THIS POST MAY CONTAIN AFFILIATE LINKS. PLEASE SEE MY DISCLOSURES. FOR MORE INFORMATION.
If you are looking to buy a hybrid vehicle, thinking it will help you to save money, think again.
For many people wondering if hybrid vehicles are worth it, the answer is probably not.
The reality is that, in some cases, hybrid cars end up costing you more money than buying a gas-powered vehicle.
So why do so many people buy a hybrid thinking it will save them money?
It is because most people only focus on the cost of gas as a reason for buying a hybrid.
And this makes sense.
You head to the gas station each week to fill up your tank.
Depending on the price of gas, you are looking at the cost of around $50 or more to fill up every week.
We focus on solutions to avoid the gas station to relieve this pain at the pump.
The solution that pops into your mind is to buy a more fuel-efficient car, namely a hybrid.
Better fuel efficiency means fewer trips to the gas station, which means saving money.
It’s a win-win.
If only it were that simple.
The truth is gas is only one part of the picture when figuring out if a hybrid will save you money.
Here is a detailed look to help you decide if you will actually save money purchasing a hybrid.
Table of Contents
Are Hybrid Cars Worth it? The Complete Picture
Do Hybrid Cars Save You Money?
To see whether hybrid vehicles will save you money, you must look at the complete picture.
This means you need to look at the following:
- Purchase price
- Reliability/Ongoing costs
- Gas savings
- Ownership savings
- Purchase incentives
Once you look at each of these, you will get a clearer picture of whether you should buy a hybrid vehicle.
Let’s go through each of these topics in detail.
Hybrid Purchase Price
The car’s cost is the first thing you need to consider when determining if a hybrid will save you money.
Often new hybrid vehicles are more expensive than regular cars.
According to new car prices for 2023, the average price of a hybrid is $1,300 more than a conventional car.
For SUVs, a hybrid vehicle has an initial purchase price premium of $2,969 compared to a gas-powered SUV.
The reason for the higher price is that they cost more to build. The manufacturer then passes that added cost on to the buyer.
Let’s look at the cost of a 2023 Hyundai Sonata and a 2023 Toyota RAV4.
The base price for the Sonata Limited is $34,975.
The cost for the same car as a hybrid is $36,250, a difference of $1,275.
A Toyota RAV4 XLE has a manufacturer’s suggested retail price or MSRP of $29,085, and the hybrid model starts at $31,735, a difference of $2,650.
So, a hybrid isn’t saving you any money right off the bat. It costs you more money.
While the general rule is that a hybrid is more expensive, the price difference will vary depending on the cars you are comparing.
But this is only part of the picture of whether hybrids are worth it, so let’s move on to reliability.
Hybrid Car Reliability
Since I am comparing the same make and model vehicle, the reliability for both should be similar.
Therefore, there are no significant savings in choosing one over the other.
Overall, hybrid versions are just as reliable as their gas-only counterparts.
You shouldn’t expect to pay much more in routine maintenance costs.
But there are some differences.
For starters, a hybrid uses regenerative braking to help power the electric motor.
This means brake pads on hybrids tend to last longer than on conventional cars.
Again, this isn’t a huge savings, but it is worth noting.
Another difference is the cost of insurance.
Some insurance companies offer discounted rates to owners of hybrid vehicles.
This is because typical hybrid drivers aren’t known to be aggressive drivers and speed.
By being seen as a safe driver, you can get insurance discounts.
However, some insurance companies charge more to own a hybrid.
This is because they see a costlier car in terms of repair.
Not only do they have to cover the traditional internal combustion engine but also the hybrid setup too.
Your best bet is to ask your insurance carrier what the annual premium would be and then compare that to another insurance company.
Insurify is the best option for comparing auto insurance rates.
You get multiple quotes in seconds, and they will make the switch for you.
Average users save over $500 a year on car insurance!
With Insurify, you get multiple insurance quotes, fast and easy. The average savings is close to $500 a year. Click the link below to see how much money you will save with Insurify!
The other major concern with hybrid reliability is the hybrid battery.
Many think a hybrid battery replacement will cost thousands of dollars.
They also believe the battery pack will only last a certain length of time or a number of miles.
The truth is car manufacturers build hybrid car batteries to last the vehicle’s life.
And many car manufacturers offer standard warranties on hybrid batteries that last up to 10 years and cover 100,000 miles.
This is much longer than the warranty most conventional car engines have.
There are even stories of hybrid taxi cars whose batteries last more than 300,000 miles!
The truth is, replacing a hybrid battery is rare.
And when it does happen, the cost to replace one is typically $5,000 or less.
Therefore, you shouldn’t worry about needing to replace the hybrid battery as, more often than not, you will never have an issue.
And if you think replacing the battery is expensive, it is equivalent to replacing the transmission in many conventional gas-powered vehicles.
When comparing the same make and model, the reliability is similar, so this is a non-issue.
Now, if you were comparing a non-hybrid Audi and a hybrid Ford, you would dig into how long the car typically lasts and the price for repairs to see which one is a better deal.
This is because cars from different manufacturers will have different maintenance costs and reliability estimates.
But at the end of the day, maintenance for hybrids doesn’t tend to have higher costs than traditional cars.
