Are Hybrid Vehicles worth the
extra cost?
Ryan Pietropaolo
NCSSM
January 2012
Goal
• Compare costs of Hybrids with non-hybrid
vehicles.
• Compare environmental impacts i.e. oil use
• Cost of owning a vehicle.
Brain-Storm Variables
•
•
•
•
•
initial cost
miles per gallon
financing rates
gas prices
tax rate
•
•
•
•
•
maintenance
repairs
average lifespan
insurance cost
depreciation value
apples-to-apples comparison
• 2012 Honda Civic Sedan
• Hybrid vs. LX
Basic Assumptions
• Driving habits: 15,000 miles per year;
50/50 city/highway
• Purchased in North Carolina (Durham County)
• Inflation 3% per year
• Insurance: same coverage, based on car value
• Equal Maintenance costs
Initial Costs and Financing
•
•
•
•
Hybrid: $24,050;
LX: $18,655
no money down
48 month loan on initial cost only
4% annual interest, compounded monthly
Monthly Payment
• 𝐿0 = 24,050
• 𝐿1 = 24,050 ∗
• 𝐿2 = 24,050 ∗
.04
1+
−𝑃
12
.04
1+
−𝑃
12
2
.04
= 24,050 ∗ 1 +
12
∗ 1+
.04
12
−𝑃
.04
−𝑃 1+
−𝑃
12
monthly payment cont.
. 04
𝐿3 = 24,050 ∗ 1 +
12
48
𝐿48
. 04
= 24,050 ∗ 1 +
12
48
𝐿48
. 04
= 24,050 ∗ 1 +
12
𝐿48
3
. 04
−𝑃 1+
12
. 04
−𝑃 1+
12
−𝑃
. 04
1+
12
47
2
. 04
−𝑃 1+
−𝑃
12
. 04
−𝑃 1+
12
47
. 04
+ 1+
12
46
− ⋯− 𝑃
46
+ ⋯+ 1
48
.
04
1− 1+
. 04 2
12
= 24,050 ∗ 1 +
−𝑃
=0
. 04
12
1− 1+
12
𝑃ℎ𝑦𝑏𝑟𝑖𝑑 = $543.02; 𝑃𝐿𝑋 = $421.21
Repayment Cost
• Annual Cost:
Hybrid- $6516
LX- $5054
Yearly Cumulative Payment and Difference
30000
25000
20000
Hybrid
15000
LX
Difference
10000
5000
0
0
1
2
3
4
Fuel Costs
• Hybrid: 44 miles/gal (combined city/hwy)
• LX: 33.5 miles/gal (combined city/hwy)
• Current gas price: $3.35 (inc. 3%/year)
𝐶ℎ𝑦𝑏𝑟𝑖𝑑 𝑡 = 1142 1.03
𝐶𝐿𝑋 𝑡 = 1500 1.03
𝑡−1
𝑡−1
Cumulative Fuel Cost
35000
30000
25000
20000
Hybrid
LX
Difference
15000
10000
5000
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Tax
• New car tax rate – 7.3% (North Carolina)
• Yearly Property Tax Rate- 1.2481% (Durham)
• Depreciation Rate:
Year 2 3 4 5 6 7 8 9 10 11 12 13
Rate 18% 11% 11% 11% 11% 20% 20% 20% 20% 20% 30% 30%
Cumulative Tax Cost
3500
3000
2500
2000
Hybrid
LX
1500
Difference
1000
500
0
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Yearly Maintenance Costs
• 5-year estimates based on previous models
• Increase 3% each year after year 5
Year
Hybrid
LX
1
84
100
2
397
435
3
257
274
4
951
985
5
897
913
Yearly Repair Costs
•
•
•
•
5-year estimates based on previous models
Increase 10% each year after year 5
Repairs same for both models
Battery Packs generally last the life of the
vehicle and reduce engine wear. (.2% F.R.)
Year
Repairs
1
0
2
0
3
99
4
216
5
333
Yearly Insurance Costs
• Liability insurance costs are equivalent for
both vehicles. ($450 per year)
• Non-liability costs are determined on the
depreciated value of the car. (3% per year)
• Owners only carry liability insurance after the
ninth year.
Oil Conversions
•
•
•
•
42 gallons of oil per barrel
45% of oil becomes usable gasoline
Super Tanker carries 2 million barrels of oil
21,000 Honda Hybrids sold in United States
last year
Extensions
• What current gas price would make it cost
effective to buy a hybrid?
• At what point should you sell your SUV and
buy a hybrid?
• Comparisons involving Electric and Diesel.
• When is it cost-effective to build light-rail
transit?
• What is the impact of the CAFE standards on
oil dependence?
Questions / Comments
Ryan Pietropaolo
NCSSM
pietropaolo@ncssm.edu