Are Hybrid Electric Cars Worth the Price?
By Steven Marks / September 1, 2014

For decades, automotive manufacturers have introduced innovative ways to add an alternative source of power to the automobile. Today, there are over 70 hybrid electric models (including plug-ins) available in the North American market, and that number is sure to grow. By the year 2020, it is expected that most vehicles will be driven by electric power in some way. All of this exciting technology comes with a premium price. Is the price worth it? Let's take a moment to analyze some of the hybrid electric technology variants to their traditional gasoline powered variants.

Back in the late 90's, the Toyota Motor Company introduced the U.S. to what has been recognized as the first mass produced hybrid, the Prius. Initially developed to be a hybrid model, the Prius now enjoys a complete portfolio that includes a larger, smaller, and full electric plug in variant. The 2014 Toyota Prius gets an impressive 51 city and 48 highway miles per gallon and carries a base manufacturer suggested retail price of $24,200. However, for the budget conscious, and for $10,000 less, Toyota also offers the compact Yaris, which returns 30 city and 37 highway mpg. It then depends on the buyer and their lifestyle to justify an extra $10,000 for 21 extra MPG in the city, and 11 more mpg on the highway to have the Prius.
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General Motors changed the way we think about the automobile by launching the first mass produced Extended Range Electric Vehicle, or EREV, the Chevrolet Volt. The Volt uniquely offers drivers the ability to drive a nominal amount of electric driving (35-40 miles) designed for an average daily commute. Afterwards, a small onboard engine allows the Volt to reach an extended range of 300+ miles with conventional gasoline. The Environmental Protection Agency claims the gasoline engine can return 35 city and 40 highway mpg, while all electric mode can get a combined 98 e-mpg overall. Yet among the Chevrolet portfolio, one can also find the compact Chevrolet Cruze Eco that will return an impressive 42 mpg on the highway. The Volt has a base MSRP of $34,170 compared to the Cruze Eco at just $21,855, which may not be justified by some to only get 2 more mpg for gasoline driving. However, those who travel under 40 miles for a daily commute could benefit from pure electric driving from the Volt.

It wasn't too long ago that Nissan introduced its completely electric Nissan Leaf to the North American market. The Leaf changed the way the country thought about electric cars, and became an instant preference of those buyers with a commute of less than 100 miles. On a full charge, the Nissan Leaf can return an estimated 126 miles per charge in the city, and 106 miles per charge on the highway. Last year, Nissan introduced the Versa Note, a compact hatchback that offers versatility, affordability, and efficiency. With a base MSRP of just under $14,000, the Versa Note undercuts the price of the Leaf by nearly half with up to 40 mpg on the highway.

There have been several studies conducted showing that five years of ownership of a hybrid electric can result in an average fuel savings of approximately $3,300. The cost premium for most hybrid electric models on average is about $4,500 more than a conventional gasoline powered vehicle. So, most hybrid electric models don't make sense for most buyers, especially those who lease vehicles. As technology continues to advance, prices will drive down the cost of these advanced technologies and could make sense at that time.

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