Fuel Savings Hybrid vs. Gas
Now we get back to the cost of gas.
This is where hybrids shine, using less fuel to operate.
To determine if there are any savings here, you need to look at the cost of gas and the number of miles you drive your car.
We will assume that a gallon of gas is $3 for regular and that you drive 15,000 miles annually.
The gas-powered Sonata averages 31 miles per gallon combined, and the hybrid model averages 47 miles per gallon combined.
The formula to figure out your annual cost of gas is to take yearly miles driven multiplied by the price of a gallon of gas.
You then divide this by the average miles per gallon.
For the gas-powered Sonata, the formula is this:
15,000 (miles driven) x $3 (price of gas) = 45,000
45,000 / 31 (average mpg) = $1,452
We will spend $1,452 per year on gas with this car.
With the hybrid, the annual gas cost is $957.
In one year, the hybrid will save you $495 in gas.
Sadly, while this gives us a rough idea of the cost of filling up our gas tank, it is not 100% accurate.
This is for two reasons.
The first reason is that the price of gas fluctuates.
If gas prices rise, the hybrid’s savings will be more significant. If gas prices fall, the savings go away.
To illustrate, let’s use the same example as above but assume gas costs $4 a gallon.
The non-hybrid Sonata will cost $1,935 in annual fill-ups.
The hybrid will cost $1,277.
The hybrid saves you $658.
As gas prices increase, hybrids will save you more money on gas.
For example, when gas is $5 a gallon, the hybrid Sonata will save you roughly $824 a year in gas.
But at $2 a gallon, the savings drop to $330.
The second reason is your commute.
I took the average combined miles per gallon in my example.
If you live in the city, you will want to focus more on the city mileage rating.
If you drive primarily on highways, then focus more on the highway mileage rating.
Also, the number of miles you drive each year greatly impacts your comparison.
The more you drive, the sooner you will see savings from a hybrid.
The less you drive, the longer it will take to see meaningful savings.
Again, let’s assume fuel prices are $3 a gallon, and you drive 20,000 miles a year.
The gas version costs you $1,935 a year in gas.
The hybrid will cost you $1,277 a year in gas.
Your fuel savings from a hybrid is $659 a year.
Finally, one more thing is critical to know about hybrids and gas savings.
This is something I rarely hear anyone talk about.
When the temperature drops below 35 degrees, hybrids see a reduction in miles per gallon.
It is not uncommon to notice a 35% reduction in fuel efficiency in cold weather.
If you routinely get 41 miles per gallon, you will experience roughly 27 miles per gallon when cold weather hits.
Gasoline-powered cars will see a 20% decrease in fuel efficiency in cold weather.
This means a drop from 31 miles per gallon to 25 miles per gallon.
Therefore, if you live in cold climates, owning a hybrid may not make sense for this reason alone.
Just know that hybrids save you money when paying for gas, but this is only part of the picture.
The next thing to consider when determining if a hybrid is worth it is if there are any incentives.
This is critical as we have seen the initial costs of a hybrid tend to be higher.
There are a few levels of incentives to look at.
The first is with the dealer.
Many times dealers will offer cash back or rebates on various models.
As of this writing, there are no purchase incentives on the Sonata.
In the past, the offer was $2,000 cash back on the gas-powered Sonata. On the hybrid, the cashback was $2,500.
Since there are no cashback incentives, both versions’ prices remain the same.
The next area to look at is government tax credits.
In years past, the government offered a credit for any type of hybrid.
But this is no longer the case.
The current tax law for hybrid vehicles allows for a credit when buying an electric or plug-in hybrid vehicle.
These tax incentives are anywhere from $2,500 up to $7,500.
Here is a great reference to review.
Since the Sonata hybrid in this scenario isn’t a plug-in, there is no government tax credit.
Some states also offer a credit on your state tax return, and some utility companies offer a rebate if you buy an all-electric vehicle or plug-in.
Again, most offer these credits are on plug-in hybrids and pure electric vehicles only, but you should still check to see if you qualify before you buy.
The last area to look at is ownership savings.
This area has little to do with money and more to do with other types of savings.
- With a hybrid, you will save time by not having to run to the gas station as frequently.
- With a hybrid, you could drive in the HOV lane, escaping traffic, saving time, and avoiding stress.
- You help save the environment by having a smaller carbon footprint with a hybrid vehicle.
- Some companies allow hybrid owners special parking spots and other company perks.
You will have to determine what, if any, of these factors play a role in owning a hybrid car.
While you can’t put a monetary value on them, you will have to decide if not running to the gas station as frequently will improve your life and if that happiness is worth it.
For example, if saving 15 minutes by not going to the gas station as often is a significant win for you, is it worth paying an extra $4,000 for a car?
The Complete Hybrid Picture
Now that we know what to consider, is buying a hybrid worth it?
Let’s look at the Hyundai in detail over ten years, then look at the Toyota.
We know that the Sonata hybrid initially costs more, and there are no current incentives from the manufacturer.
There are no extra savings in the form of government hybrid tax credits either.
So out the door, buying a hybrid puts us in the hole by $1,275.
When looking at the cost of gas, we see that the hybrid will save us money.
