Friday, September 30, 2005

Econocar punditry

My buddy Joe wrote this:

To think, when I bought my Prius last year, people told me I'd never make up the added price of the hybryd system in gas savings. I wonder if they would say the same thing today.

(Permalink seems to point to a wrong entry, so scroll down a tad.)

Well, let's take out the slide rule, and let's be very generous. Suppose that I drive 20,000 miles a year (an exaggeration - actually about 18K, depending). How much would I pay in different cars?

I drive a 1997 Neon, which costs almost nothing, with KBB price of $1200 for private transactions. But suppose that I bought a 2004 Neon for $18000 (an overpriced econobox - $15435 MSRP loaded). The 2004 Prius had MSRP of $24K. I know that people pay way more for the privilege, but we'll let it slide in Joe's favour. This comes to about $6K difference.

I burn about 34mpg. It is a real number. If it was all highway, I would be pushing 40mpg. Joe's prius does, say, 50mpg (the real number from Dan York's blog is 46). So, to drive my 20K miles, I need 588 gallons of gasoline in a Neon, and I would need 400 gallons in Prius. This comes to 188 gallons, or $564 @$3/gal, per year.

To break even, I'd need to drive Prius for 10 years. It's not out of the realm of possible. My Neon is about 8 year old with 166K miles, and runs like new. But still, it's not as if Prius saves you a fortune.

The reason why this happens is twofold. First, Prius only delivers its incredible economy in city cycle. When I lived in Fremont and commuted by city streets, I received about 24mpg. The engine barely had time to warm up (and become economical), when my commute ended. Prius, by contrast, delivers better economy in the city than on the highway. On the highway, it's all in the aerodinamics and other friction. Prius has marginally better aerodynamic shape and its tires are narrower, so it comes ahead, by a small amount. Second, gas at $3 is still incredibly cheap. If it becomes $6, I'd need only 5 years to break even with Prius.

Unfortunately for Prius, regular cars are getting better and cheaper. For the same money as Neon, you can buy Toyota Corolla, which is a way better car, with a better fuel economy, than Neon. Or you can buy Scion xB, which has somewhat worse economy, but much better design than Neon (Scion is a Toyota brand, too).

Notice that if I lived in a truly dense city, like downtown Chicago, it would be different. On one hand, Prius shines in a city. But on the other hand, I would be driving much less, so the bigger advantage per mile may end with smaller advantage in dollars, which is what matters.

Anyway, as far as Tracy, California, is concerned, I do not see a compelling reason to buy a hybrid car. Even when gas is $6 for gallon.

Update: Joe has a post with numbers, too. I missed it the first time around, sorry.


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