The ‘rents have been on the lookout for a new car for a while now, but seeing as I haven’t had a need for a hand-me-down, there hasn’t much urgence. However, seeing as I’ll be in Ontario for the next year, that need has increased ever so slightly. Just this past weekend, my dad and I surmised that hybrids were little more than gimmicks and that the payback period in decreased fuel cost would be longer than we’d normally keep a vehicle.
But the conversation piqued my interest, and armed with some second-hand information about hybrid vehicle rebates from the government and an internet browser, I set out to find the truth about hybrids, the options available, and the financial case for them. In at least one case, it seems like both my dad and I were terribly misinformed.
Take the Toyota Camry, the type of car that would most likely populate our garage. The standard LE model in Canada has a $23 400 MSRP, while the base hybrid model costs $30 660 MSRP. [Toyota Camry price list] However, the hybrid comes with some desirable features that we’d want, such as power driver’s seat and a moonroof, and some nice-to-haves, like a higher-end sound system and automatic dual-zone climate control. The Touring package for the LE adds most of the extra features of the hybrid, but also brings the MSRP price up to $27 055.
Now, combining the federal government’s ecoAUTO program rebate and the Ontario government’s alternative fuels rebate, you get a $3 500 incentive to buy a Camry hybrid. Of course this is all after tax, levies and delivery costs, but it cuts significantly into the premium for an alternative fuel vehicle. Let’s do some quick calculations for the Camry.
LE w/ Touring pkg = [$27 055 + $1 415 (delivery, etc)] * 1.13 [taxes] = $32 171.10
Hybrid = [$30 660 + $1 415] * 1.13 = $36 244.75
Difference = $4 073.65
However, taking into account the $3 500 rebate from the government, that equates to only a $573.65 difference. Not too bad, huh? At least if you’re in this specific situation.
Now, let’s assume we’ll drive 20 000km per year (which is really not that much given the commute distances in Ontario…). Toyota lists efficiencies at (city/highway) 5.7/5.7L per 100km and 9.5/6.2L per 100km for the hybrid and LE V4 respectively. Since the advertised mileages are often a bit optimistic, let’s assume a combined average of 6.5L/100km and 8L/100km for the hybrid and LE V4 respectively. That equates to 1300 litres of gas per year for the hybrid and 1700 litres for the LE V4. Now that gas is in the range of $1.35/L for regular unleaded, that works out to an annual savings in reduced fuel costs of:
(1700L – 1300L) * $1.35/L = $540
That’s right, the price difference for the hybrid is made back in just slightly more than one year. That’s what I call a good return on investment. And, the more you drive, the more you’ll eventually save, literally. Plus, who knows where the price of gas will be over the next several years. There’s already talk of $200/barrel oil – you can guess what will happen to the price at the pumps if that were to happen.
After crunching all the numbers, I’ve come to the conclusion that going for the Camry Hybrid nets a car that is feature-wise comparable or more advanced than the LE with the Touring package, has slightly more power than the standard V4, thanks to the hybrid engine, and will end up saving money a little bit after the first year of use. Of course, this is all due to the government incentives. Without them, it’d be closer to 8 years before the investment breaks even, which is getting a big long in the tooth. The federal government’s alternative fuels incentive will be terminated at the end of this year, so the time to buy (if it makes sense financially) is within the next few months.
Okay, I’m being a bit naive and considering only one case, our case, but in the end that’s what matters to us. Given the above, I think it’s safe to say that the hybrid option is very appealing, and almost a no-brainer, given the choise of the two models above. Anyone care to poke some holes in my logic? It almost seems too good to be true, and if my microelectronic circuits professor is to be trusted, anything that seems too good to be true probably is.