But it is only saving us $495 each year.
When we combine all the costs of owning the Sonata, it will take until year three to finally start saving money.
This is a problem if you think you will save just by buying the vehicle.
Also, remember this is just one car model.
Let’s look at the Toyota RAV4 XLE.
The purchase premium for the hybrid is $2,650, and you save $375 a year in gas.
When we do the math, it will take eight years before you truly save buying this hybrid.
In other words, after seven years of owning the hybrid, we will have spent more money buying the hybrid than if we had just purchased the non-hybrid version instead.
Here is an annual breakdown of the cost to own over ten years.
The average car ownership length people keep their cars is around eight years.
However, this is just the average.
Many people fall on either side of that number.
If you only keep your RAV4 for five years, you will spend $775 more owning the hybrid than you would if you bought the gas-powered version.
But there are caveats here.
First, this assumes gas averages $3 per gallon, and you drive 15,000 miles annually.
What if gas prices go higher or your drive less?
Here is the breakdown for the RAV4 in each of these scenarios.
If you drive 15,000 miles annually and the price of gas jumps to $5 per gallon, your break-even period drops to where you are saving money in year five.
Finally, if gas is $3 per gallon and you drive 12,000 miles annually, you won’t start to save until year nine.
To save money buying a hybrid, you need to understand how much you drive and consider the change in fuel costs.
Also, you have to determine how much you care about the environment.
You might be OK with paying more for a hybrid knowing you are producing fewer carbon emissions when you drive.
Owning a hybrid car can make sense if these monetary and non-monetary savings are worth it for you.
But if you are only trying to save the most money possible, you might be better off buying a conventional car instead that has good gas consumption.
This is because of how long it will take you to actually begin saving money with a hybrid.
And as car manufacturers meet new fuel efficiency guidelines, gas-powered cars will get better gas mileage.
For example, the 2019 Sonata averaged 28 miles per gallon. Now it is up to 31.
This improvement in fuel economy will only continue to erode the potential savings from the fewer fill-ups you get from a hybrid.
Finally, while I am looking at the cost of new cars, know that used hybrids also command a higher resale price.
This means you might not come out ahead with a hybrid buying used, either.
So this leaves us with two unanswered questions.
- If you think a hybrid is worth it, which ones are the best value?
- What do you do if your ultimate goal is to save money, especially on gas, but you don’t think a hybrid is worth it?
Below are the answers to both of these questions.
Which Hybrids Are The Best Value?
If you run through this guide and feel that, based on your numbers and other factors, a hybrid makes sense for you, what are the best hybrid vehicles to buy?
In no particular order, here are the best hybrid models that get you the most for your money.
Best Hybrid Cars
- Hyundai Sonata Limited Hybrid
- Toyota Corolla SE Hybrid
- Honda Accord Touring Hybrid
Below is a chart showing the cost of ownership for the first year for all the models analyzed.
The most interesting note is that the Honda Accord Hybrid has a lower purchase price than the gas-powered version, allowing you to save in the first year of ownership.
Best Hybrid SUVs
- Honda CR-V Sport Hybrid AWD
- Toyota Highlander XLE Hybrid
- Kia Sorento EX Hybrid
Below is a chart showing the cost of ownership for the first year for all the models analyzed.
In both the car and SUV categories, you can see how much more expensive buying a hybrid is when comparing it to the gas-powered version of the same car.
In most cases, you are looking at between a $1,000 and $3,000 premium.
The exception is the Ford Explorer Limited Hybrid, which is nearly $6,000 more expensive.
With both charts, understand it assumes you drive 15,000 miles a year and pay $3.00 for a gallon of gas.
Based on these numbers, you can save anywhere from $150 to $625 a year in gas, with the average annual gas savings being $381.
Now that we have this information, we need to consider owning the hybrid long-term.
Below is a chart doing this.
The green numbers show how much money you are saving by purchasing a hybrid, and the red numbers show how much you lose by opting for a hybrid.
In most cases, you are breaking even by the fifth year of ownership.
If you keep your car for a long time, you will realize savings by purchasing a hybrid.
But if you want a new car every three years, a hybrid might not make sense if your goal is to reduce your car expenses.
A great example of this is the Toyota Camry Hybrid.
After five years, you are essentially breaking even, so if you change cars frequently, this isn’t a good choice.
But if you keep your car longer, the ten year savings on the Camry hybrid is a wise choice.
The interesting thing about this analysis is how the savings by switching to a hybrid has been declining.
Every year I update this post with current vehicle information.
Just two years ago, opting for the Accord Hybrid saved you close to $1,000 after five years and over $3,500 after ten years.
But because internal combustion engines are getting more efficient, fuel economy is improving, and the price gap between the different versions remains the same, the long-term savings from hybrids is shrinking.
And seeing how this analysis is factoring in 15,000 annual miles, you should be able to keep driving the Accord for much longer than ten years.
These vehicles in the chart are the best hybrid values because the purchase premium of the hybrid is low enough that you will begin to save much sooner than with most other hybrids.
I used purchase price and fuel economy versus gas-powered alternatives to determine these numbers.
I did not take into account incentives since these change all the time and would skew the results.
For example, I could have considered the current incentive on the Toyota RAV4.
