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In Depth: What's really the most cost effective hybrid you can buy?

One of the major hurdles cost-sensitive buyers report when plunking down the cash for a hybrid is trying to calculate the amount of time it takes to pay off the additional cost over an equivalent non-hybrid model. With so many factors to consider, it's not easy to find out how to save the most green - while driving a green car.

A recent report compiled by the San Francisco Chronicle did its best to answer the dilemma, and while we appreciate the paper's efforts in posing and attempting to answer the question, we saw some flaws to their methodology.

For this report, the Leftlane team decided to concentrate our efforts only on less expensive four-door hybrid sedans. If you, our readers, are interested, we'll put together a similar comparison with hybrid pickups and SUVs in the future. Just indicate below in the comments section what you'd like to see.

Picking an equivalent model
Since there are no non-hybrid versions of two of the most popular hybrids - the ubiquitous Toyota Prius and the Honda Insight - it would be natural to choose the next closest thing.

Oddly, the report selected the bargain bin Toyota Yaris as a Prius alternative. To us, this seemed illogical because not only is the Yaris two feet shorter than the Prius, it is positioned as an entry-level model in Toyota's lineup and thus lacks many of the creature comforts Prius buyers no doubt enjoy. Instead, we chose the Toyota Matrix, which is sized and optioned out about like the Prius.

We do agree with their selection of the Honda Fit as an Insight alternative.

The pricing game
We also threw up a red flag when we saw that the Chronicle quoted a "more than $6,000 discrepancy" between the price of an Altima and an Altima Hybrid - something seemed amiss there.

To make our comparison as accurate as possible, we carefully loaded a non-hybrid, automatic transmission version of each car with as many options as we could in order to equal a feature content as close to identical as a low-option hybrid. Most automakers' hybrid versions come loaded with a few extra goodies than their base counterparts - like alloy wheels and extra convenience upgrades. Those are easy to more or less duplicate on a non-hybrid.

With the Fusion, we found too big of a feature gap between the mid-range SE or upmarket SEL and the base Hybrid, so we spec'd a leather-equipped Hybrid against the leather-equipped SEL. The base Hybrid commanded a nearly $5,000 premium over the SE, but it also added a Sony audio system, leather-wrapped steering wheel, alloy wheels automatic climate control and a few other options that were otherwise unavailable on the SE. That was too much to overlook.

Throwing in an outlier
To car nuts, Hybrids are about as sporty as Kim Kardashian is modest, so we thought we'd include the default enthusiast choice for eco-minded drivers: The Volkswagen Jetta TDI. Enthusiasts have long cried for efficient, torquey diesels to return to North America, and so far only Volkswagen has obliged in mass quantities.

The Jetta TDI delivers one of the best highway fuel economy figures on the market, but it requires pricier diesel fuel and, unlike hybrids, it doesn't perform as well in city driving.

Compiling the data
With our car selections chosen and carefully priced out on each manufacturer's websites, we set out to calculate how long it would take to pay off the extra cost of a hybrid - or a diesel - low or mid-price sedan.

Then we found the EPA's combined fuel economy figures for each model. To simplify things, we looked only at 50-state, non-flexible fuel models - those the average American would be most likely to buy.

From there, we found the EPA's Annual Fuel Cost, which is based on 15,000 miles of 45 percent city driving and 55 percent highway driving at an average fuel cost of $2.85 for regular unleaded and $3.08 for diesel.

Ignoring the unpredictability of fluctuating pump prices, we then calculated how long it would take to make up the initial MSRP difference.

Limitations
Even our detailed MSRP comparison isn't entirely accurate since the hybrid models generally feature a handful of exclusive items over their gas-only counterparts, like advanced trip computers, aerodynamic body kits and ultra light alloy wheels, not to mention a convenience item here and there. Still, we're convinced that our as-optioned 2010 models are as close to one another as we could find in order to calculate the true MSRP premium for a hybrid.

And, of course, we're only looking at hybrid ownership from one angle. Our numbers don't factor in maintenance, resale value, manufacturer incentives or government credits as our figures are simply intended to give you a broad picture of how long it takes to chip away at the additional cost of entry.

