Gas Prices Squeeze Hybrid Car Affordability

With gas prices continuing to be more affordable than they’ve been in a decade and the fuel economy of conventional cars reaching new heights, only a handful of fuel-saving hybrid-electric vehicles make financial sense to own these days. That’s according to an analysis of new-vehicle ownership costs conducted by the market research company Vincentic in Bingham Farms, Michigan. The company determined that only seven out of 29 hybrids analyzed from the 2016 model year cost less to own than their gasoline-only counterparts over a five-year period, including factors like depreciation, insurance and financing in addition to fuel costs. By comparison, back in 2013, when gas prices were fluttering around $3.50 a gallon, 13 out of 33 models made financial sense to own. Not surprisingly, hybrid sales are falling, with 14.4 percent fewer hybrids delivered to buyers over the first seven months of 2016 than over the same period in 2015, according to industry sales reports. Most hybrids cost as much as $3,000 or more than comparable conventionally powered models to cover the additional cost of the electric motor, battery pack and other technical upgrades. As an extreme example, the large and luxurious Lexus LS 600h L sedan, which leverages its hybrid technology more to enhance its performance than its fuel economy, costs a staggering $35,924 more than the costliest gas-only version. That means (assuming our math is correct) it would take an owner - and his or her descendents - around 150 years to recoup the added up-front cost entirely in fuel savings with gas at $2.25 a gallon. On the other hand, the Lincoln MKZ Hybrid midsize luxury sedan is priced on a dollar-for-dollar par with its conventionally powered version, which means it’s all good on day one. Vincentric estimates the MKZ Hybrid will save an owner $2,602 over a five-year period compared to the standard model. We’re featuring the short list of money-saving hybrids in the accompanying box. Note that costlier plug-in hybrids, which feature larger batteries and can run for several miles solely on electric power, were not included as part this study. Of course, not all hybrid car buyers choose their rides purely for economic reasons. Many prefer them because they’re “greener” cars with smaller-than-average carbon footprints. And should fuel prices again reach or exceed the $4 mark, they’ll look like the smartest people in the room. “There are still instances when a hybrid’s cost-of-ownership savings justify the hybrid price premium,” says Vincentric President, David Wurster. “Hybrids, however, may be losing their competitive edge due to the decrease in fuel prices and improved fuel economy of all gasoline-powered vehicles. Buyers should analyze the individual models and their own driving patterns to decide whether a hybrid or its gas counterpart is the best choice to save them money in the long run.” Vincentric’s study was based on total cost of ownership factors for 2016 models over a five-year period, assuming 15,000 miles driven and including depreciation, financing, insurance, maintenance, repairs, fees and taxes as well as fuel consumption. Gasoline prices were averaged over a five-month period to negate sudden peaks and dips in per-gallon gas prices.