Do Hybrid Cars Save Money?
RENEE MONTAGNE, host:
A hybrid car may save gas, but the question is whether it will save you money. At a moment when many people feel the sting of high fuel prices, reporter Joe White did the math. He's the Detroit bureau chief of The Wall Street Journal, and from member station WDET in Detroit, he spoke to Steve Inskeep.
STEVE INSKEEP, host:
Welcome to the program.
Mr. JOE WHITE (The Wall Street Journal): Good morning. How are you?
INSKEEP: So I understand this starts with your own personal decision. You were thinking about trading in a Subaru, which is not a hybrid...
Mr. WHITE: No.
INSKEEP: ...for a Toyota Prius, which is.
Mr. WHITE: At least in my case, the math didn't work out. I would be behind, when I got done financing the Prius, which would cost more than a typical compact car of the same size, despite the fact that the Prius has much better mileage. I mean, the bottom line is, oddly enough, gas isn't expensive enough to justify the switch to a hybrid for a lot of people, particularly people who have my kind of car.
INSKEEP: Just so I know, how much money would you have saved per year in gasoline before you factored in the other costs here?
Mr. WHITE: Well, let's see, I probably would have saved about $746 a year if I had bought a Prius, and that's just in gas. The problem...
INSKEEP: And you're assuming roughly $3 a gallon gas about--yeah.
Mr. WHITE: Roughly. I--just to make the math easy, because, heck, I'm a journalist. I said $3 a gallon. And I've got readers who argue I should have said, no, no, in the future, it'll be more than that. But that's what it is today.
INSKEEP: So that's what you went for. If it becomes $5 a gallon, does that change the math at all in the future?
Mr. WHITE: Certainly. And the higher the gas goes, the more likely it is that a hybrid will pay off. The problem fundamentally is that there's a several thousand--three to $4,000 premium for the hybrid technology, and at current gas prices, that's a hard sell.
INSKEEP: Now what if I'm in a somewhat different situation. I was in a situation of not even owning a car and deciding, do I buy a hybrid or do I buy a regular car? Do the numbers make sense then?
Mr. WHITE: If you went out and bought a Honda Civic, just a standard Honda Civic, four cylinder, the way the numbers look that I pulled off various Web sites, you would save $506 a year in gas costs to buy the Prius. However, the Prius would probably cost you as much as $8,000 more, and my back of the envelope math is that that would take you roughly 15 years to pay off that difference, and that's not even accounting for the time value of money. So it doesn't really work out.
INSKEEP: Do tax breaks help here?
Mr. WHITE: Tax breaks would absolutely help. Right now as of this minute, there's a $2,000 tax deduction that you can claim if you buy a hybrid. As of January 1, there's a tax credit. In other words, it comes right off of your tax bill. It's rather complex. It can be as much as $3,400, I believe, but it's diminished over time, and it phases out in 2009. Frankly, the government doesn't subsidize hybrids as much as it would need to to overcome these economic obstacles.
INSKEEP: Aren't there other reasons that people buy hybrids, though?
Mr. WHITE: Absolutely. If you buy a hybrid, you're kind of making a statement, which is that you're supporting the development of a new kind of technology, and I got a lot of reader e-mail suggesting that that was an important point, that they want to put their money where their mouth is, so to speak, and support this kind of technology. You know, car purchases are a complex gumbo of emotion and economics and ego and sex and all the rest, and it's just a question of, you know, how many parts of those various elements do you put into your decision-making hat to come up with the answer?
INSKEEP: So the Earth will be saved when we have a hot, red convertible sporty hybrid is what you're telling me?
Mr. WHITE: Right. There are hybrids that are tuned not for mileage, but for performance and speed, and the Lexus RX sport utility vehicle is one such. It gets better mileage than a typical V8, but it's not 50 miles a gallon, by a long shot. But right, if you could get a car that could get 40 to 45 miles to the gallon and go as fast as my Subaru, which can do zero to 60 in under seven seconds, and feel like a lot of fun to drive, boy, would you have something, and that's clearly something the industry is hoping they can get.
INSKEEP: Joe, thanks very much.
Mr. WHITE: Thank you.
INSKEEP: Joe White is Detroit bureau chief of The Wall Street Journal.
MONTAGNE: This is MORNING EDITION from NPR News, with Steve Inskeep. I'm Renee Montagne.
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