Reasons to buy a hybrid -- or not

Story Highlights

There are two reasons to buy a hybrid -- save the world, or save on gas costs.
Your reason for wanting a hybrid will determine whether you should buy one.
If gas prices drive your decision, it could be 2 to 4 years before you break even.
The trim package will determine how soon you recoup paying extra for a hybrid.

OK, it's official: Hybrid vehicles are definitely the wave of the future or at least one of them. With gas prices remaining over $3 a gallon and oil prices up around $100 a barrel, the need to save on fuel -- and fuel costs -- is clearly not just a passing trend. And, of course, concerns about air quality and global warming seem to mount every day.

So, it would seem that this is the right time to take the plunge and buy a hybrid. But first there are some questions you need to ask yourself. One key question is this: Why are you buying a hybrid? Is it to save on gas costs -- or is it to do your part when it comes to cutting back on fossil-fuel emissions, which foul the air and contribute to rapid climate change?

(Picture Left: Ford Escape Hybrid)

That question has been a valid one the last few years, because hybrid vehicles can be more expensive than their non-hybrid counterparts, if you're comparing apples to apples. (That is, if you're comparing two cars of the same size, same equipment levels, etc.)

One school of thought that was advanced a year or two ago is that you pay such a high up-front "premium" for a hybrid that it could take many years before you "break even" on the amount you would save in fuel costs. In that scenario, your incentive for buying a hybrid vehicle would have to be largely driven by a concern for the environment. Which, of course, is not a bad thing. If we're going to clean up the air and reverse the effects of rapid climate change, perhaps that's just the premium we'll all have to pay as we do our part.

But more recently, with gas prices rising even further and hybrid car prices getting closer to non-hybrid counterparts, it is likely that you will recoup that up-front premium in just a few short years.

So we decided to find a couple of experts on the topic, and pose this question: "Why should people buy a hybrid -- for the cost savings, or just for the environmental benefits?"

One such expert is Bill Reinert, the manager of alternative-fuel vehicle development for Toyota, which produces the most popular hybrid vehicle on the road today -- the Toyota Prius.

"First, let's take a look at the fact that the courts have ruled that C02 is a harmful pollutant, and that Congress has also pushed the auto industry to investigate alternatives to fossil fuels, and is considering regulations as we speak," says Reinert. "So it's clear the government is addressing this problem -- how to reduce C02 emissions -- in a fairly aggressive manner. And hybrid vehicles are one of the most effective ways to do that right now. So it's unavoidable that this is going to be a major direction the industry will go in, even if it didn't want to."

Reinert points out that that there are also emission reductions to be achieved in the "total fuel cycle."

"You also have to consider the emissions that are produced when you extract the oil from the well, and transport it, and convert it to gasoline, and get it into the pump," he says. "So when you drive a hybrid, you're also helping to reduce all of those 'upstream' emissions."

Another factor to consider is the urbanization of the world's population.

"At this point in history, half the world's population lives in urban environments," says Reinert. "And although urban areas cover only 4 percent of the world's land mass, they use 90 percent of our resources. So, how a vehicle performs in urban environments is crucial when it comes to the impact on the environment. That's where a hybrid really offers some key benefits.

"In urban settings, you can just shut off the engine and run it in purely the electric mode for six or eight miles -- and that range is going to get better with every generation of hybrids. And this ability is going to go a long way toward reducing or eliminating emissions signatures of automobiles -- which also happens to be a key issue in the development of the lungs of young children in these urban areas."

Which brings us to the cost issue. Trying to calculate how long it will take you to recoup your up-front premium when buying the Prius is problematic, because there is nothing to compare it to. The Prius only comes as a hybrid, so you can't compare it to, say, "a V6 gas-only version" of the Prius. The Prius's MSRP is $20,950 - $23,220, depending on level of equipment, and has a fuel economy rating of 48/45/46 (city/hwy/combined).

However, it is possible to compare a Toyota Camry Hybrid to a "regular Camry."

The Camry Hybrid is powered by a 4-cylinder engine, but for comparison purposes, Toyota spokesman John McCandless claims that, "if you take into account the equipment level of the Camry Hybrid -- and that it has the performance of a V-6 -- the best apples-to-apples comparison is to compare the hybrid to a V-6 Camry LE. Those base prices are less than $2,000 apart -- $23,640 for the Camry V6 LE, vs. $25,000 for the Hybrid."

Toyota reports that the Camry Hybrid's fuel economy rating is 33 mpg city/34 mpg highway. Meanwhile, the Camry V6 gets 21/31 mpg, city/hwy.

For purposes of comparison, McCandless used a combined fuel economy rating, splitting the difference between highway and city mileage.