This incentive would make the hybrid vehicle a decent option.
But the Toyota RAV4 Hybrid is not a good value if that incentive goes away.
I also assumed that the maintenance costs are the same between the non-hybrid and the hybrid.
Since the price of a hybrid makes or breaks any savings, it is critical to get this number as low as possible.
I wrote an article on how to save the most money buying a car that will help you with this critical step.
If you don’t want to read the entire post, make sure you use Edmunds.com to research car prices to ensure you don’t overpay.
I love using Edmunds because this site lets you get personalized price alerts and specialized car-buying experts.
You can learn more by clicking the link below.
Skip negotiating and get the best price on your next car with Edmunds. Do all your research and save the most money when you use Edmunds.
Is Buying A Toyota Prius A Smart Investment?
The Toyota Prius was the car that started the hybrid craze back in 1997.
I didn’t include this vehicle in my analysis above as I was comparing the same make and model gas vs. hybrid.
Since the Prius doesn’t have a gas-only version, I couldn’t include it there.
But here is the latest information on the 2023 Toyota Prius.
It is not a smart investment.
Let’s look at the numbers.
Below I compare the 2023 Toyota Prius XLE to the Toyota Corolla XLE Hybrid and the Honda Civic EX.
I used these cars as they are of similar size and features. I had to use the gas version of the Civic since Honda does not have a hybrid version.
After one year of ownership, the Honda Civic is the least expensive of the options.
After two years, the ownership cost of the Civic and the Corolla are the same.
From year three on, the Corolla is the best value, saving you the most.
While the Prius does cost the least in terms of gas, it only saves you $110 annually when compared to the Corolla.
Because the higher purchase price of $4,295 for the Prius is more than the Corolla, and the gas savings are so small, you would have to own the Prius for 40 years just to save money!
Hybrid Break-Even Calculator
I provided you with the analysis of many popular hybrid models, but you might want to analyze another model.
If so, how do you do it?
For starters, you get the price of the model you are looking at.
Make sure you pick the trim level and configure the car exactly as you want it.
In my analysis, I looked at the same trim level with no additional options to keep everything fair.
While configuring your vehicle, note its combined mpg rating, as you will need this information shortly.
Once you have the purchase price, you need to consider any incentives the dealer or manufacturer offers.
If you qualify for any, use them to reduce the price.
Next, it is time to estimate the cost of gas.
I used the national average at the time of this writing.
Depending on where you live, this number could be higher or lower.
Now, estimate how many miles you drive your car in a year.
Most people fall between 12,000 and 15,000 miles.
It’s time for some basic math.
Multiply the miles you drive by the cost of gas, then divide this number by the MPG.
If you estimate 15,000 driven, $4 gas, and an MPG of 30 for the gas version, your math looks like this:
15,000 x 4 = 60,000
60,000 / 30 = $2,000
Do the same thing for the hybrid to get your annual fuel cost.
The final step is to take the price and add the annual cost of gas to it.
This is your first year of ownership cost. For the second year, add the annual cost of gas to it.
Do the same thing for both versions and compare the two for ten years of ownership to find the break-even point.
Based on how long you plan to keep the vehicle will determine which version is right for you.
If your analysis points you towards the direction of the gasoline powered car, read my post on how to minimize your fuel costs with ease.
Plug In Electric Vehicles
This post about hybrid vehicles would not be complete without talking about electric cars.
While most of the data I shared above is true with a plug-in hybrid, you have to consider electricity and how that factors into your savings.
In most cases, buying an electric car is an intelligent financial choice.
This is for two reasons.
First, there is a federal tax credit of up to $7,500.
This credit can often make the price between a plug-in hybrid and a gas-powered car identical.
For example, let’s look at the Kia Sportage.
The gas-powered SX Prestige trim starts at $33,490, and the hybrid, with the same trim, starts at $36,190.
There is no SX Prestige for the electric vehicle, so I used the X-Line, which starts at $38,490.
Applying the federal credit of $7,500 brings the price down to $30,990, cheaper than either of the other models.
As for fuel costs, the gas version will cost you $1,607 annually, the hybrid $1,046 annually, and the plug-in hybrid $1,104 annually.
Here are the total costs going out ten years. I bolded the lowest price for each year.
The plug-in is the best option beginning in year two, mainly because of the lower price and the less gas you need.
My analysis uses gas at $3 per gallon, driving 15,000 miles annually, and the cost of electricity of $0.14 kWh.
Over ten years, the plug-in version saves you $7,530 over the gas version and $4,620 over the standard hybrid.
But here is the catch.
The tax credit is only for the amount of taxes you owe, up to the maximum of $7,500.
If you only owe $4,000 in taxes, then this is the maximum tax credit you can take.
Using this tax credit amount, you save $4,030 in ten years compared to the gas version and $1,120 versus the standard hybrid version.
Here are the best values when it comes to plug-in or pure electric vehicles:
- Kia Niro Plug-in
- Subaru Crosstrek Plug-in
- Chrysler Pacifica Hybrid
- Kia Sportage Plug-in
- Kia Sorrento Plug-in
When analyzing these vehicles, I suggest you use the plug-in hybrid fuel calculator found here.
