August 02, 2011

Basic Mileage Math

It's official: the Obama Administration has set a CAFE average of 54.5 MPG by 2025. On one hand, manufacturers are warning that such unrealistic and politically motivated hocus pocus will raise the price of new cars far more than the market can bear and will dramatically reduce safety while destroying thousands of jobs and further damaging our already fragile economy, even if it is possible to engineer vehicles that can, across an entire fleet, reach such fanciful numbers (it's not). But it's not all bad news! The good news is that a good portion of those thrown out of work will die in car accidents because their vehicles will be smaller and lighter and far less capable of absorbing impact energies. This will, of course, lessen unemployment.

On the other hand, the Obama Administration and its allies claim that the wonders of green technology will save fuel, create or save jobs, cure the common cold, make you more attractive, raise the debt ceiling, make you taller and give you erections lasting longer than four hours which do not require medication or a call to a doctor. To be fair, the claims of these people are only slightly less whimsical and fantastic. What is certain is that their numbersif you take a moment to analyze them by means of the kinds of highly advanced methods taught only in the finest Ivy League schoolsaddition, subtraction, multiplication and divisionare unicorn horns and fairy dust.

On April 26, I posted an article on the Chevy volt titled An Explosive Automotive Debut. In that article (here) I did a bit of mathalways dangerous for an English majorand discovered that even if a Chevy Volt managed 200 MPG, it would take 14 years to break even by means of fuel savings on the difference in purchase price over a comparably equipped, high-mileage conventionally powered vehicle.

It would seem to make sense that a green technology wonder car getting 41 MPG, compared to a comparable model getting only 23 MPG would save money on fuel, and so it would if those two numbers were the only parts of the equation. When we consider the fact that hybrid, hybrid/electric and electric cars cost considerably more than their conventionally propelled competitors, all of the promised efficiency and fuel savings vanish. The Obamite sycophants haven't mentioned that? No? Well then. As a public service, let's return to Mrs. McGillicuddy's third grade classroom and practice a little elementary mathematics.

Let us consider two versions of the same vehicle: the 2011 Ford Fusion, a popular mid-sized, four-door sedan. Keep in mind that it's difficult to make such comparisons with a high degree of accuracy because prices vary a great deal from car to car due to difference in options, so for the purposes of this little exercise in elementary school math, we'll compare only the MSRP of the 14SEL with the MSRP of the base line Hybrid. According to the Ford website, both vehicles appear to be outfitted comparably.

14 SEL Fusion: MSRP $25,300, 23 City/33 highway

Fusion Hybrid: MSRP $28,600, 41 City/36 highway

Initial Cost Difference: $3300.00

Notice that the real mileage advantage of the hybrid is in city driving not highway driving, which is an interesting quirk of hybrid technology. Keep in mind too that for most owners, the initial cost difference is likely to be much greater as there really is no such thing as a basic hybrid (manufacturers assume that people willing to shell out extra thousands for a hybrid are also going to want a much higher level of accessorizing). Depending on the make and model, it's not unusual for hybrids to cost as much as $6000 more (I'm being conservative) than a comparable conventionally powered vehicle. This reality no doubt accounts for the fact that hybrid sales are, in 2011, less than 3% of the automotive market.

If you are in the market for a mid size car and the Fusion looks good to you, the primary reason to buy a hybridif we assume that you're not mostly looking for environmental street credis because it promises savings over the long run in fuel costs. However, those savings won't be realized until you break even on the difference in MSRP. Let's see how that works out, first analyzing only city fuel economy.

For no reason other than the ease of dealing with the numbers, let's assume that you'll drive 10,000 miles per year and that fuel will remain at $3.65 per gallon. Raise or lower the miles or cost per gallon as you please, but the proportions will remain roughly the same.

14SEL: 10,000 divided by 23 = 435 gallons X $3.65 = $1587.75 per year

Hybrid: 10,000 divided by 41 = 244 gallons X $3.65 = $890.60 per year

Difference: $1587.75 - $890.60 = $697.15 in fuel savings per year

Break Even In: $3300 divided by $697.15 = 4.7 years

Simple math reveals that the proud hybrid owner would not began to save a penny in actual fact until after 4.7 years. You might be tempted to think that's not bad until you realize that, according to RL Polk and Associates, in 2008 (the most recent year I could find for hard figures rather than estimates) the average new car buyer kept their new car for only (you saw this coming, didn't you?): 4.7 years. Therefore, the average hybrid owner, if he kept his hybrid at least 4.7 years, could expect to save exactly zero in fuel costs. Keep it less than 4.7 years and he would lose money.

Current trends suggest that consumers might be holding onto their cars longer than ever, which seems reasonable considering our current economic woes, but we're talking a matter of months, not years, so the figures don't fundamentally change.

Now let's examine the difference using the highway mileage figures. This is where things get really interesting.

14SEL: 10,000 divided by 33 = 303 gallons X $3.65 = $1105.95 per year

Hybrid: 10,000 divided by 36 = 278 gallons X $3.65 = $1014.70 per year

Difference: $1105.95 - $1014.70 = $91.25 in fuel savings per year

Break Even In: $3300 divided by $91.25 = 36 years

Let's make it simple: The proud new hybrid owner would have to keep his hybrid 7.7 times longer than the average new car buyer just to break even, racking up 360,000 miles in the process.

