Savings That Cost You

No one ever saved money by spending it.

The job of a salesman isn’t to save you money. It is to make money by convincing you to buy something. People who have money understand this principle often, having made a lot of it as salesmen, convincing other people of the opposite.

Like a hybrid or an electric car, for instance.

There are many reasonable reasons for buying one or the other but don’t kid yourself that you’ll be saving money.

A hybrid car will save you money on gas because it burns less of it. And it is true you’ll spend nothing on gas if you buy an electric vehicle, which doesn’t burn any gas at all

But what do all these “savings” cost you?

A new Toyota Prius hybrid stickers for $24,525.  A new Toyota Corolla, otherwise similar, stickers for $20,075.

The Prius averages 56 MPG. The Corolla 33. On roughly 11 gallons of gasoline, the Prius will go about 600 miles before it needs more gas. The Corolla can travel about 450 miles on 13 gallons (it has a slightly larger gas tank). Call it 400 miles to account for the additional two gallons of gas the Corolla’s larger tank holds.

So, the Prius goes about 200 miles farther on roughly the same quantity (about 11 gallons) of gasoline. You have saved about $19–the cost of roughly six gallons of gasoline (at about $3.20 per gallon) you didn’t have to buy. If you fuel up once a week, your monthly savings amount to about $76. Over a year, you will have saved about $912 on gas vs. what you would have spent to drive the Corolla the same distance.

But you spent $4,450 more on the Prius itself.

It will take you about 5-6 years of “saving” on gas to make that back. In addition to spending that $4,450 on the Prius, you also probably paid more in taxes based on the vehicle’s purchase price/retail value. Insurance too is based on the replacement cost of the car. A car with a higher replacement cost will usually cost more to insure.

There is also the cost of depreciation.

The Prius will have lost a proportionately greater percentage of its original value and if you think that doesn’t cost you money, think about it some more.

But these are incidental costs relative to the ones that will eventually cost you the most–replacing the battery pack in the Prius.

At some point, the battery that is key to the hybrid’s gas mileage savings may no longer be holding as much charge as it was capable of holding when it was new. You may get many years out of the battery before capacity degradation becomes noticeable. But you are not likely to get the 15-20 years and more that you’re likely to get out of a Corolla before anything comparably costly requires replacement.

A used/refurbished battery pack for a Prius currently costs about $1,100. You’ll pay a cost to keep the Prius “saving” you on gas or a cost you’ll eat when you decide to sell/trade your tired-battery Prius. Dealers are well aware of the battery life problem, and they aren’t going to fail to factor into their offer what it’s going to cost them to put a refurbished battery pack into your trade-in hybrid to be able to re-sell it to someone else.

So, not counting the higher taxes on the purchase of the more expensive hybrid and the probably higher cost to insure it, you will have spent in the neighborhood of $5,550 to “save” on what you would otherwise have not spent at all on the Corolla.

The “savings” are probably worse than that, too, as Corollas routinely go for 20 years or longer before their owner is obliged to spend anything substantial to keep them going. And a mechanically sound 20-year-old Corolla is still a pretty safe bet for reliable service for many more years to come after that. It may need a new $100 starter battery at some point. But you can buy a lot of starter batteries for the cost of one hybrid battery.

Actually, you could buy about 340 gallons of gasoline. That’s enough to take you about 11,000 more miles down the road.

Electric cars are even more preposterous ways to “save.” You spend $10k-plus more to buy one, and you’ll spend as much on a refurbished/replacement battery pack for one as you would have to buy the Prius over the Corolla. And the electric car’s battery will cost you more because it has to work harder.

Most of the work of moving the car is done by the engine, which reduces the load on the battery. A hybrid’s battery never fully discharges. The gas engine/generator automatically re-instills charge when its charge gets low. The battery is also more of a supplemental power source than the primary propulsion source.

EV battery packs do all the work. Well, they provide all of the power. And if you drive the EV to the edge of its range, you will have deeply discharged the battery pack. Do this regularly, and you’ll likely be spending more, sooner for a new battery pack.

And these packs, larger and more powerful, are much more expensive than hybrid battery packs.

If you want to save money, buy a used Corolla. It’s possible to pick one up for about the difference in price between a new Prius and a new Corolla, plus maybe a little bit more. Put the $15-$20k, or so you didn’t spend on the new either-of-them toward gas, and you’ll never spend more to drive than the people who bought new think they’re “saving.”

Eric Peters lives in Virginia and enjoys driving cars and motorcycles. In the past, Eric worked as a car journalist for many prominent mainstream media outlets. Currently, he focuses his time writing auto history books, reviewing cars, and blogging about cars+ for his website

Editor’s Note: The opinions expressed in this article are those of the author.

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