It's been more than 10 years since the first Honda Insight hybrid, a two-seat commuter pod, rolled off a car carrier from Japan, followed shortly thereafter by the iconic Toyota Prius.
Despite fairly cheap gasoline at the time, people were fascinated with the idea of a car that combined a conventional internal-combustion engine with an electric motor and battery pack to reduce both fuel consumption and tailpipe emissions. But there was a catch. The hybrids cost a lot more than their closest gasoline-powered equivalents.
Since then, more automakers have jumped on the hybrid bandwagon and the number of models has proliferated, with more promised. Yet the price premium remains. Hybrids remain a costlier alternative to similar-sized and equipped models, even in the same product line.
The asking price for a 2010 Camry hybrid is almost $4,000 more than a Camry SE. The Prius costs $27,500, compared with $21,800 for Toyota's Corolla-based Matrix hatchback.
With rare exception, the price gap gets even wider as you head upmarket. General Motors' Tahoe and Yukon full-size SUVs are almost $15,000 more in hybrid form. Lexus, Toyota's luxury division, charges almost $20,000 more for its GS 450h sedan than the conventional GS 350, although Lexus's HS 250h hybrid is only $4,000 more than the petrol-fuelled IS 250.
Combined, Toyota and Lexus currently account for about 60% of hybrid sales in Canada. Toyota's director of external affairs, Sandy di Felice, says a straight list-price comparison is misleading because its hybrids typically come with more standard equipment.
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| Lexus Hybrid | |
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Still, for anyone buying a hybrid in hopes of recouping the price premium through lower fuel costs, a 2008 analysis by the U.S.-based automotive web site Edmunds.com makes for dismal reading.
Depending on the model and the average miles driven, Edmunds found it takes anywhere from four to two-dozen years to make up the difference through improved fuel economy.
Edmunds' number-crunchers kindly updated their figures for me for this article. The picture remains much the same, and even worse for some models.
The Camry doesn't look bad: it takes just over a year to break even for someone driving an average 15,000 miles (about 24,000 kilometres) annually. Different U.S. pricing for the Lexus IS 250h means it saves the owner money before it leaves the dealer lot.
But for almost every other model, the car will never pay for itself through fuel savings. For the Lexus LS 600h, breaking even would take more than a century!
Fine, you say, but gasoline is much cheaper in the U.S., where Edmunds is based. Hybrids should fare better when the analysis is based on Canadian prices at the pumps.
Not so fast. The B.C. Automobile Association has been doing something similar for several years -- a five-year cost analysis for hybrids, compared with their conventional counterparts. The latest report, released in July, puts the automotive balance sheet into the red for hybrid owners.
"Typically you're paying more for your hybrid to begin with, and when you factor in the cost of financing that purchase, you're financing more and paying more interest," says Bob McHugh, the report's author. "So your costs accumulate. Yes, you're getting it back in terms of fuel economy but certainly the price of fuel would make it harder to recover your initial outlay plus interest costs."
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| Cadillac Hybrid | |
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The latest study presumed average annual driving distance of 20,000 kilometres, fuel costs at $1.17 a litre and includes financing costs, less any applicable tax rebates (though government incentives for hybrids have largely disappeared), but does not include maintenance or insurance costs.
A Camry hybrid will cost its owner an extra $2,148 over five years, compared with a conventional Camry. The best performer in the study among models with large sales volume is the Civic hybrid, which lost only $290 over five years, compared with a Civic EX.
When all vehicles are included, however, the big winner is the Mercedes S400 hybrid. It's about $2,000 cheaper than the conventional S450, and costs less to run. Over five years, it would save its owner more than $5,300 over five years.
But before you run out to order one, bear in mind half the saving came from its lower but still eye-watering base price of $105,900, compared with $108,000 for the S450.
"It starts off with a price advantage, and with the fuel-economy savings it actually gains more," says McHugh. "But in every other case the hybrid costs more than a gasoline-engine-equipped vehicle."
It's back into the loss column among more affordable luxury models: $9,755 for the Cadillac Escalade hybrid SUV, $15,688 for the Chevrolet Silverado or Sierra hybrid pickup and more than $21,000 for the Lexus GS 450h.
Note, too, that the B.C. study was based on that province's fuel prices, which are among the highest in Canada. The gap between the high cost of hybrid models and those with gas-only engines widens in provinces where gasoline is cheaper.
McHugh points out hybrids make economic sense only at much higher pump prices. "You have to get up to about three dollars a litre before you see it making a substantial cost difference."
Di Felice says the latest Maritz Canada new vehicle survey found 41% of buyers cite fuel economy as a factor in buying a Lexus -- up substantially from last year -- with 39% citing its eco-friendliness, roughly the same as in 2009. J.D. Power and Associates has similar figures for U.S. hybrid buyers.
The best interpretation I can put on this is that committed hybrid buyers discount the price premium, preferring to look at the operating cost and presumed environmental benefits. (The BCAA report includes carbon-dioxide reductions over the operating period).
"It's my opinion they're not looking at dollars and cents," McHugh agrees. "They're buying hybrids because they want to buy a hybrid, and they want to do something in terms of the environment."
There may be a way, though, to have your environmentally friendly cake and eat it too. Buy used.
Hybrids have proven not to be particularly troublesome when it comes to reliability and maintenance. Electric motors are fairly robust and manufacturers are offering extended warranties for the costly battery packs.
That means a lower-mileage hybrid can be bought confidently, assuming the usual due diligence for used vehicles, negating the hybrid premium for a new car.
For example, the top-of-the-line Lexus 600h this year starts at about $120,000. A quick look at Autotrader.ca turned up a 2009 model in Ontario for about $90,000 and a 2008 for $69,000. So you can be kind to the Earth and to your bank account.
Hybrids versus non-hybrids:
| Large sedan | |||
| Mercedes-Benz S450 | $108,000 | ||
| Mercedes-Benz S400 hybrid | $105,900 | ||
| Large SUV | |||
| Cadillac Escalade | $84,575 | ||
| Cadillac Escalade hybrid | $94,775 | ||
| Large pickup | |||
| Chevrolet Silverado/Sierra | $31,845 | ||
| Chevrolet Silverado/Sierra hybrid | $47,505 | ||
| Mid-size SUV | |||
| Lexus 350 | $47,050 | ||
| Lexus 400h | $59,550 | ||
| Small sedan | |||
| Lexus IS250 | $34,400 | ||
| Lexus HS250h | $39,900 | ||
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| Sources: B.C. Automobile Association; Manufacturers' suggested retail price | |||
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