May 04 2009

Battle of the Hybrids

Posted by: Jonathan Marshall

It's only a matter of time before every reader of NEXT100 does his or her bit for the environment and buys a hybrid car, thus helping to drive the world economy out of recession.

But with dozens of new models due to hit the market over the next year, how should you choose?

Paradoxically, given that fuel economy is the prime reason to buy a hybrid, relative MPG ratings should probably be low on your list of priorities.

The reason is that today's better hybrids already get such good mileage that additional fuel savings are rarely worth the extra cost.

For example, compare the Honda Insight 2010, released on the market in March, with the Toyota Prius 2010, due out in late May. The Insight lists for $19,800, the Prius for $22,000 (and up).

For a price difference of $2,200, you get a seemingly big difference in fuel economy--50 MPG for the Toyota, 41 MPG for the Honda (combined city and highway). That's got to be worth it, right?

Actually, if gasoline costs $2.50 a gallon and you drive 10,000 miles a year, the Insight will use only about 40 more gallons and cost only $100 more for fuel. It would take 22 years to make up the difference in price through fuel savings (not counting interest).

You can check for yourself with a handy online GPM Calculator (sometimes called an MPG Illusion Calculator) created by Richard Larrick, Associate Professor of Management and Organizations at Duke University. It takes miles per gallon and converts them into gallons per mile so you can see how cars really compare in fuel use and costs. (Larrick co-authored a seminal article in Science magazine last year calling attention to the virtue of gallons per mile as a better measure of how much gas you will use while owning a car.)

The fundamental insight is that any given absolute difference in MPG ratings (in this case, 9 MPG) represents a much smaller percentage difference at high MPG levels.

Second, any given percentage change in fuel use matters a lot less when total fuel use is relatively low. If you could travel 10,000 miles on just 100 gallons of gasoline (100 MPG), saving 10 percent wouldn't matter much (10 gallons). On the other hand, if it took you 1,000 gallons to go the same distance (10 MPG), saving 10 percent would be a considerable amount (100 gallons).

If we could improve our mileage rating from 16 MPG to 25 MPG, the same 9 MPG difference we see between the Insight and the Prius, the savings in gasoline over 10,000 miles would be 225 gallons, worth about $562 at $2.50 a gallon. That kind of saving might start to make a difference over time.

Choosing a high-mileage car is only one way to save money on fuel. Another good way is "hypermiling"--driving more frugally by accelerating slowly, coasting instead of braking, keeping windows closed and minimizing wind resistance by avoiding excessive highway speeds.

Late last month, NASCAR driver Carl Edwards and a team of passengers hypermiled a Ford Fusion Hybrid 1,445.7 miles on a single tank of gas, for an average of 81.5 MPG, double the car's EPA rating. The whole trip cost them only $37 in gas and covered a distance of half the United States.

So the lessons are:

• Buy a fuel-efficient car (probably hybrid, electric or diesel).
• Pay extra for cool features and sex appeal, not modest improvements in mileage.
• Drive your sporty new car slowly and conservatively to save gas.

 

 

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