It makes estimating the cost of gas and electricity easy.
And if you are looking at fully electric vehicles, this calculator can do that too.
You must estimate the cost of electricity correctly and the charger you have at home.
A 110-volt outlet will take longer to charge, costing you more than a 220-volt charger.
Frequently Asked Questions
This post takes a deep look at answering whether hybrid cars are worth it.
Because your time may be limited, I created this section for you to quickly skim through to get the answers to your biggest questions regarding hybrid vehicles.
What kinds of hybrid cars are there?
Most people lump hybrid vehicles into one single category.
But the reality is there are four different types of hybrid vehicles for sale.
Here are the different kinds you will come across.
- Parallel Hybrids: This is the most common type of hybrid vehicle you will see. Regular hybrids use a combination of an electric motor and a gasoline engine to move the vehicle.
- Mild Hybrid Cars: These are also called micro-hybrid and light hybrid. These cars have a battery to give a boost to the gas engine as well as improve fuel efficiency. Many vehicles today are sold in this configuration, but they offer little savings.
- Plug-in Hybrids: Called PHEV cars for short, these are a combination of electric vehicle and a hybrid. You must plug these vehicles into an electrical outlet to charge the electric motors. Some of these also have a gasoline engine to increase the range on longer drives.
- Series Hybrids: Also known as Range Extended Hybrids, these cars are powered by a battery pack and use gasoline to recharge the battery so the driver can continue to drive. You must plug these vehicles in as well.
Most people lump hybrid cars into one single category.
But the reality is there are 4 different types of hybrids vehicles for sale.
Are hybrids reliable?
Yes, hybrids are reliable.
Hybrids are just as reliable as conventional cars.
While there is a myth that the hybrid battery will eventually die and leave you stranded, this is very rare.
Most car manufacturers offer a warranty on the battery that is longer than the warranty on the gas engine and related powertrain.
Some car manufacturers even warranty the hybrid battery for life.
Are there any problems with hybrids?
There is only one problem with hybrids. I consider it a problem because no one talks about it.
The problem is that you will not get the advertised miles per gallon when the temperature drops below 35 degrees.
When the outside temperature is below 35 degrees, you can expect a drop of 35% because the regenerative braking system doesn’t work as efficiently.
This means if you are getting 49 miles per gallon in warmer weather, you can expect 32 miles per gallon in frigid weather.
This is still decent fuel consumption but nowhere near what many hybrid buyers expect.
What are the pros and cons of hybrid cars?
There are certain advantages and disadvantages of hybrid cars.
The pros of hybrid cars include saving money on gas, high reliability, tax credits on certain models, lower carbon dioxide emissions, and lower insurance premiums with some car insurers.
The cons of hybrid cars include higher purchase prices, the potential for battery pack replacement, an additional operating system that can be costly to repair, and being bad for the environment during the manufacturing process.
Are hybrids more expensive to insure?
This varies by insurer.
On the one hand, some insurers will give lower premiums to hybrid car owners since the typical driver does not speed and is a safe driver.
On the other hand, some insurers charge higher premiums on hybrid vehicles because more things can potentially break.
Not only do you have an internal combustion engine, but you also have an entire hybrid system that runs off a battery.
Your best option is to get an insurance quote from your current insurer before you buy a hybrid.
Then get a second quote from Insurify to ensure your insurer isn’t overcharging you.
With Insurify, you get multiple insurance quotes, fast and easy. The average savings is close to $500 a year. Click the link below to see how much money you will save with Insurify!
Does it make sense to buy a used hybrid?
It can make sense to buy a used hybrid.
When you buy used, you save as the car has already taken the initial depreciation hit.
However, you do want to understand the warranty the car has. Is there a warranty on the hybrid system? If so, is it transferable to a new owner?
Be sure to have a mechanic look over and test the battery pack since this can be an expensive repair.
What Is The Best Hybrid Crossover?
The best on the list is the Honda CRV Sport Hybrid AWD.
Not only is the purchase right so that you are saving money early on, but with the reliability of Honda, you know you won’t be servicing the vehicle very much.
What Is The Best Hybrid Hatchback?
It should be no surprise that the Toyota Prius is tops for hatchback hybrid.
It has a long history of reliability and offers many options to fit your needs exactly.
If you are looking for a smaller hatchback, consider the Chevrolet Bolt.
Should I Buy A Hybrid?
This is a personal decision.
If your main goal is to save money, you need to do the math to determine the break-even point between the higher sticker price and the lower fuel expense.
For many hybrids, this point is anywhere from five years or longer.
So if you only plan to keep the car for three years, chances are you won’t save any money.
If money isn’t a factor and you are just looking to make a smaller carbon footprint to help the environment, then you need to consider the environmental impact of getting the materials for the hybrid vs. the impact of fossil fuels.
The bottom line is there is no simple yes or no answer here.
You must decide what is most important to you and if a hybrid meets those needs by doing your own research.
- Read now: Are hybrids good for the environment
The answer to the question of are hybrids worth it is not clear cut.
Since many hybrid vehicles cost more than gas-powered ones, not all hybrids offer savings.
Sometimes, the savings at the gas pump won’t offset this higher sticker price untilfive years of ownership or longer.
