Hybrid Car Buyers Still Paying a High Premium

Posted by Adam Sharp - Wednesday, June 1st, 2011

Car buyers are sometimes disappointed when they compare the long-term savings (or lack thereof) from owning a hybrid compared with a traditional car.

Below is the (estimated) cost of owning a standard Camry, compared with Camry Hybrid, over 6 years.

hybrid-expense-vs-normal-car

Opportunity Cost

The hybrid is still $5k more expensive after 6 years. So let's say two guys bought Camrys on the same day. They've both saved up $25k for a car. One buys a hybrid ($25k), the other a standard model ($18k).

The standard owner has $7k left over, which he can invest or spend as he sees fit. The hybrid buyer pays an "opportunity cost", as they cannot invest or spend that money.

The hybrid will emit about 1/3rd less CO2 over the period. That's good, environmentally (although hybrid batteries are costly to produce, hard to dispose of, and likely expensive to replace).

From a financial perspective, buying a hybrid is still a hard case to make. Plug-ins may offer a better alternative within a few years.

Note: I used the calculator from this site, and plugged in an average expected gas price of $3.50. If gas prices hit $5, even $7 or more over the next few years, the hybrid owner may win or at least break-even, money-wise.

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