Hybrid Savings Don’t Offset Higher Price Premiums

We all know there is a trend these days towards alternative fuel vehicles, hybrids at this stage being the post common. But before you consent to purchasing one, consider some of the facts.

According to a recent study from CarGurus, stronger resale values and lower fuel expenses in hybrids are typically not enough to make their ownership costs less expensive than traditional gas-powered models, contrary to popular belief.

The idea that hybrids cost less to own and drive via higher resale values and reduced gas expenses proved false in 76 percent of the cases examined.

Based on the analysis of 45 hybrid cars which have similar non-hybrid, gas powered models, on average the Hybrid models cost 25% or over $2,200 more to own and operate than their non-hybrid counterparts.

The study found two compelling pieces of evidence:

High initial MSRP premium is bad – If you do want a hybrid, pick a model where the initial price premium over a comparable non-hybrid car or model is not significantly large. In this regard, some of the worst buys are Hybrid Trucks, namely the Chevrolet Tahoe Hybrid and the GMC Yukon Hybrid, which have MSRP premiums over their non-hybrid counterparts of over $10,000.

High Gas Mileage differential is good – Look for Hybrids which have substantially higher gas mileage statistics than their non-hybrid counterparts. Along these lines, good hybrid investments found were Ford’s Escape and Fusion Hybrids. In both cases, these cars benefit from a low MSRP price premium and substantial gas mileage improvements (of up to 50% higher) over their gas-only counterparts. In both cases these cars have a lower cost of ownership than their gas-only equivalent models.

CarGurus looked at the total cost of ownership for 45 hybrid vehicles from the model years 2003 to 2010 that have similar non-hybrid versions. The total cost of ownership for the hybrid and non-hybrid models was compared for each vehicle to determine the total cost of ownership premium for hybrids. This total cost of ownership included the initial purchase price, lost value in terms of depreciation, and total gas costs over the time period analyzed.

While it is almost certain that the carbon-producing combustion vehicles have seen their day and are slowly but surely moving aside for alternative fuel vehicles, the economics of owning such vehicles must be realized in order for this trend to take off. This has been the primary reason we aren’t seeing hybrids take off at a mass scale like many experts predicted.

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About the Author

AC Jones
Auto Enthusiast and Contributor. Big fan of muscle cars and classics. I get excited by high performance automobiles and powerful engines. Also enjoy helping people with dealers. If I can be of assistance in any way do not hesitate to contact me.