While you may intend to keep your car longer, know that it isn’t always in your control.
You might get into an accident and total your car. Or you might have a major mechanical failure after the warranty expires, making it not worth repairing.
But suppose you have other reasons for wanting a hybrid, like saving the environment.
In that case, you can justify the higher initial buying price and the potential of not saving much money by owning a hybrid vehicle.
The goal of this post isn’t to be anti-hybrid.
The goal is to make you think about money over the long term.
As I noted, some great hybrids and pure electric cars out there save you money much sooner than the examples I provided.
But many others will not save you money until after many years of ownership.
And if you are smart with your driving habits, you could lower your cost of gas to the point where you are saving a substantial amount of money with a traditional vehicle.
Too often, we make money decisions based on the short term, and they cost us more in the long run.
Learn to look long-term with your money, and you will make smarter financial decisions that will positively impact your well-being.
- Read now: Learn how to save for a car fast
- Read now: Discover this simple trick to never have a car payment again
- Read now: Find out how to negotiate a car purchase to save money
I have over 15 years experience in the financial services industry and 20 years investing in the stock market. I have both my undergrad and graduate degrees in Finance, and am FINRA Series 65 licensed and have a Certificate in Financial Planning.
Visit my About Me page to learn more about me and why I am your trusted personal finance expert.
50 thoughts on “Are Hybrid Cars Worth It? The Answer Will Surprise You”
After considering a hybrid when buying my car, I decided it wasn’t work it. But it would be better for the environment,however, they cost a lot of money.
I agree. I was considering a hybrid myself and it just wasn’t worth the extra cost to me.
@Daisy: I think you hit the nail on the head. At this point, it is really more about going green than anything else. Even the mid size car with a break even point of 7 years is still more about going green. The cost and mpgs make it more about environmental issues than anything else.
I disagree – bought a 2018 Prius Prime Plug-In — Got $4500 from the Federal Government, $3000 from the state of CA, $500 from my power company, $1,500 from Toyota – with my trade-in I didn’t come out of pocket. I love using the car pool lane by myself in CA, love not polluting the air and love the car. Most of my Monday-Friday driving is within range of the plug-in (no gas) Why wouldn’t you want the Federal Government’s money??
Do you know if all those rebates are still avaliable? Toyota dealers seem
Al little fuzzy
I’ve crunched the numbers a few times and found similar results. I think we’ll get there with hybrids or electric cars at some point, but the technology hasn’t gotten us there from a pure economics perspective.
I agree. I think in time it will be more economical, but not yet. It’s like the government giving the rebates to encourage buying of ‘green’ technology or creating ‘green’ businesses. The company goes out of business because the product can’t compete in the market. You can’t make the market demand what it doesn’t want. One day it will get there, but just not yet.
I don’t have a car anymore (I moved from Ohio where I had one to New York and then San Francisco where I don’t need one). While it looks like the hybrids don’t save much money on gas, they certainly do a lot more for our environment which can be valuable in many ways. But, one can’t be expected to go broke to help the environment so it ends up being a very personal decisions. Thanks for sharing this comprehensive breakdown of the costs!
I’ve been wanting a hybrid. When I get to the point where I can afford to buy a used car that is newer than my niece, I’m definitely going to look for a used hybrid. I’m willing to guess that for used the price is more comparable.
When I went to lease my wife’s altima they tried to push the hybrid. My argument against was exactly what you presented here…why would I lease it when the cross over period is WAY past the lease date? He moved on another way to work me quickly thereafter lol
Excellent analysis. Great example of the need to really crunch the numbers before making a major purchase or a major financial decision.
Why weren’t repair costs taken in account in the article? The amount of money it takes to replace broken parts is another huge factor when deciding what type of car to buy. I can’t confirm the following statement, because I never owned a hybrid. But I heard that the repair costs are higher for a hybrid than for a regular gas powered car.
There’s other things that hybrids save on, like tolls . Green pass discounts save you a ton of money. Cash toll in new York is $13.00 green pass is like $4.25 or $4.50 that’s big savings
Interesting….I never heard of a green pass.
It is certainly better for the environment, but like you pointed out it would take way too long to break even on the cost benefit. I tend to only keep cars for 5 years or less so it doesn’t make sense.
One thing that could change this calculation would be state tax breaks on hybrids. However, it is a great illustration of the point… do the math! Think about how much you drive and how long it will take to make a difference. Well done.
Well done. Thanks for mentioning the tax breaks too.
I personally don’t think Hybrid cars are worth it. I save a lot of money on gas by driving my small Honda, but I just don’t see hybrid as an investment.
My dad did this type of analysis back when he bought his Honda Civic hybrid back in 2002 (though probably a bit less extensive). At that time, with the various tax breaks, I think he calculated his personal break-even time to be about 7-8 years as he had a long commute in stop-and-go traffic. However, one of the bigger selling points at that time was HOV lane access, and he really valued the decrease in his commute time afforded by that pass. I think hybrids/electric vehicles have become so popular now that many jurisdictions don’t offer those perks any longer (I have heard that a similar type of sticker pass on a hybrid in CA used to raise the resale value of the car by thousands) but they were great while they were available.
