Most Hybrid Vehicles Not as Cost-Effective as They Seem, Reports

Jun 01, 2005, 01:00 ET from

    SANTA MONICA, Calif., June 1 /PRNewswire/ -- Consumers seeking shelter
 from high gas prices might not find the relief they expect by turning to
 hybrids, announced, the premier online resource for automotive
     "The combination of increasingly higher gas prices and a greater variety
 of hybrids in the marketplace has made many consumers seriously consider a
 hybrid as their next vehicle," said Phil Reed, co-author of's
 "Strategies for Smart Car Buyers."  "While some people buy hybrid cars because
 they appreciate the environmental benefits and enjoy using advanced
 technology, consumers looking at hybrids solely to save money at the gas pump
 need to carefully research the cost of actually owning and operating a
     Consumers who own a hybrid car or SUV may purchase less gas and have lower
 maintenance expenses than if they owned the non-hybrid counterpart, and may
 qualify for a federal tax credit designated for hybrid vehicle owners.
 However, most hybrids' high sales prices, insurance costs and related expenses
 will offset the savings. found that during the first five years
 of ownership, a hybrid can cost as much as $5,283 more than its non-hybrid
      Model      True Market Value(R)   Additional cost to
                            price plus ownership costs*          own hybrid
      Ford Escape Hybrid            $50,521
      Ford Escape XLT AWD           $47,092                       $3,429
      Honda Accord Hybrid           $49,972
      Honda Accord EX V-6           $46,156                       $3,816
      Honda Civic Hybrid            $36,666
      Honda Civic LX                $32,993                       $3,672
      Toyota Prius                  $37,893
      Toyota Corolla LE             $32,610                       $5,283
      Toyota Camry LE               $37,974                         -$81
      Only when the analysts compared the Toyota Prius to the Toyota Camry LE
 did the hybrid ownership experience prove financially advantageous -- but
 barely.  Over the first five years of ownership, the Camry is expected to cost
 just $81 more than the Prius.
     However, when comparing the costs of the other vehicles,
 analysts determined that gas would have to cost at least $5.60 per gallon for
 hybrid drivers to break even if they drove 15,000 miles per year over the five
 years.  Alternately, they could break even if they drove at least 37,000 miles
 per year at the current average gas price of $2.28 per gallon.
     Below are the break-even points for hybrid ownership for each vehicle in
 the study.
      Model                    Fuel Would Have to   Or a Driver Would Have to
                                    Cost ...       Exceed Annual Mileage of ...
      Ford Escape Hybrid
       (vs. Ford Escape XLT AWD)     $5.60                   37,000
      Honda Accord Hybrid
       (vs. Honda Accord EX V-6)     $9.20                   60,000
      Honda Civic Hybrid
       (vs. Honda Civic LX)          $9.60                   63,000
      Toyota Prius
       (vs. Toyota Corolla)         $10.10                   66,500
      Toyota Prius
       (vs. Toyota Camry)            $2.28                   15,000
 analysts predict this cost differential is likely to decrease
 as the technology matures and hybrids become more mainstream. Currently,
 hybrids make up less than one percent of market share.  Accordingly, the
 manufacturers have not yet been able to achieve economies of scale and are
 passing the higher costs along to their buyers.  Since current customer demand
 greatly exceeds supply, the vehicles are easily able to carry the premium
 transaction price.  At some point in the near future, these dynamics are
 expected to change.
     Other factors may level the playing field even sooner.  For example,
 President Bush made a speech on May 17 in which he stated that his proposed
 2006 budget includes a substantial increase in the hybrid tax credit.
     The above hybrid vehicle ownership research was based on data from's free True Cost to Own(SM) tool, found at, which helps consumers
 estimate the total five-year cost of buying and owning a car or truck.  The
 tool covers new vehicles and used vehicles starting with the 2001 model year.
     "Anyone shopping for a vehicle, especially one very different from his or
 her current car or truck, should do research to avoid being surprised by the
 ownership costs," advised Reed.  "In general, no more than 20 percent of a
 household budget should be designated to cover automotive expenses."
     *How Analysts Determined the Costs
     The True Market Value(R) is the average purchase price as
 described at  The
 ownership costs used in the above estimations include interest on financing,
 taxes and fees, insurance premiums, fuel, maintenance and repairs.  Fuel was
 estimated to cost $2.28 per gallon for the first year with a three percent
 increase for each subsequent year.  It was also assumed that the vehicles are
 traditionally financed over 60 months with a 10 percent down payment by a
 buyer with a good credit rating who drives 15,000 miles per year.  And, the
 buyer is assumed to be in the average demographic for insurance rates, and
 qualifies for the hybrid vehicle federal tax credit.
     About, Inc.  ( is the premier online resource for automotive information.
 Its comprehensive set of data, tools and services, including True
 Market Value(R) pricing, is generated by Information Solutions and
 is licensed to third parties.  For example, the company supplies content for
 the auto sections of, AOL,, and,
 provides weekly data to Automotive News and delivers monthly data reports to
 Wall Street analysts. also publishes a high-speed, on-screen car
 magazine called Inside Line available free at
 was named "best car research" site by Forbes ASAP, has been selected by
 consumers as the "most useful Web site" according to every J.D. Power and
 Associates New Study(SM) and was ranked first in the Survey of
 Car-Shopping Web Sites as reported by The Wall Street Journal.  The company is
 headquartered in Santa Monica, Calif. and maintains a satellite office outside