The Economy Of Hybrid Vehicles And The Road Less Traveled

Hybrid vehicles and alternative propulsion technologies are all the rage at the moment, but aside from an advantage in fuel economy, do hybrids make sense in the cold, hard light of their plain old economy? From a strictly bottom line perspective: no.

If automakers need to charge a $5,000 premium to make the technology worth their manufacturing while, most experts agree that even at $4/gallon for gasoline, hybrid vehicles don't contain enough of an economic incentive to make them worth the consumer's while. And yet, there they are.

A so-called hybrid premium of $5,000 would take 6-8 years to recoup based on a host of factors, including the balance between city and highway mileage, the cost of gasoline and the difference in MPG between a hybrid and non-hybrid version of a vehicle. Some people keep their cars that long, but many drivers would opt to trade in for a newer model well before they'd hit the break-even point in a hybrid.

As hybrid technology becomes more common, the price will drop, making hybrids more attractive technology alternatives. If automakers like Toyota are correct, by 2020 all vehicles will be hybrids, or at least have hybrid versions. Some analysts argue that a better approach (and one being adopted by Ford) is to make internal combustion engines more efficient.

According to Ford, its EcoBoost engine can improve fuel economy by 30% and the "EcoBoost premium" is $700. If that's the case, the payoff period for an EcoBoost engine is more along the lines of ten months. Economically, improving the efficiency of internal combustion engines - even at a premium of $700 per vehicle - makes much more sense for most consumers. Additionally, clean diesel options, like the one being offered by Volkswagen, offer yet more efficient and environmentally friendly alternatives to the hybrid premium.

Even so, the dwindling global supply of oil and the prolonged poor economy have spurred innovation and development in automotive engineering that would not have come about in other circumstances. The race to make cars that are cleaner, more efficient, faster and less expensive has brought back some excitement to the auto industry, and that's certainly laudable.

Making an all-electric car for less than $20,000, or hybrids that get 50 miles to the gallon are excellent approaches to the problem of fuel economy and dwindling resources. Improving the efficiency of the technology we have - which doesn't require expensive re-tooling, battery technologies that at this point are only theoretical, or the creation of a whole new fuel infrastructure - is also laudable, especially if it can produce the same result and makes economic sense for the average consumer.

Photo Credit: Jorge Vicente