Is A Green Car Worth It?

All of you “green energy” advocates will be most interested in these break-even years for coal/nuclear/natural gas powered cars. Based on 15,000 miles of driving per year, the added cost of the fuel-efficient technologies is so high that it would take the average driver many years to save money over comparable new models with conventional internal-combustion engines. Gasoline would have to approach $8 a gallon before many of the cars could be expected to pay off in the six years an average person owns a car. For example, it will take 26.6 years of Chevy Volt ownership to reach break-even versus a Chevy Cruze Eco. For the Nissan Leaf versus the Versa, break-even comes in “only” 8.7 years.

There are, of course, exceptions: the Prius and Lincoln MKZ, and the diesel-powered Volkswagen Jetta TDI. But…

• The Toyota Prius, with seating for four, is compared to the Toyota Camry, which has seating for five. I don’t know why the Prius was compared to the Camry.
• The Lincoln MKZ, a luxury sedan that has the same base price of $34,755 for gasoline power or hybrid.
• The Volkswagen Jetta and Jetta TDI, which is, in its fuel-efficient version, diesel (not electricity) powered.

The added cost of the new technologies is limiting the ability of fuel-efficient cars to gain broader appeal. Hybrid sales have surged more than 60% this year, but they still account for less than 3% of the total market. Plug-in cars represent a very small fraction of sales, with GM even halting production of the Volt in response to less demand than it expected.

According to RL Polk tracking data, only 35% of hybrid vehicle owners purchased another gas-electric model when trading in during 2011. After living with the high-mileage technology, nearly two of three hybrid owners wind up returning to a more conventional vehicle when it’s time to trade in.

Why do some buyers pay more for advanced technology that might not save them money? Many never do the math, analysts say, or they tend to overestimate how much the added miles per gallon translate into actual monetary savings. Others see saving fuel and doing something better for the environment as their ultimate goals, regardless of cost. The Prius, for example, became a success in part because drivers wanted to drive, and be seen driving, a hybrid. Fuel economy has become a social attribute.

Green cars may be environmentally friendly, but they aren’t financially friendly. Most people can’t afford to be environmentally friendly.

BTW, in the accompanying figure, “profit” corresponds to keeping a car longer than its break-even point (with cars, it is in years) so that the extra cost of acquiring fuel efficiency is offset by the fuel cost savings.

But that’s just my opinion.