Do Lower Fuel Costs Justify Buying a Green Vehicle?

by Scott Sery on February 21, 2013

Hybrid car fuel costsAs thrifty people we are always looking for ways to save money.  After all, there is no reason to waste money if we can avoid it.   There are some ways that are excellent and easy ways to save money and some will be more worth your time.  With gas prices bouncing between $3 and $4 per gallon, many people are looking for ways to save on fuel costs.  Some have taken the plunge and purchased a hybrid vehicle in order to maximize their fuel economy and minimize their fuel expenses.  But are they really saving money?

As Americans, we love to drive.  The average driver puts 12,000 – 15,000 miles on his or her vehicle each year.  Depending on the type of vehicle driven, the costs can really add up.  If you have an older vehicle, or a larger vehicle and you get 15 miles per gallon, you are spending $2,400 per year on fuel costs (assuming 12,000 miles per year and $3 per gallon of gas).  If you have an efficient car, one that gets about 35 mpg, you will be spending right around $1,050 per year.

Many people who are looking for a new care might be considering a green vehicle.  The most common, of course, is a hybrid.  But these vehicles come with a premium.  According to Kelley Blue Book the base model for a 2013 Toyota Camry at dealer invoice is $21,105.  The base model for a 2013 Hybrid Toyota Camry comes in at $24,809.  In order to get the hybrid technology, you will be spending an additional $3,704.  What that buys you is 40 miles per gallon instead of 35 miles per gallon (in addition to some other perks, but for the sake of argument we are just looking at fuel economy).  What this means is that if you drive 12,000 miles per year (and assuming $3 per gallon for gas), you will spend $900 on fuel with a hybrid Camry, and $1,050 with a standard engine.  Total savings: $150 per year.  In order to make up the difference between the sticker prices, you will need to keep the vehicle for 24.5 years (not taking into consideration the ever increasing fuel costs).

Now there are a lot of different factors that will vary in this analysis.  If you drive more miles per year, or live in an area that charges more per gallon the payoff period will be shorter.  If you want to drive a hybrid because it is better for the environment, the analysis becomes more complicated; how do you quantify that?  But if you are looking to straight up save the most on fuel costs, a hybrid might not be in your best interest.

Do you own a green vehicle?  Would you ever consider it?

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Scott Sery

Scott Sery is a native to Billings, Montana. Within an hour in nearly any direction he can be found fishing, hunting, backpacking, caving, and rock or ice climbing. With an extensive knowledge of the finance and insurance world, Scott loves to write personal finance articles. When not talking money, he enjoys passing on his knowledge of the back country, or how to live sustainably. You can learn more about Scott on his website Sery Content Development
  • Kasey

    Your post only takes into consideration a regular Camry at highway fuel economy. A regular Camry is 25/35 while a hybrid is 43/40. If you do more city driving you will be saving more money on fuel.

    • Scott Sery

      True, I used averages for the fuel economy. There are other factors that can sway the analysis one way or the other. The overall picture is that, in my opinion, the hybrid technology does not add enough benefit to justify the extra cost.

  • I wouldn’t consider one at this point. My car gets 33 mpg and is not a hybrid.

  • Kevin Watts

    For the longest time I thought hybrid cars saved you money. But I guess I was wrong

  • This is tough one. As you stated, when you compare gas costs between a hybrid car and non-hybrid, hybrids generally win. But when you add the price of vehicles into the equation, you do pay more on a car to pay less for gas. 🙂 Little bit mind boggling. I live in California, so smog is a huge issue as is gas prices. We tend to have some of the highest prices stateside, so the savings on gas prices is probably a little bit higher for us. I think for many it boils down to wanting to be “green”. We currently don’t have hybrids as our vehicles are not new, but when it is time to replace our vehicles, I’m sure we’ll at least consider them.

    • I recently saw what gas prices were in California and it blew my mind. We actually have some of the lowest prices here in Colorado.

  • If you drive a lot and live in a state with high gas prices then its going to be more worth it.

  • holly

    We have a Toyota Prius! Love it! We bought it used for about 17K and it’s a great car. A few vacations ago, we drove from Indiana to Florida, to New Orleans, back to Florida, then back home for about $135 in gas. It gets 45-50 mpg so it’s awesome. I haven’t done the math as far as savings go but I do feel good that we are using less gas in general. We have a finite amount of resources and I believe we should use them sparingly if possible.

  • The technology is still a work in progress if you ask me. Cars could still be greener. Right now I don’t own a green car but I own an old car which to me is being green. We haven’t traded it in for the newest flashy thing. We are driving it until it dies which will still be a long time from now. Once it dies though I do want to get a greener car with green sourced power.

    • I agree that it is a work in progress. I think in the next 5-10 years you are going to see a whole new side to green cars.

  • Scott Sery

    Despite my cynicism for “green” cars, I would drive one such as this: http://www.huffingtonpost.com/2013/01/23/peugeot-car-that-runs-on-air-hybrid_n_2535024.html

  • I am still not convinced that I would save money by buying a green vehicle. Maybe in the future but not yet.

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