I didn’t think about the HOV lane thanks for pointing that out.
If I were to buy a hybrid, I’d surely go for the lifetime warranty on the battery, it would be really annoying to have to replace it. They are quite a new technology and I think for now I’ll pass until it really proves to be worth the extra money.
If the big cost difference is the initial upcharge for the hybrid feature, maybe when you consider dealers that are discounting hybrids tremendously, the savings could be realized. I was at a Ford dealer the other day and they were selling a new 2013 C Max for $22,000 before any haggling. This was $4,100 off list. They were trying to get rid of the car. I bet I could have bought it for less than $20,000. Also, if you find a used hybrid, there may be savings. The question would be if hybrids depreciate faster or slower than gasoline powered cars.
Great point. If you can get a hybrid for a great price, you can come out ahead in the long run. For many of the cars, the higher sticker price is what makes a hybrid a bad choice in many circumstances.
My son-in-law has owned two Tesla’s. He loves the car but stresses that he is under no illusion that he can save on driving by driving a Tesla. I have driven it several times and I have never gotten tired of the acceleration ( 0-60 in 3.3 seconds), handling, and pleasure of the technology.
I recently picked up and extremely nice 2012 Chevrolet Volt. Even with the over 1/2 off the original price I’m sure that breaking even with the current $1.75 gasoline is going to be hard to achieve. It’s neat, though, and I’m pleased with the car.
Another incentive to get a hybrid or electric car in New York is to get a Clean Pass which is designed to encourage the purchase and use of vehicles that are very fuel efficient and that significantly reduce vehicle exhaust emissions. The program is a joint effort by the NYS Department of Transportation, the NYS Department of Environmental Conservation, and the NYS DMV. The main benefit is allowing all qualified drivers to drive in a carpool lane without any passengers in the vehicle.
he CPV program is a pilot program t
I think with continuous increase in price of gasoline, more and more people are turning towards hybrid cars. The result is that these green vehicles have started commanding higher than average resale values. So, in case you are not satisfied with your vehicle, you can always sell it at a premium price to buyers looking for it.
I believe, hybrid cars are all worth it! They may be more expensive than the conventional cars but come to think of it, green car owners get to save more. With the gas price continuing to rise, what we need are vehicles that can run even without gas. They are even safer to drive.
Thanks for the excellent cost/benefit analysis. In my case spending less time and less stops at the gas station would be a huge benefit. That should be given a monetary value and factored in as well. Also it seems to me that, at least theoretically, there would be less depreciation with a hybrid and that that would militate against the loss caused by selling before the break even point.
It appears that hybrid vehicles are still not an affordable purchase for the average consumer.
It really depends on the car you are looking at and doing the math. It can work out. For example, the Lexus CT200h will save you money faster than the example I gave. Additionally, if you go with a plug-in hybrid or full electric vehicle, you could come out ahead much sooner thanks to any government and state tax credits.
But the bottom line is that you need to make sure the premium you are paying for a hybrid is as small as possible versus the gas powered version. That will be the ultimate factor in saving money.
I think, first of all we have to consider, ” do we really need that huge volume cars/SUV/pickup?” Most of the time, we use our car by ourself. There is no second passenger! We are not carrying load.
Also the technology becames our cars’ engines more smaller and powerful. Why we do not use a car, having one size smaller that we have now. Do we really need the power that we got our car now?
More volume for engine, more fuel consumption.
If battery staroge technology becomes one step further, there will be no need hybrid vehicles.
Worth noting that this article only compares the lowest cost base models, the SE. If you compare the Limited models in both the hybrid and the non-hybrid, the difference is only $1,700 at this time. This is significantly less than the $3,500 quoted in the article and could lower the break-even time. But of course you are paying more for the car overall but some people may want the upgraded features of leather seats and power seats plus much more.
Great point Curtis. As always, you need to run the numbers in your situation to see what the break-even time is to ensure you make the best possible decision.
I tend to keep my car for 12-15 years.
My concern would be the replacement cost of the battery, which likely would require replacement at some point.
Factor in battery plus labor and the hybrid gas savings all those years, will have been eliminated.
Or you sell the car at that point and start over. In which case, a gas powered vehicle makes more sense.
We’ll see. Gas is more expensive in Ontario, Canada so there’s more fuel savings to be had.
Definitely too many unknown variables…
Environmental costs to manufacture and dispose or recondition battery, would be interesting to see these numbers. Also would be interesting to see numbers over 15yr cycle
Money is not the issue. Our survival is. Do whatever you can to lessen your carbon footprint. Money will have absolutely no meaning if we don’t stop Climate Change.
Well said Jan!
My husband and I just bought a hybrid and we feel good about this purchase. We believe the benefit to our environment is worth the extra cost on sticker price. In the long run, we all benefit.
Just came back from a trip in my 2012 Camry hybrid. My MPG was just over 40 in a midsize car. One point not mentioned, the performance in a hybrid car is fantastic. My Camry hybrid is the fastest car I have ever owned.
Buyers forget that electric or electric/gas outperform everytime. My hybrid is now seven years old and accept for maintenance, it has never seen a garage.
But another consideration- would it be better buying a new hybrid than keeping your older but reliable used car.
