Investment Return on Hybrid Car

Non-monetary Advantages to Owning a Hybrid Car

Hybrid car owners tell of many advantages to owning their vehicles.

• Great gas mileage
• Lightweight car
• Better emissions
• Shorter commute times in some cities due to the HOV lanes
• Battery pack that recharges itself

Previous Criticism

In 2004, many experts criticized the investment return on hybrid cars. They said that with the economy at the time, at $2 per gallon of gas, it would take 12 years to recover the investment of a hybrid Civic compared to the purchase of an equally equipped Civic powered strictly by gasoline. At that point, the hybrid Civic only averaged seven more miles per gallon than the gas powered Civic. Additionally, the hybrid Civic’s sticker price was $6,000 more.

Many times invest return is figured based on the EPA’s fuel efficiency ratings. However, this is a poor way to actually gauge the effectiveness of a hybrid. Consumer Reports indicated in 2004 that the actual mile per gallon statistics for the Prius and Civic were 20 to 25 percent lower than reported by the EPA. David Champion, Consumer Reports senior director of automotive testing, stated, “If you’re looking at a hybrid just as a financial investment, it doesn’t make sense.”

Initially, this caused many unhappy hybrid owners. Automakers got negative feedback and had to improve.

Current Outlook for Investment Return on Hybrid Car

In 2004, Max Martina, managing director of the Alternative Energy Institute, said that gas prices were going to have to reach $2.50 to $2.65 to cause hybrids to show a five year return on investment. Well, that time has come. Additionally, technology continues to improve, causing hybrids to become more and more efficient. The hybrid’s use of battery packs is increasingly becoming more effective.

The interest level in the United States for hybrid automobiles is exceeding the supply currently. Long waiting lists are commonplace at dealerships, with the average wait being as long as six months to acquire a hybrid vehicle.

Federal Tax Credit

The federal government is currently offering a tax credit to hybrid owners with a maximum claim of $3,400. Here’s how it works:

• The hybrid vehicle purchase date must be after 12/31/05 and before 12/31/10
• The tax credit is only for new vehicles, not used hybrids
• The hybrid’s use is to remain in the United States
• The vehicle must have been acquired by the individual claiming the tax credit
• The credit is limited to 60,000 hybrids per automaker

Advantages

Obviously, monetary advantages include fewer trips to the gas station with increased fuel efficiency and increased dependency on the battery pack for power. Depending on the make and model, increased fuel efficiency can really make a difference. The return on a hybrid owner’s investment also includes from what kind of a situation he came originally. If a vehicle owner is currently driving a gas guzzler, then the investment return will be more easily realized. However, if the prospective owner is driving a vehicle that is fuel efficient, then the investment return will take longer to be realized.

Many experts continue to comment, most hybrid drivers are not simply looking for an investment return on a hybrid car. They are all about the “big” picture. They are concerned with helping the environment. It’s even been reported that hybrid car owners don’t even consider another vehicle. Once they decide to go hybrid, there is no other option for them. It isn’t about comparing a gasoline-powered vehicle to a hybrid car. It’s about comparing one hybrid against another.

In the current economy, a hybrid vehicle certainly makes sense. An investment return can be realized within five to 10 years based on current statistics. The federal tax credit makes a jump start on that return. Then count in the “cool” factor you achieve by being a hybrid owner. That is, by far, the biggest return on your investment.