A car purchase is the second most expensive investment that an individual is likely to make (the first being their home). And in that respect, consumers come close in behaviour to their B2B counterparts — after all, vehicles are expensive, have ongoing cost requirements and (whether we like it or not) reflect on our own sense of self. Accordingly, when it comes to purchase time, we shop around, do our homework, check blog posts, search engines and customer satisfaction ratings. We ask friends for recommendations, take a keener interest in the cars we pass in the street, and think through the implications of this major purchase.
Recently though, the greater awareness (and concern for) the environment, coupled with ever spiralling oil prices has seen a massive spike in the popularity of hybrid cars. (Some US states have gone so far as to mandate the production of eco-friendly cars.) But, even a cursory glance at the prices of hybrid cars shows that they are significantly more expensive, meaning that you will need a longer timeframe before your hybrid car breaks even with its petrol equivalent.
However, there are other factors at play in the calculation of ROI — and Todd Andrlik has developed a great online tool that brings carbon emissions into the calculation. Originally developed to assist his employer, Leopardo Constructions, in calculating the ROI impacts for their fleet of company vehicles, the calculator has now been made widely available. Simply enter a few variables about the vehicles you are comparing, press calculate, and you will receive data about fuel savings, unreleased carbon emissions and ROI timeframes. Check it out here.
It is a wonder that companies like Toyota or Honda, makers of leading hybrid vehicles have not produced something similar.
13 thoughts on “Measuring the Hybrid Car ROI”
Thanks for the plug, Gavin. I had a very small role in the development of this tool… it was mostly my very talented team. Still, I’ve definitely found myself taking a greater interest in all things green and doing more at home/work to curb my own personal energy consumption. I even added a green category on my blog as I expect to write more on the topic. With the arrival of energy positive buildings and the world’s increased interest in energy efficiency, I’m looking forward to what the next five/10 years hold in terms of sustainable innovations.
The calculater is pretty basic.. I wonder if it can be modified to include other factors, such as:
– The Federal Tax Credit for hybrid cars. The 2008 Escape Hybrid 2WD for instance qualifies for a whopping $3000 tax credit from Uncle Sam.
– Reduced maintenance costs of a hybrid– The Prius for instance uses regenerative braking, so it doesn’t need a brake job until 100,000 miles (not a typo). It requires tranny fluid change only once every 60,000 miles, and has no alternator, starter solenoid or motor, or timing belt to go bad.
I think those factors in some cases can drastically decrease the payback period to recover the premium one pays for a hybrid.
Quincy – I helped develop the calculator and was the one who figured out all the math that it uses. For something like a tax break, you could just reduce the price of the vehicle by the appropriate amount. For maintenance issues, it just got too complicated and I didn’t have any kind of baseline I could pull from to represent anything remotely fair as an average for those types of expenses. Again, a user could add some amount to each car’s price based on what they expect to pay in maintenance for the time they expect to own the vehicle, and factor it in that way. Anyway, I hope you find the calculator useful for what it is.
Hi new here and have reach this place by my own renascence how are you what does Roi mean
hybrid cars are the next big thing in the automotive world.
I was surprised, my savings would be non-existant, so I’m going to keep buying non-hybrid cars. It simply doesn’t pay off on the ROI.
It is important to know some requirements when finding a car with fuel efficiency feature. Today, due to high price of gasoline, buying a car with this feature is a must, for average people it can be a wrong decision to buy a car without fuel efficiency feature.
Hybrid cars are very reliable… as I bought one.
It changed the way I drove the roadways.
With every new technology comes both good and bad attributes. Sometimes a technology can be great in some areas but lacking in others. Often new technologies need time to develop properly.
There are some high tech cars that doesn’t use too much gas, but the only problem with it is that it’s too expensive. Not all people can afford to buy such a car.
I agree with you that car purchase is the second most expensive investment that an individual is likely to make. That is why they say car is a status symbol in a community.
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