Gas and insurance prices keep going up. One way to combat the rising costs of driving is to get a hybrid car that is both cheaper on gas and insurance. With that we ask, is buying a hybrid car worth it?
Toyota is set to launch a hybrid car that runs on biofuel (ethanol, AKA corn) to lower emissions and altogether eliminate the need for fossil fuel-based gasoline.
Canada lags behind. Despite sales of hybrid and electric cars doubling from 2017 to 2018 within our country, hybrids and electrics only represent 1.1% of the market share of new cars sold.
What is a hybrid car?
A hybrid car takes its power from a hybrid of the gas tank and a battery. The battery is charged from regenerative braking.
Hybrid vs. Electric
In this article, we’re looking at hybrids, and not plug-in hybrid electric vehicles (PHEVs). The reason is that full-electric cars or PHEVs need a charging station for power which would increase your costs if you need one in your garage.
While in Ontario we get our power from hydro and nuclear or “clean energy,” whereas, in China, they’re building a coal-powered plant a week to deliver electricity to their people and their cars. If the power plant isn’t “green,” is the car that draws its power from it really clean? To understand the impact of hybrid cars and the environment, you need to understand the bigger picture. Climate change is not isolated to any country, it’s a global issue that impacts us all.
Hybrids and the time to recoup – the math
I took some vehicles and compared annual fuel and insurance costs to see if we could make a case to buy the hybrid version of the same automobile. Then, I used our car insurance calculator which allows you to compare car insurance quotes from multiple providers in minutes to see how insurance helps you get closer to buying the hybrid.
I used NRCan’s online fuel consumption ratings search tool to give me the average fuel consumption per year. It’s based on 20,000 km/year, 55% of which is driven inside city limits, and it assumes you’re filling up with regular gas at $1.02 per litre. The gas pricing NRCan uses is from Edmonton, for that reason, for insurance, we’re comparing Alberta car insurance quotes.
Then, to figure out if a hybrid is worth it, I used a simple formula. I take the difference in MSRP pricing and divide it by the difference in fuel and insurance savings to understand when the hybrid breaks even and starts to save you money.
Is buying a hybrid car worth it?
Below we compare the hybrid and non-hybrid version of the same vehicles. Let’s find out the time it takes to recoup and better understand whether or not buying a hybrid is worth the extra cost.
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Toyota Rav4 Vs. Rav4 Hybrid
Time to recoup 2.6 years
It costs $1,400 more to buy the Rav4 hybrid, but it’s also $469 cheaper in gas, and $75 cheaper in insurance every year. In other words, in 2.6 years the initial higher cost of the Rav4 hybrid will be worth it. After 2.6 years, you’ll start saving even more.
Honda Accord vs. Honda Accord Hybrid
Time to recoup: 6.5 years
The Honda Accord Touring hybrid is $4,000 more expensive to buy. However, the hybrid costs $530 less per year in fuel, and $84 less in insurance for a total savings of $614. When doing the math, it will take 6-½ years to recoup and start saving money. A little caveat though, if you’re in Toronto or Vancouver where gas can be $0.30/L more expensive, your annual savings are $670 and you’ll recoup your costs in under 6 years.
Hyundai Sonata vs. Hyundai Sonata Hybrid
Time to recoup: 8.75
The Sonata Hybrid is $4,850 more expensive than its non-hybrid self. However, the gas and insurance per year only add up to a savings of $554. The length of time to recoup the Hyundai Sonata vs. Hyundai Sonata Hybrid is 8-¾ years. With this in mind, it might make sense to take the non-hybrid version, unless you want to make the call based on the environmental impact alone.
Kia Optima vs. Kia Optima Hybrid
Time to Recoup: 3.5 years
The Optima is our first car where the hybrid was more expensive to insure. However, the price between the hybrid and the non-hybrid is relatively inexpensive at $1,500. The gas difference is $553 in favour of the hybrid, but we need to subtract the $120 per year for added insurance costs giving us $433. Add it all up, and the time it takes to recoup the costs on the Kia Optima Hybrid is 3-½ years.
What about repairs and maintenance?
The biggest concern for several buyers is the cost to maintain the hybrid. A typical battery replacement on a hybrid is around $2,000. However, you will only need to replace the battery as you approach 300,000 kilometres, or, based on this case study, about 15 years. A lot of other things could go wrong before the battery gives up.
Also, a hybrid car typically comes with a longer warranty. Reading through the lines, it’s probably because they will last longer than its non-hybrid counterpart.
Is buying a hybrid car worth it? Well, it depends. Sometimes the cost to recoup is absolutely worth the higher investment. Again, our test was based on 20,000km of driving every year and at $1.02 in gas pricing. If you drive more than that, or if gas prices in your area are more expensive, the cost to recoup on a hybrid is much faster. Finally, if you care about the environment and want to take a step in the right direction, there’s another reason to go hybrid in your car buying.