Study: Lower fuel prices threaten hybrids’ cost effectiveness
An analysis by Vincentric LLC indicated that hybrids may be losing their competitive edge in the U.S.
The company’s most recent U.S. Hybrid Analysis shows that seven of 29 hybrids it examined have lower total cost of ownership compared to their closest all-gasoline-powered counterpart.
This represents a continued decrease in cost-effective hybrids, dropping from 44 percent in 2012 and 32 percent in 2014, to just over 24 percent now.
The seven low-cost hybrids were the Audi Q5 Hybrid, Ford Fusion Hybrid, Lexus CT 200h, Lexus ES 300h, Lincoln MKZ Hybrid, Toyota Avalon Hybrid and Toyota Prius C. Their cost-effectiveness was due primarily to declining fuel costs in the U.S., although the results also revealed that five out of the seven cost-effective hybrids depreciated at a lower rate than their all-gasoline equivalents, contributing to their cost advantage.
The Audi Q5 Hybrid offered the greatest hybrid-over-gasoline-powered-vehicle total cost of ownership savings for a direct hybrid-to-gasoline model comparison, with $4,484 in savings. For consumers looking to save at the pump, the Lexus NX 300h and the Infiniti Q70 Hybrid exhibited fuel savings of $3,546 and $3,443, respectively. Overall, eight of the total 29 hybrids had fuel cost savings greater than the price premium paid for the hybrid.
“There are still instances when a hybrid’s cost of ownership savings justify the hybrid price premium,” said Vincentric president David Wurster. “Hybrids, however, may be losing their competitive edge due to the decrease in fuel prices and improved fuel economy of all-gasoline-powered vehicles. Buyers should analyze individual models and their own driving patterns to decide whether a hybrid or its gas counterpart is the best choice to save them money in the long run.”
Fuel prices used in the analysis were based on a weighted average over the previous five months. The report also assumes the vehicle is owned for five years and 15,000 miles are driven annually. Vincentric measured total cost of ownership using eight different cost factors: depreciation, fees and taxes, financing, fuel, insurance, maintenance, opportunity cost and repairs.
More information and a chart showing results for all vehicles analyzed is available here.