Payoff for Green Cars Still Not Economically Viable

by Editor

Green and fuel efficient cars, such as the Toyota Prius are still overpriced and based on today’s fuel prices will take over 10 years to pay for themselves. This is due to high cost of fuel-efficient technologies that these cars use. However, as the price of petrol increases and the cost of these cars reduce, they will become more and more economically viable.

Toyota Prius

DETROIT — Ed Moran’s new Toyota Prius was programmed by the dealer to make him feel good about his gas savings. A dashboard display compares the fuel consumption of the Prius and his 2001 Ford pickup truck

Used S.U.V.’s at Terry Lee Honda in Avon, Ind., whose manager said that production cuts in Japan limited hybrid supplies.

“Every time I go to the store it will tell me how much money I saved,” said Mr. Moran, a horticulturist in Ames, Iowa.

Like more and more Americans, Mr. Moran is looking to a fuel-efficient car to help soften the financial blow of ever higher gas prices.

Shoppers have more options than ever to fight back, including hybrids, plug-ins, electric vehicles and “eco” or “super fuel economy” packages.

But opting for models that promise better mileage through new technologies does not necessarily save money, according to data compiled for The New York Times by TrueCar.com, an automotive research Web site.

Except for two hybrids, the Prius and Lincoln MKZ, and the diesel-powered Volkswagen Jetta TDI, the added cost of the fuel-efficient technologies is so high that it would take the average driver many years — in some cases more than a decade — to save money over comparable new models with conventional internal-combustion engines.

That is true at today’s pump prices, around $4, and also if gas were to climb to $5 a gallon, the data shows.

Gas would have to approach $8 a gallon before many of the cars could be expected to pay off in the six years an average person owns a car.

Analysts say the added cost of the new technologies is limiting the ability of fuel-efficient cars to gain broader appeal. Hybrid sales have surged more than 60 percent this year, but they still account for less than 3 percent of the total market. Plug-in cars represent a minuscule fraction of sales, with General Motors even halting production of the Chevrolet Volt in response to less demand than it expected.

“The point where a car can actually go after a mass-market audience is when the pricing starts making sense on paper,” said Jesse Toprak, vice president for market intelligence at TrueCar. “If they want these technologies to be mainstream, pricing still needs to come down.”

The Prius and Lincoln MKZ are likely to produce overall savings within two years versus similar-size gas-powered cars from the same brand, but other hybrids, despite ratings 8 to 12 miles per gallon better than conventional models, will cost more to buy and drive for at least five years.

The data assumes an average of 15,000 miles driven a year and a gas price of just under $4 a gallon.

If gas cost $5 a gallon, the TrueCar data estimates that the payback period for a hybrid Ford Fusion over the conventional Fusion would be six and a half years, compared with eight and a half years at $4. At $6 a gallon, the hybrid Toyota Camry, Hyundai Sonataand Kia Optima are likely to generate savings within four years.

News Source: NY Times

Would you ever buy a hybrid car? If so which one? What price would they have to retail for?

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