Would a Hybrid Save You Money?

Posted: March 10, 2008

This morning's Orlando Sentinel asks, "Do hybrids actually save you money?"  In a comparison between the hybrid-powered 2008 Toyota Prius and a comparably-equipped four-cylinder compact from the same manufacturer, the 2008 Toyota Corolla, the Sentinel finds, "The answer is yes. And no."  The Prius bests the Corolla in fuel economy, achieving an EPA rating of 48 mpg city/45 mpg highway to the Corolla's 26/35.  However, the Corolla comes in at "a buy-in price of $4,279 less than the Prius."  At that rate, with "an annual fuel savings of $590 for the Prius, it would take roughly seven years and three months for the Prius to equal the cost of the Corolla."  The hybrid may still make financial sense in the long run:  while the resale value of both cars is good, the Prius' resale value is "astronomical, among the best in the industry."

The Fort Worth Star-Telegram reports, "Most hybrid-car experts say one is unlikely to recoup through gas savings that initial extra cost of the hybrid over the course of an average, five-year ownership of the vehicle. Frank Markus, technical director of Motor Trend magazine, says that an owner may have to drive a hybrid at least 100,000 miles to offset the initial extra cost for the technology."

A report from CNN Money notes that one of the avenues consumers have used to offset the higher initial cost of a hybrid may be closed.  According to CNN Money, "If you bought a hybrid vehicle last year, and you were counting on a tax credit, you may be in for a nasty surprise."  While tax credits can offset the added cost of buying a hybrid vehicle, consumers who bought hybrids hoping to cash in on the credits could "get a much smaller credit than [they]were expecting. Or none at all."  Some hybrids are no longer eligible for credits because Congress authorized credits on only the first 60,000 hybrids and manufacturer sold. Toyota and Honda, for instance, have already crossed that threshold.  "Qualifying for the credit -- and how much of it you can take," also "depends on how close you come to having to pay the Alternative Minimum Tax."