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# Hybrid cars don’t save you money (part II)

Ramit Sethi · November 28th, 2005

In the last few months, there have been 89235932153 articles about why hybrid cars are the best because gas is so expensive and they save you lots of money.

So I’m digging out an article from the IWillTeachYouToBeRich archives today:

Hybrid cars don’t save you money. Do the math!

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1. ##### George

This post badly needs an update, since it assumes that gas costs \$2/gallon.

What would be interesting is to figure out how high gas prices should go to make hybrid cars worth the extra money you pay for them.

2. ##### Sripathi

The Cost savings and environment benefits aside, I am going to get a hybrid car, as it allows me to get onto the carppol lane (in Calif. atleast) and get that extra hour to 2 to do what I like.

3. ##### Ian Ybarra

At \$3/gallon, it would take 8.2 years to break even given the case I used in the original article.

Furthermore, if gas cost \$24.71/gallon, you would break even in 1 year.

\$12.35/gallon, 2 years
\$8.24/gallon, 3 years
\$6.18/gallon, 4 years
\$4.94/gallon, 5 years
\$4.12/gallon, 6 years
\$3.53/gallon, 7 years
and, as I mentioned above,
\$3.00/gallon, 8.2 years

See the attached spreadsheet for my calculations, and to do your own.

4. ##### Anonymous

Gas is \$2.02 where I live.

5. ##### SQ

You mentioned the Clean-Fuel Vehicle Deduction, which nearly everyone owning a Hybrid should be able to get (you made it sound like not everyone can).

However, that is a \$2,000 DEDUCTION, not a CREDIT. Therefore, it means your AGI goes down by \$2,000, which means the net amount you save is ~\$700 (assuming a combined Federal + State Tax of 35%). (I got that by doing 2000 * 0.35.)

Therefore, by your original calculations, you would not break even in under 4 years. It would still take about 9.4 years.

6. ##### pjh

Environmental benefits are never black and white. Consider this article from the New Scientist on the effects of hybrid vehicles on the Amazon rainforests.

http://www.newscientist.com/channel/earth/mg18825265.400.html

7. ##### Jim LeTap

Plug-in Hybrid cars have their own economics in my opinion. The break even analysis will be more favorable then. I guess we have to wait a couple of years before they go mainstream.