Hybrid Car Savings

Today I had a conversation with someone at work about buying a regular car vs a hybrid. He was of the opinion that the difference in prices don’t justify going for a Hybrid unless you drive 150K miles. Wanting to know if that’s correct or just out of curiosity of the various parameters, I tried to find out if there is a formula that’s possible to come up with.

I am not an experts in cars and so my assumptions might be completely wrong. I am assuming that the savings are measured purely in terms of the savings in the gas. So, let’s derive the formula.

Say, the difference in price between a standard car and it’s hybrid counter part is $P. Say, you have to drive D miles before breaking even. Say, the mileage (MPG) for the standard vehicle is S and for hybrid it’s H. Let’s assume the cost of a gallon oil is $G. Now, we have all the parameters.

The amount of gas required to travel D miles by standard car is D/S

The amount of gas required to travel D miles by hybrid car is D/H

So, the savings is (D/S – D/H) * G

Equating the above to the premium paid, P, we get

D = P*H*S/(G*(H-S))

Now, let’s go with some real numbers.

Premium = $4000.00

S (MPG) = 25

H (MPG) = 42

Price of a Gallon = $4.5

Then, distance D for breakeven = 4000*25*42/(4.5*(42-25)) = 54,902 miles. If the gas price is $4 a gallon, it would be 61,765 but if it were increased to $5, then it’s going to be 49,412 miles. So, definitely not in the range of 150K miles.

Of course, at this time the assumption is that the battery won’t go bad, there is no maintenance costs associated purely with the Hybrid part of the technology which may or may not be correct.

Of course, for those who are green conscious may be ready to spend a few hundred dollars extra for the greater good. If it’s beyond that, it probably doesn’t make sense.