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Are Hybrid Cars Worth the Extra Cash?

Over the past several years, the world has started to focus more heavily on preserving the environment. People are trying to go green any way that they can, and that includes shopping for a new car. Many people have made it a point to turn to the hybrid vehicle, which pairs an electric motor with the standard gasoline engine, limiting pollution and squeezing extra mileage out of each gallon of gas.

However, with new technology comes a higher price, and in these dire financial times, people are paying extra attention to their bank accounts. While saving the environment is something everyone should strive to accomplish, many people may not have the extra cash to drop on a new hybrid car.

Of course, the other side of the argument is that the amount you'll save in gas will more than make up for the extra cost of the hybrid. But is that really the case? Below, you'll find a comparison of some of the top hybrid cars on the market in terms of MSRP value and miles per gallon of gas. These comparisons were made between cars that have hybrid and non-hybrid counterparts, including four of the top hybrid cars and four of the top hybrid sport utility vehicles on the market.

*Figure based on vehicles with comparable features between conventional and hybrid  **Figure based on an average gas price of $3.00 per gallon. ***Based on 12,000 miles/year Assuming an average driving distance of 12,000 miles per year, it would take no less than nine years for drivers to start seeing their investment in their hybrid car pay off. No hybrid will start recouping the extra money that the owner has paid into it until it hits 100,000 miles, either, so people that drive less than the national average are not likely to see their investment pay out at all. Even driving double the national average, it’s not likely that any of the SUVs other than the Lexus RX will begin to recoup their extra investment. However, according to the United States Department of Transportation, the average car lifespan is around 140,000 miles or 13 years. This means that, on average, most of these vehicles can last long enough to see a payoff, especially for overly-active drivers. Some of the larger SUVs, though, don’t save enough per gallon, making it nearly impossible for the car to reach the payoff stage.

Some other things to consider:

    - Warranties: One thing that needs to be considered is the car’s warranty. Almost every one of these popular models will come right off the lot with a three-year/36,000 mile warranty on the car, with many models offering a longer, five-year/60,000 mile powertrain warranty, which covers the engine and transmission. Neither of these standard factory warranties will get you to the payoff point, so you’ll have to worry about paying for any necessary repairs along with the extra monthly payment on your auto loan. You can pay for an extended warranty that will get you to 100,000 miles, but the extra $1,000 or more will mean that it’s likely you won't see your hybrid hit the payoff point at all.

    - Federal Tax Credit: With the federal government focused on going green, they are offering people that purchase a hybrid or other alternative-fuel vehicle a federal tax credit, although these programs are starting to fade. However, if you are lucky enough to have a federal warranty, you may be able to completely offset the extra cost of your hybrid, as some of the federal grants can be as much as $3,000 depending on the make and model of the vehicle. At the very least, it will significantly reduce the amount of time to hit the point where the hybrid starts paying for itself. Using the first example above, the Ford Fusion, and a hypothetical tax credit of $1,500, the Fusion would hit the payoff point at just over 55,000 miles or five years. These numbers are much more reasonable and still within the standard factory powertrain warranty.

    - Repairs: There's been another stigma attached to the hybrid car, claiming that these vehicles are much more expensive to repair due to the new technology. Just a few short years ago, this may have been the case, but with so many hybrids hitting the road each year, repair costs have evened out. The technology wasn’t actually what was making the repairs more costly, it was the fact that every repair required the purchase of brand new parts from the manufacturer. Now, with the number of hybrids on the road, parts are easier to find in junkyards and there are plenty of aftermarket parts available, driving repair costs down. Also, cars that have both hybrid and non-hybrid models have an abundance of parts that fit each car, other than the engine, which also significantly reduces repair costs.

In conclusion, the argument that the hybrid car will start to recoup its value in savings on gasoline is valid, but only If you end up keeping the car long enough to see it pay off, or are lucky enough to receive a federal tax credit. It’s not likely that any of these hybrid cars, especially the SUVs, will ever reach that potential. So, from a strictly financial standpoint, the investment may not be worth it…yet. As the technology continues to improve, prices will ultimately drop, especially with newer and more exciting electric car models ready to hit the dealerships. Eventually, the hybrid may make up for its increased price right off the lot, but today, they do not.

That is coming from a strictly financial point of view. There are many reasons people turn to the hybrid, and most of the time it’s not about the money, it’s about the environment. People are concerned with reducing pollution, and the average hybrid car emits 80 percent less harmful gasses, like carbon monoxide, lead and nitrogen dioxide, than the average gasoline-powered car. So, while the hybrid may not pay off the increased price, it will pay off environmentally, which is exactly what many people are looking for.

Are hybrid cars worth the extra cash? That depends on the buyer. If you’re looking to save money on gas, the investment may not be worth it. If you’re looking to save the environment, though, the hybrid is a great way to go.