Nearly 6 years ago I started a job where I commuted 30,000 miles/yr from Orange County, CA to Los Angeles, CA. To me this was a lot. Though I knew a lot of people who did even more. My family was growing and we were looking to upgrade my wife’s 07 prius (purchased in 07) to a minivan. I was driving my 04 matrix (purchased in June of 03). Gas was in excess of $4/gal and I decided to consider selling the matrix and keeping the Prius.
I have no clue how I heard it, but I believed “The prius is better for the environment and it will save money on gas.” After doing the math, I can most assuredly tell you this fallacy is akin to “buying a starter home” or “keeping a mortgage as a tax shelter.” If a financial advisor tells you any of these things, you need to run away as fast as your feet will carry you. In fact, by my math, there are very few scenarios where you would sell a car that works to buy a car with better gas mileage for that reason alone. WOW! Right?
Here is how I figured it out.
Define the Scope: I put down a list of all of the cars and scenarios that we could consider.
In this case they were:
Keep the Matrix – trade/sell the Prius – buy a used mini-van
Keep the Prius – trade/sell the Matrix – buy a used mini-van
Keep the Matrix – trade/sell the Prius – buy a used SUV
Keep the Prius – trade/sell the Matrix – buy a used SUV
Next I needed to understand the annual costs associated:
Miles per gallon & Annual Cost of Gas
Maintenance, consumables & Annual Cost assoc.
Risks/Worst Case scenarios (What if I get hit and get totaled? What if my motor blows?)
Payments and Annual Cost
Insurance differences in annual premiums
Finally i did comparisons:
What does 1 year look like in this scenario?
What about 5, 10 or 15 years?
What is the break even point? At what point does the efficiency of new technology begin to save you dollars?
After I put the numbers in a spreadsheet I could clearly see, that even at $4.xx/gallon gas was negligible in comparison to having a car that was paid off. (the Matrix got 31mpg on the highway, the prius 44mpg on the highway. These numbers were based on real driving for a week. ) The matrix consumed ~968 gallons of gas/yr. The Prius would consume ~681. That’s a net change of 287 gallons @ $4/gal = $1148/yr. The matrix was paid off and the prius was costing us $400/mo for the next 4 years. That is $4800/yr in payments. I gave myself an annual maintenance budget of $1500. (Which was extremely generous, because i really only spent about $700/yr in hindsight.) $1500/yr in Maint. + $1148/yr in extra Fuel – $4800 in payments x 4 years = gave me a net loss the first 4 years of $8600. It would be even worse to go with the prius in 2015 when gas in CA is $2.xx/gal.
The break-even analysis showed that I wouldn’t yield a net savings for 20 years (given the prius’ need for a new battery between the 10-15 year mark). There were no scenarios where it made fiscal sense to choose the Prius over my Matrix. I thought it odd and did the math on downgrading my car from a 4-cylinder hatch to a 6-cyl truck for a straight across trade and it took an annual hit, but again, was negligible in comparison.
Next I tackled the “Green Aspect.” The Toyota Matrix I had scored just over 1 on emissions. It was considered ULEV. Today they utilize different standards. The prius scored just over .5 and was SULEV. Back then they just took readings off of the tail-pipe and rated it by expulsion of green-house gases. The differences were negligible, as both burned gas. The prius was 25% more efficient at it, but the efficiency was subsidized with other technology.
So I decided to research that other technology. The regenerative braking and electronic assist motor were part of a very advanced electronics system. Where my matrix had a low tech – mostly Steel and Aluminum motor. The prius introduced a lot of computers, sensors and electronics. They were powered by a battery that carried a 10yr, 150K mile warranty. These batteries are 200V NiMh. Not the more efficient and dangerous Lithium-ion. 168 cells in 28 modules weighing 1 kilo / module. If I drove this car for 5 years @ 30K/yr, the chances are, i would need a battery.
…or as my friends at “how stuff works” put it:
According to an in-depth study by the U.S. Department of Energy’s Argonne National Laboratory, hybrid cars do, in fact, require more energy to produce than conventional cars, emitting more greenhouse gases and burning more fossil fuels during the manufacturing process. The production of hybrid batteries, in particular, requires much more energy than producing a standard car battery and results in higher emission levels of gases like sulfur oxide.
It’s a net loss to the environment to drive a hybrid. For that matter, to drive a car for 20 years, instead of buying a new car every 5 years would also be a net gain for the environment.
New cars are big business. New cars are not good for your wallet or the environment. New cars must be made and manufactured – they’re not grown from a magical tree. Old cars must be disposed of when it is no longer cost prohibitive to keep them on the road. One 30 year old car is more environmentally conscious than a new car every 6 years with the newest tech. The five cars left in the wake increase factory movement which impacts projections used to manufacture the vehicle. There are five more cars in the world and five more cars to one day recycle or sit in the yard of a pick-n-pull.
So if you buy a new car, especially a hybrid, do it because you want to; Because you like the car; Know it will cost you significant money over an older car even with the old technology. Also know that you will likely be hurting the environment more than you’re helping it.
I’ll leave you with this quote from Dr. Seuss’s The Lorax:
I meant no harm. I most truly did not.
But I had to grow bigger. So bigger I got.
I biggered my factory. I biggered my roads.
I biggered my wagons. I biggered the loads
of the Thneeds I shipped out. I was shipping them forth
to the South! To the East! To the West! To the North!
I went right on biggering… selling more Thneeds.
And I biggered by money, which everyone needs.