I don't know what you're doing with your weekend, but I'm spending mine driving a Prius from the Midwest to the East Coast. Next week I'll tell you all about my experience with the car, but I'll say this: it hasn't been what I expected. Not that my opinion on the subject matters to Toyota; I'm not a customer for a Prius or a hybrid of any type and I am unlikely to become one until the last car that can beat a Prius around a racetrack enters the loving jaws of the Crusher.
Existing hybrid owners, on the other hand, are near and dear to Toyota's heart. Unfortunately, that affection is being returned in smaller and smaller doses.
It's the kind of headline that generates clicks the way a Prius going down a hill generates battery power: Gas price fallout: People trading in hybrids for SUVs. And the facts, in this case, justify the hype:
So far this year, only 45% of people that traded in an environmentally-friendly hybrid car purchased another, according statisticians at Edmunds.com. In 2012, that figure was over 60% and this is the first time it has ever fallen below 50%…
Back in 2012, gas prices peaked at $4.67 a gallon. At that price, it would take five years for owners of a hybrid-powered Toyota (TM) Camry to make up for the $3,770 price differential with the brand's gasoline-powered model. But with today's gas prices at $2.27 a gallon, it would take about 11 years.
Admit it, your first reaction to the above was, "How stupid can people be? Do they think cheap gasoline will last forever?" That was certainly my reaction. Although many of the B&B picture me as being just to the right of Attila the Hun, I'm a bit of a closet progressive at times and the image my Brooklyn-born brain conjured up when I read the above was an endless line of fat Walmartians trading in their Hy-Higlanders for Yukon XLs while smugly telling their neighbors, "I reckon gas is gonna be cheap forevah." It's the kind of image that is thoroughly satisfying for anybody who enjoys thinking of themselves as smarter than the average American. After all, I would never be that stupid, and neither would you, right?
But what if those stupid hicks who can't wait to get rid of their hybrids are actually pretty good at doing real-world math? After all, using the Camry analogy provided by CNN, even when fuel is close to five bucks a gallon, you're still looking at five years to the breakeven point. That's longer than a lot of people keep their vehicles, so if you're going to keep your Camry for three years and you don't think fuel will swing past five or six dollars a gallon there's probably no point.
The problem with that Camry analogy, however, is the standard Camry four-cylinder gets outstanding gas mileage. Very few cars sold in this country are as good as a four-cylinder Camry at conserving fuel on the move. Are buyers really just trading in Camry Hybrids for Camrys, or are they moving to larger SUVs? That's not something we can know without access to additional data, and it's not a conclusion that's directly supported by the CNN article.
What if that is the case, however? Let's do a few moments' worth of math, based on the idea of a 15,000-mile year.
Prius (50mpg) v $2.50 = $750/year
Tahoe (16mpg) v $2.50 = $2,343/year
Prius v $4.00 = $1,200/year
Tahoe v $4.00 = $3,750/year
Prius v $6.00 = $1,800/year
Tahoe v $6.00 = $5,625/year
I don't think anybody expects gasoline to rise past six dollars a gallon in the next decade, assuming the world doesn't erupt in flames.
With cheap gas, the Prius saves you $132 a month. With four-dollar gas, it's $212.50. At six bucks, it's $318.75. This is what I consider "real money" at all three amounts, but let's put it in context by looking at how much extra car you could get if you put that same amount of money into paying a five year loan on a more expensive car.
At $2.50, you could afford to pay about seven grand more for your car if it has a Prius-Tahoe fuel advantage. At $4.00, it becomes eleven grand. At six bucks? Nearly seventeen thousand dollars. That, too, is real money. Since even the cheapest Tahoe costs twenty-two grand more than a base Prius, however, we can assume that our Prius-to-Tahoe people are ready to spend extra money to drive a Tahoe and that this additional fuel cost is just more money to burn. The math gets much more complicated when you start comparing fundamentally similar vehicles that are available in hybrid or conventional form. That's the math that killed the Tahoe Hybrid and it's the math that would kill it again were GM bold enough to bring it back.
After running about fifty more permutations of the above calculations, I've come to believe that people who trade in hybrid versions of Highlanders and Altimas for conventional versions are probably making a solid mathematical bet. And I've also come to believe that if you trade in a Prius for a Tahoe you're going to take it in the shorts no matter what fuel costs are, said shorts-taking still being less than the additional amount you're paying to drive a much more expensive vehicle in the first place. So our putative hybrid-traders are neither stupid nor bad at math, no matter how you slice it.
No, I think the lesson of the numbers is something else entirely. While looking at my fuel-economy spreadsheet, I kept thinking back to my Audi S5. Driven with some spirit, it had an 18-mpg appetite for fuel. Its supercharged replacement might fool the EPA but it doesn't do much better in the real world. Nor do all the turbo near-luxury and luxury cars the Germans want you to buy. Pretty much anything that will arouse envy in your neighbors nowadays is also unlikely to do significantly better than 20mpg in the real world of mixed-use commuting and daily operation.
That means five thousand dollars a year or more to keep the tank full as fuel costs rise. Which they will. There is no way around it. If you think gasoline will be two dollars a gallon in the year 2035, you are either a drooling moron or the super-genius who will invent cold fusion and make petrol irrelevant for all but the most committed and particular of motorists.
Five grand a year is twenty-five grand in five years. So when I ask myself, "How much will people pay for the electric version of today's luxury cars?" I now have a solid answer. And I have a second answer to a different question. The question is: "When will electric cars outsell gasoline-powered cars in the American marketplace?" The answer?
"Not as long from now as you think."
The post No Fixed Abode: Fruit Flies Of The Marketplace appeared first on The Truth About Cars.
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