wheel well which needs replacement every 3-4 years.
I bought a second Prius Prime in 2017, and my effective gas mileage is over 199.9 miles per gallon. I add gas about every 3 months as most of my driving is within the 25 mile range of the rechargeable batteries. I definitely think the plug-in hybrids are great, but I have an electric F-150 truck on order to get the $7500 tax credit next year. I got the same tax credit on my 2006 Prius when they were new.
In sixth paragraph below, the full self-driving feature is a $10,000 upgrade, or $200/month, not $20/mo,
Much seems to depend on how many miles you drive per year and how many per typical trip. If most of your trips are less than 20 miles each way, total of 40/trip, a plug-in hybrid might almost always operate on electricity.
For example, Consumer Reports info for the 2021 Toyota RAV4 Prime gives an overall vehicle rating of 79, MSRP price range of $38,350 – $41,675 with $1,175 destination charge. CR also indicates up $5,000 cash back incentives thru Jan. 2nd.
CR mpge: Overall 72 / City 74 / Hwy 71 mpge.[I believe this is CR real world because EPA EV Equivalent Combined Fuel Economy (MPGe) given as 94 mpge with electric range as 42 miles.]
In comparison, the 2021 Toyota RAV4 gets a 69 overall vehicle rating with MSRP price range of $26,350 – $37,430 with same $1,175 destination charge and same up to $5,000 cash back incentives thru Jan. 2nd.
CR MPG Overall 27 / City 19 / Hwy 38 mpg [EPA Combined Fuel Economy at 29 mpg]
A $4,249 difference between the two 2021 RAV4s, but with both having unlimited mileage range when operated via fuel. The the plug-in hybrid should typically requiring no fuel when operated in my typical day to day driving experience. Thus, in my environment, the breakeven could be much less than the 30,000 or 92,000 miles in the blog post, and for approximately similar vehicles but with better 10 point better CR overall rating for the plug-in hybrid.
Regarding the 2021 Tesla Model S gets a lower 76 overall CR rating than the plug-in hybrid, and has a MSRP price range of $69,420 – $149,990 with $1,200 destination charge [Tesla options can become very expensive].
CR mpge Overall 102 / City 101 / Hwy 102 mpge [EPA EV Equivalent Combined Fuel Economy 110 mpge with 387 mile all electric range.
A 2021 Tesla Model 3 with a 78 CR overall vehicle rating with MSRP price range $44,990 – $58,990, $1,200 destination, might be a better comparison to the Toyota RAV4s, except for much higher cost, especially if you got the longer range battery upgrade, ~$4,000, and/or Full Self Driving option, $10,000 or $20/mo. The CR overall vehicle rating for the Tesla Model Y, 47, would be a deterrent for me, as well as the $39,990 – $62,990, $1,200 destination, plus expensive upgrades.
Much more than the price of fuel to consider, as I hope above indicates.
I might reconsider the battery replacement in those assumptions, especially for Toyota. Toyota Hybrid Taxis routinely go 250K miles without replacement (about 99% of them, per Toyota in NC.) Some have been documented at over 400K miles. Plus one usually can replace only the bad cells, rather than the entire battery, I understand.
The site below suggests better compares than you’ve calculated – payback at about 65K miles for the Camry XSE. However, they use about half the price differential you quote, so that explains most of the difference. Not sure why they think the pricing gap is less than you do, maybe the models don’t quite line up the same way, but you might have more opportunity on the hybrid price than you think (??), once we get past the current supply chain issues. Your time frame will obviously play into that heavily.
In any case, good luck on your quest for the best deal!
https://www.fueleconomy.gov/feg/hybridCompare.jsp
Thanks for the good info. I hadn’t pick up the 250K miles for the hybrid battery – that clearly would change the math as would the premium you note. I used MSRPs + tax. MSRP seems to be a good indicator based on current supply conditions, but perhaps the math shifts once markets become more normal.
What about a plug-in hybrid?
Will look more comprehensively at electric when (if) new tax incentives come into law
My brother and sister-in-law are on their 5th Toyota Hybrid – three Prius, a Camry, and a Rav-4. They have been happy with all of them, and have passed on several to their daughter. He shops for the best deal, but knows he is paying a premium. He has made a conscious decision to pay the premium because he believes it is helping the environment,t and he can afford it.
For an EV (not hybrid) I recently compared a Tesla Model S (highest EV range) with my current gas powered vehicles for our various annual road trips. Trips to the beach (apx three times a year) in either our Toyota Highlander or BMW 4 series take 6 hours and 45 minutes including one 15min gas stop to be on the safe side (per Google). A Tesla Model S (highest EV range) takes 45min to one hour longer (per Tesla’s trip planner).
A trip to Nashville takes 8 hours and 15 minutes including one 15min gas stop. A Tesla Model S takes 1 hour and 45 min longer.
A trip to Texas takes 20hrs and 12 min including three 15 minute gas stops which we do in two days. A Tesla Model S takes 6 hours and 15 min longer which would almost certainly add another half day to our trip and another night in a motel.
Thanks, but no thanks.
And then the need to locate a charging station. I’m all in when they have a range of 500 mi plus and can fully charge in 15 minutes. For now they are basically for around town and modest commutes.
It takes me 30-40 minutes to supercharge, and most of the charge is done in the first 10-20 minutes because of how the battery charges.
Once you enter the location of where you’re traveling, the screen lays out paths that include superchargers as stops. You rarely go to empty on the battery, which means 20 minute stops every 250 miles or so.
Having moved all over America, I can say that my trips were as long with a Tesla as they were when I drove a combustion engine. Some folks may be Superman and able to stop only for a few minutes at the pump in a 1,000 mile plus drive, but I need to rest, eat, use the bathroom. For me, the Tesla destroys any previous car I’ve owned and long distance trips were no different (plus, the use of autopilot on the road made it even easier for
me).
Possibly the biggest difference: I save at least 20 minutes every week not driving to fill up and instead charging while I sleep. Sure, it’s better for the environment (we get our power from wind utilities in Texas), but the performance is far superior (I drive the slowest Tesla and it’s 0-60 in 4 seconds) and its made in America (with another plan coming on line here in Austin soon). Win-win-win.
+1 Tesla has built the best driving experience I’ve ever had. And you don’t need 500 mile range in an EV if there are fast chargers along major highways like Tesla’s. Also: maintenance and repair costs are way lower for EVs which are vastly simpler than hybrids. Did I mention the best, most fun driving experience?
How does it work out with a EV?
Figure I’ll look into this one at some point in the future. The complexity here will be tax credits (and how that’s a moving target in DC right now) plus how to factor in incremental electricity cost. I am sure some data is out there I can fold in.
In late 2011 or early 2012, while driving my first EV, I compared fuel costs per mile for my last car (‘08 Prius) with the new EV and the EV was nearly 3X cheaper. I’ve driven EVs since then and my maintenance and repair costs have been near zero. Tire rotation is the only recurring thing on any regular basis.