Obviously, the more time the new hybrid driver spends in city driving, the better his numbers and the sooner he'll break even and actually begin saving money on fuel, but the best time frame remains a stubborn 4.7 years. If we make the reasonable assumption that the actual numbers would be somewhere between these extremes, things don't get any better. The midpoint is about 15.7 years, and even if we assume numbers so in favor of the hybrid that they make no sense, say eight years, the hybrid owner would still have to keep the hybrid nearly twice as long as the average new car owner just to break even.

The numbers don't get better for other makes and models. In fact, when we start to consider crossover and SUV hybrids, the MSRP divide becomes greater and greater and the mileage savings smaller, again, placing the reality of savings in the same category as shovel-ready jobs or the recovery summer: non-existent.

There is no doubt that saving money on fuel is often not a new car buyer's primary consideration, but since the Obama Administration is obviously trying to force drivers into a limited number of "green" choices, it's only fair to examine the reality of their calculations. Elementary math makes plain that saving the American taxpayer money isn't part of their equation.

Posted by MikeM at August 2, 2011 10:41 PM

I don't understand the problem. I just purchased a current technology, in fact long standing technology, vehicle that routinely achieves in excess of 38 mpg in town and over 45 mpg hi way. Cost, well equipped, in the $27,000 range. And does 0-60 in the 8-9 sec. range.

I have no problems finding fuel, it's clean, has a drive train expectation of over 200,000 miles, a 10 year plus lifetime, and the only engine maintenance needed is oil and filter changes (first 3 years included in base price). And the technology moves more tonnage than any other current technology.

It's a diesel. Of course it's not made in America, not because we couldn't but because we don't want to rock the political "green" boat. Or does it? Let's see. High ethanol fuels have driven the cost of corn sky-high, contributes to engine failure and don't seem to provide any realistic savings. You've already shown that hybrids and electrics are not economical. Diesel is the cheapest petroleum fraction product, could be reasonably produced from biological waste - sell the corn for food and use the stalks to produce diesel fuel, recycle used cooking oils, etc.

Is it an ideal solution? Perhaps not, but we have the existing infrastructure to get to market. We have the capability to manufacture the engine. My vehicle is not "smelly", it's not "noisy", and it's not subject to dieing by the side of the road because the batteries are "dead".

And the car - it's a VW Gof TDI. The same drive train is available as a Jetta, or in the Audi marque. I first drove one of these 7-8 years ago in Europe where diesel fuel and bio-desiel is readily available - and is the least expensive fuel avaialble.

Posted by: Del Ahlstedt at August 3, 2011 05:46 AM

Don't forget that hybrids also have battery packs that might cost $5K - $10K to replace, and no one knows how long they will last in real life. Some makers have warranties, prorated, of course.

A hybrid has only two advantages: first, the IC engine can run at it's most efficient speed to charge the battery, IF the car is designed to always run on electric power. If the engine drives the car directly at any time, the advantage is lost then. Second, regenerative braking - which is why hybrid city mileage is so good. Driving one of these on a long trip on flat land pretty much erases the advantage.

Diesels make a whole lot more sense - you can literally grow your own fuel.

What I don't get is why no one so far has offered a Diesel hybrid. With a reliable battery, that might be something I would be interested in

Posted by: Chuck Kuecker at August 3, 2011 05:59 AM

Unfortunate that we can't compare maintenance costs and reliability. A basic rule in engineerings is that an overall systems reliability is the multiplication of the reliability of every part in the system. Hybrids are more complex, more stuff to break. I suspect that the maintenance costs will be higher for the hybrid with lower reliability.

Posted by: styrgwillidar at August 3, 2011 09:33 AM

I "Bidened" heavily from your post in a comment to Katie Pavlich posting on the same topic at TH. Hope you don't mind, but people need to do this kind of basic math before making green decisions that will turn their wallets brown.

Posted by: Col Bat Guano at August 3, 2011 04:42 PM

Don't forget to add in Insurance and Taxes too. Maintenance will cut into that too, no doubt that Hybrids are more expensive to work on than conventional cars, plus they will have more expensive repair parts.

Posted by: Georg Felis at August 3, 2011 05:19 PM

For me at least, due to the tax benefits we have here on hybrids, the choice was (on cost only) obvious.
A Civic hybrid costs me (as a lease car, corporate owned, I here pay a portion of the purchase price in income tax, which is a smaller portion than for non-hybrid cars) less than 100 Euro a month to drive. A similar priced diesel powered car (company won't let me select a regular gasoline powered car because of the price difference in fuel) would set me back abour 400 Euro a month.
For the company, the equation is of course reversed. That hybrid gets 45mpg on gasoline costing 1.65 Euro per liter. The diesel would get 55mpg on fuel costing 1.35 Euro per liter. It's not all bad though, the road taxes on the hybrid are 0, rather than several hundred Euro per quarter on the diesel, maybe (in part) compensating.

Don't you love unintended consequences? By subsidising hybrids they've pushed tens of thousands of corporate drivers (and that's the people driving the longest distances) into cars that use more fuel than the cars they used prior.

Posted by: JTW at August 4, 2011 04:38 AM

I did the math here for the Toyota Highlander back in March. Similar results. Math is so useful. A pitty so many people avoid it after high school.

Posted by: Professor Hale at August 4, 2011 12:42 PM