The Revolution Will Be Hybridized
Do hybrid cars save consumers money? In a recent issue of Consumer Reports, the editors of the respected magazine said no. But after some alert readers questioned the findings, the magazine went back to the calculator. Actually, it found, two hybrid cars on the market did actually save money over conventional gas-only models. After some embarrassment, Consumer Reports corrected the article on the web, but not before millions once again got the message that hybrids are a poor economic decision. In fact, the question of whether hybrids save money, while not altogether invalid, is slightly odd, given that no one expects other automotive options to pay for themselves. Think about it: Does power steering save you money? Or 4-wheel drive? Or cupholders? Well, maybe they do and maybe they don't, but you don't see much hand-wringing over those decisions.
In the end, it all depends on your values. If it's worth it to you to drive a more efficient car because you're concerned about our oil addiction, smog emissions and the changing climate, then paying for that efficiency makes all the sense in the world. That said, the economics of hybrid ownership will only improve as economies of scale bring prices down. In the meantime, notes BusinessWeek, hybrids have exceptional resale value, with used Priuses selling at prices approaching the cost of new models. See: Top Ten Hybrid Myths.
2 Comments:
This is a similar thing to how people talk about the costs of making renewable energy work.
No one calculates the cost (and pas costs) of making fuel the way we do now.
How much energy does it take to get oil from ground to your gas tank -- never mind what it costs in your tank!
Well, maybe Consumer Distorts got their calculations right when the did them over -- but they're still calculating the wrong thing. They're taking the base price and adding on all kinds of costs that they never factor into reviews of other products -- costs like depreciation and higher financing and sales tax costs.
That's bizarre, for several reasons. First off, it's just not the way they normally do price comparisons, so it's misleading to their readers.
When they compare refrigerators, they don't bother pointing out that whatever the difference in the sticker price is, you should factor in an extra 10-30% for the fully loaded cost with tax and insurance, etc..
If you're going to buy that $10,000 SubZero instead of the $1,000 Kenmore, would the magazine feel obliged to point out that not only will you pay $9,000 more on the sticker price and perhaps another $1,500 more in sales tax and higher personal property insurance, but you'll most likely also spend many thousands of dollars more over the lifetime of the refrigerator on expensive brie and pate, since you'll be more likely to have fancy dinner parties to show off your fancy SubZero?
Nope. They'd keep it simple with a simple apples to apples comparison of the sticker price.
But financing costs only apply if you're paying for your car on credit. And by including depreciation (which is the biggest of these "extra" costs), they're assuming that you're planning on selling the car within a few years. (Otherwise, if you keep your cars for their full lifetime, depreciation only makes a difference in fairly unusual circumstances, such as insurance settlements if your car is totalled.) In the same issue of the magazine, they cite the Toyota Prius and the Honda Civic Hybrid as the most reliable vehicles on the market, so there's a greater likelihood that hybrid buyers will hang on to their cars much longer than someone who buys a car that's starting to act cranky after a couple of years.
These aren't crazy assumptions, but they are indeed asusmptions that only apply to some buyers. And the data on depreciation costs is particularly suspect -- look online and you'll find entrepreneurs who pay list price for hybrids at the dealership and immediately resell them at a markup to people who don't want to endure the waiting lists for hybrids.
If they're going to tack on all of these plausible, but out-of-character, extra costs, they should balance the equation by highlighting the extra per-vehicle savings to society as a result of reduced emissions. But where to begin?
Maybe they should start by adding up all the societal costs that go hand-in-hand with buying a conventional vehicle, and divide by the number of cars on the road. Start with the health costs for the asthma and skin cancer epidemics that are exacerbated by emissions-related global warming. Toss in the billions resulting from extreme weather events, like Katrina and Rita. And don't forget to factor in the $300 billion (and counting) cost of military initiatives whose sole purpose is to maintain our addiction to oil.
Post a Comment
<< Compass Main