"So if you drive 15,000 miles a year, and you buy the Hybrid version, you'll be using about 454 gallons a year," says McCandless. "Meanwhile, if you get the V6 LE, you'll be burning 635 gallons a year. At $3.20 a gallon, that's a fuel-cost saving of about $547 a year. So it should take you three or four years to recoup the up-front premium you paid to buy the Hybrid. Plus, you get the satisfaction that you are easing the emission imprint on the planet."

Another popular hybrid on the road is the Honda Civic Hybrid, which can be purchased for even less than the Camry Hybrid. The MSRP of the regular Civic with the 4-cylinder gas engine ranges from $14,810 - $29,500, while the Civic Hybrid's MSRP is a flat $22,600. So, in the case of the Civic, the calculations will depend on what trim level and features you order if you go with the regular Civic 4-cylinder. The Civic Hybrid's fuel economy rating is 45 mpg hwy/40 mpg city compared to 34/26 for the regular Civic.

"The Civic EX [AT] has an MSRP of $19,510 and gets 29 mpg in the EPA combined cycle," says Martin. "The Civic Hybrid has an MSRP of $22,600 and gets 42 mpg in the combined cycle. That's an MSRP price difference of $3,090, and a mileage difference of 13 mpg.

"At an of assumed gas price of $3.20/gallon for 15,000 miles/year, it would ordinarily take a little over 6 years to pay back that difference," he continued. "However, the Civic Hybrid still qualifies for a $1,050 federal tax credit until June. That credit can bring the price difference between the two trim levels to only $2,040. Taking that into account, using the same cost per gallon and 15,000 miles/year, it would only take 3.98 years to pay back the difference."

Another popular hybrid is the Ford Escape Hybrid. The Escape Hybrid's MSRP ranges from $26,330 - $28,080, and its fuel-economy rating is 30 mpg hwy / 34 mpg city, while the regular Escape has an MSRP range of $18,770 - $25,520, and a fuel economy rating of 28/22. At press time, Ford had not yet provided its own "payback-time" calculations.

One expert who extols the virtues of hybrid vehicles -- both for their environmental benefits and cost savings -- is Bradley Berman, the editor of Hybridcars.com who also writes about hybrid vehicles for publications like the New York Times and Business Week.

"Not all hybrids are created equal, when it comes to price, because it depends on what equipment level you're looking at," says Berman. "But if you buy the most fuel-efficient ones, you'll definitely get a return on your premium within a few years."

As for the Prius, Berman points out that "people who are considering a Prius are probably not entry-level buyers who are also looking at a Toyota Yaris or some other sub-compact. They're going to the next tier. They're comparing the Prius to other cars in that price range -- cars that, if they bought them, they'd be spending that extra money on other features and options."

Berman also notes that "the data I've seen, from J.D. Power, and Polk Automotive, show that the customer satisfaction rate among buyers of hybrid vehicles is 80 to 90 percent. And the market penetration of the hybrid vehicles is increasing. Initially, it was just early-adopter types, but now we're seeing more and more people buying them who probably wouldn't have considered them two or three years ago."

Berman also cites the "tech appeal" of the hybrid vehicles. "Hybrids definitely appeal to people who are into 'fun technology'," he says. "If you were one of the folks who went out and got an iPod or iPhone as soon as they came out, and if you use a TiVO instead of a VCR, then you'll probably like the fact that today's hybrids are the most advanced vehicles out there today in terms of electronics. So they have sort of a 21st-Century-Geek appeal," he adds with a laugh.

If you're ready to make the leap into the hybrid-car world and are wondering which one to buy, there are a few factors to consider, says Berman. "One important decision is the size of the vehicle." If you really, really need an SUV-sized vehicle, there are a number of hybrid SUVs that are on the market now or coming onto the market soon," notes Berman. "But even the most fuel-efficient hybrid SUVs aren't as fuel efficient as most of the conventional gasoline-powered sedans, just because of their size, and the size of the engines."

Styling is another factor. "Some people think the Prius is the ugliest thing ever, but others love it. And environmentally-minded folks love the way it looks because the body style calls attention to the fact that it's a 'green' car. But if you're into more conventional styling, the Civic or Camry or Escape might be the way to go."

One key point that Berman likes to make is that today's hybrids "are still essentially gasoline vehicles. The importance of today's hybrids is that they're forming a bridge to future technology -- to what we will see 20 years from now. And it's a symbolic shift away from the gas-burning internal combustion engine. And that's a key, because the facts about climate change and the global oil markets are incontrovertible.

"We definitely need to get off of fossil fuels, and hybrid vehicles of both today and the future are an excellent way to do that."

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