Do Hybrids Really Save Money?

The convergence of electric and gasoline-powered motors under the hoods of some of today's most popular cars represents a real engineering achievement. The electric motor provides lots of torque at low speeds, virtually nil emissions and good fuel economy for driving that involves lots of stop-and-go activity - such as in cities. Meanwhile, the traditional internal combustion engine provides good performance at higher speeds and surplus energy to recharge the electric motor's batteries. The engineers who spent many years getting the two technologies to work well together as a hybrid vehicle certainly deserve a lot of credit.

Most people however, buy hybrids with the idea that they will save money over the cost of a traditionally gasoline-only powered vehicle over its useful life. But do they? The automobile research firm Edmunds has put the new hybrids to the economic test. Edmunds looked at the hybrids as well as the traditional vehicles that most closely fit the same passenger class, and compared their market value plus their costs of ownership. Here, in a nutshell, is the results of Edmunds' study:

Edmunds Hybrid vs Traditional Vehicle Costs
Basic Model/Hybrid	Traditional ($USD)	Hybrid ($USD)	Hybrid "Premium" ($USD)
Ford Escape XLT AWD/Escape Hybrid	47,092	50,521	3,429
Honda Accord EX V-6/Accord Hybrid	46,156	49,972	3,816
Honda Civic LX/Civic Hybrid	32,993	36,666	3,672
Toyota Corolla/Prius	32,610	37,893	5,283

Edmunds found that despite the savings on fuel economy, hybrids carried higher sale prices, insurance costs and other related expenses, which led to the vehicles carrying a "premium" over traditionally-powered vehicles. Edmunds analysts did note that these costs could be expected to decrease over time as the vehicles' technology matures. Until then, Edmunds also determined what the fuel prices would have to be for an owner of one of today's hybrid vehicle to break even on their investment in a hybrid, or alternatively, what distance they would have to drive each year at current gas prices to justify the additional expense of owning a hybrid:

Edmunds Hybrid vs Traditional Breakeven Costs
Hybrid Vehicle	Fuel Cost per Gallon ($USD)	Miles per Year (at $2.28/gallon)
Ford Escape	5.60	37,000
Honda Accord	9.20	60,000
Honda Civic	9.60	63,000
Toyota Prius	10.10	66,500

Who would have guessed that the American hybrid model would offer the best value among hybrids? It will be interesting to see how the economics of the used-car market handles the hybrids compared to new hybrid sales over time.