The Rising Cost Of Fuel Is Shortening Hybrid Payback

It's no secret among hybrid owners that the cost of the technology isn't exactly cost-effective. The typical estimates on how long it will take to recover the increased cost of hybrid vehicles with the fuel savings at the pump ranges from several years to several decades depending upon the model and the cost of the "hybrid premium."

The premium drivers now pay for hybrid technology and the likelihood that the technology will never save money doesn't discourage most hybrid drivers, who purchased their vehicles more for their "statement" value than for a positive cost-benefit analysis. However, the increasing cost of fuel in the US is shortening the payback time for hybrid vehicles, in some cases to as few as 18 months.

As gasoline costs rise above $4 per gallon, rising fuel costs more easily absorb the hybrid premium. At $4 per gallon, the break-even point in a comparison between the Toyota Prius and a Toyota Camry occurs shortly after the Prius' fourth year on the road, assuming that each car is driven 15,000 miles per year, and the Prius' hybrid premium is about $3,500 over a similarly equipped Camry. This also assumes that no major repairs or maintenance costs attributable to the Prius' power train are needed.

A five-year break-even point is tolerable for most drivers, since the vehicle is likely to remain in operation for at least five years from the time of purchase. More expensive vehicles, plug-in hybrid electrics and hybrid conversions are still likely to have a break even point that exceeds the anticipated lifespan of the vehicle, even when gas rises above $4 per gallon.

Recently, MIRA and Poulsen have announced after-market plug-in hybrid electric conversion kits that are expected to sell for $3,500-$4,000, not including the cost of installation. The MIRA kit is designed specifically to work with diesel power trains, while the Poulsen kit appears to work for gasoline engines. Low-cost conversion kits that could provide a range of 25 miles of all-electric drive would work for the majority of commuters and would significantly reduce the break-even point for such a conversion.

Source: Motor Authority
Logo: Progressive Automotive X-Prize/Poulsen