Those government credits alone, which can vary from state-to-state, can erase a significant portion of the MSRP difference and thus would greatly change our numbers. Currently, among hybrids, only the Nissan Altima Hybrid qualifies for a $2,350 federal credit and the Jetta TDI qualifies for a $1,300 alternative fuel credit. Note, however, that the Altima Hybrid is only available in a handful of states on either coast.

But we think we've painted the best picture we can.

The data
Ford Fusion SEL with Package 301A, Decklid spoiler, Reverse sensing system, $26,865
Average MPG: 25
Annual Fuel Cost: $1,710
Ford Fusion Hybrid with Package 501A, Leather trim, $31,460
Average MPG: 39
Annual Fuel Cost: $1,094
MSRP Difference: $4,595
Annual Fuel Cost Difference: $616
Years to Pay Off Hybrid: 7.5

Honda Civic LX-S, $19,005
Average MPG: 29
Annual Fuel Cost: $1,475
Honda Civic Hybrid, $24,510
Average MPG: 42
Annual Fuel Cost: $1,017
MSRP Difference: $5,505
Annual Fuel Cost Difference: $458
Years to Pay Off Hybrid: 12

Honda Fit with Keyless entry, $16,560
Average MPG: 31
Annual Fuel Cost: $1,381
Honda Insight LX, $20,510
Average MPG: 41
Annual Fuel Cost: $1,043
MSRP Difference: $3,950
Annual Fuel Cost Difference: $338
Years to Pay Off Hybrid: 11.7

Mercury Milan Premier with Package 202A, $26,720
Average MPG: 25
Annual Fuel Cost: $1,710
Mercury Milan Hybrid with Package 300A, $31,980
Average MPG: 39
Annual Fuel Cost: $1,094
MSRP Difference: $5,260
Annual Fuel Cost Difference: $616
Years to Pay Off Hybrid: 8.5

Nissan Altima 2.5S with splash guards, $22,715
Average MPG: 27
Annual Fuel Cost: $1,582
Nissan Altima Hybrid, $26,780
Average MPG: 34
Annual Fuel Cost: $1,257
MSRP Difference: $4,065
Annual Fuel Cost Difference: $325
Years to Pay Off Hybrid: 12.5

Toyota Camry LE with Extra Value Package, $23,035
Average MPG: 26
Annual Fuel Cost: $1,646
Toyota Camry Hybrid, $27,657
Average MPG: 34
Annual Fuel Cost: $1,257
MSRP Difference: $4,640
Annual Fuel Cost Difference: $389
Years to Pay Off Hybrid: 11.9

Toyota Matrix 1.8 with Power Package III, $20,210
Average MPG: 28
Annual Fuel Cost: $1,526
Toyota Prius II, $23,550
Average MPG: 50
Annual Fuel Cost: $855
MSRP Difference: $3,340
Annual Fuel Cost Difference: $671
Years to Pay Off Hybrid: 5

Volkswagen Jetta SE, $22,400
Average MPG: 25
Annual Fuel Cost: $1,710
Volkswagen Jetta TDI with Moonroof, $25,680
Average MPG: 34
Annual Fuel Cost: $1,358
MSRP Difference: $3,280
Annual Fuel Cost Difference:$352
Years to Pay Off Diesel: 9.3

The results
According to our research, it will only take 5 years - actually about 4.98 - to make up the difference between the MSRP of a Toyota Matrix 1.8 and a Toyota Prius. That's a far cry from the report's numbers, which indicated that it would take 20 years for a Prius to pay out over a Yaris. The report argues that a cost-conscious consumer would select a Yaris to compare to a Prius, but if that was the case, why wouldn't a cost-conscious consumer who wanted a Ford select a Focus?

And, unfortunately for enthusiasts, the Jetta TDI was hampered by both the additional cost of diesel and the relatively hefty cost of entry over the standard Jetta.

Still, as we've said, there's a lot more to factor in when it comes to choosing a hybrid over a standard gasoline-powered model.

References
1.'7 Hybrid Cars...' view
2.'IRS Hybrid Incentive Table...' view



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