My 16 year old Accord with only 80,000 miles which has been very reliable and very cheap to maintain as I do much servicing myself has cost me only $300 per year exclusive of depreciation.
My car is worth $5,000 so depreciation is only about $750 this year.
A new Accord Hybrid would cost me over $46,000 and depreciation for year of purchase would be 15% of $46,000 or $6,900 using the same rate of depreciation.
So in just the first year I would save 6,900 – 750 = 6,150 by keepng my old Accord – and a similar amount in succeeding years simply because cars depreciate far in excess of what they should.
So how much gas would I save by driving the hybrid – Clearly far less than the depreciation I would save by keeing my old car.
Yes I may incur higher repair costs but considering I only have 80,000 miles on my old Accord and it is extremely unlikely I will incur repair costs any where near the $6,150 saving just on depreciation it is far better to just keep my old reliable Accord than to purchase a new Accord hybrid.
It is almost always better to keep the car you have versus buying a new one. Once you get to the point where your car is breaking down and costing a lot to repair on a regular basis, then you should consider replacing it. But with your Accord, you should be able to go to 200,000 assuming you are keeping up with recommended maintenance.
I don’t know where you are getting your figures but I just bought an Accord Hybrid in the Touring model and with tax, licensing and fees it cost $37k out the door. I’m in Southern CA if it helps.
We have had our 2018 Honda Clarity plug in hybrid for a year. Love it! Quick off the line, cheap to buy, cheap to operate, almost no maintenance cost. We saved $12,500 in combined federal and Colorado tax credits. We save about $80 net per month on fuel even when we include the cost of charging each night = $1,000 per year fuel savings. Maintenance costs less (one oil change per year). We will expect to save $22,000 over and equivalent Honda Accord in life cycle costs in first ten years. Plus it is greener and faster off the line. Great car!
Is there a reason that you listed the Camry LE as one of the best hybrids for the money, but it’s not in your comparison charts like the others? The Camry is the one I was most interested in seeing in that chart. I need to get a new car and have been thinking about a gas only 2019 or 2020 Camry. The only thing that’s been holding me back is they’ve had complaints about the eight-speed automatic transmission and sluggish acceleration, which I also noticed when I test drove one. However, it is still recommended by Consumer Report and still rated highly as to reliability on other sites. Someone said I should look at a Camry Hybrid because of my concerns about acceleration with the gas models, but, like your article states, I said it doesn’t make sense because I don’t drive a lot of miles anymore. In fact, the miles I drive are ridiculously low. The hybrid seems to get high reliability ratings, including on http://www.carcomplaints.com. Reliability and longevity is the most important thing to me.
Toyota’s are known for their long term reliability, so either the gas powered version or the hybrid is is a good choice based solely on reliability. But the hybrid costs close to $4,000 more out the door and if I estimate 15,000 miles driven at $3.50 per gallon of gas, you are saving between $350-$850 a year. This means you would need to own the hybrid version for a little more than 6 years just to break even.
Have you looked at a Kia Optima? They have come a long way with regards to reliability and offer 10 year/100,000 miles warranties on their cars.
Thanks for the great feedback and article. I haven’t considered an Optima for several reasons, including it’s only rated 3 of 5 on JD Power.
I honestly never even considered a Korean car until I recently briefly thought about a Kia Soul because it’s the only other 2019 model that I could find that doesn’t have a CVT transmission (besides Mazda). It appears to have great reliability, and people seem to like them, including seniors.
However, I always end up back with the Camry because of it’s proven reliability AND longevity. My current car is 20 1/2 years old, and I want to keep my next one at least that long. I’m concerned about all the complaints with new cars today due to these newer transmissions that are evidently not as reliable.
The redesigned Camry has only been out since 2018 so I might try to wait until the 2020’s come out with the hope that they will have fixed some of the redesign and acceleration issues. The thing that also bugs me about the Camry is I don’t think I can get leather without a sunroof, and I definitely don’t want a sunroof! The hybrid Camry makes even less sense for me than most people because I don’t currently drive even close to 15,000 miles a year and probably never will again. I bought my current car in 1999, and it only has 79,000 miles on it.
Instead of buying a brand new car, why not look at a used 2016 or 2017 Camry with low miles? Maybe even a 2015? I’m not sure which one’s have an older version of transmission but that might be an option as well.
Thanks for the suggestion. Other people have also suggested that I buy a certified pre-owned, but I’ve always purchased new cars because that’s what I prefer. I never realized when I started looking for a new car that it would be such a challenge this time around.
One factor to consider regarding hybrids is resale value. That is to say, if you buy a new hybrid and keep it ten years, would not the cost of an impending battery replacement running thousands of dollars have a big impact upon what you could get for the car ? After ten years of use and 120,000 miles or so, a small gas powered Toyota or Honda or some such has a great deal of life left with no such anticipated expense, which must have a big impact for the savvy used car buyer .
I am currently shopping for a new car. I am looking at the 2020 conventional and hybrid versions of the toyota rav 4 and honda crv. So far, 2 people (one is my mechanic) have suggested I not purchase a hybrid based on initial cost, gas mileage being more than claimed, and battery replacement being needed at 5-7 years. It’s all so very confusing, unfortunately. At this point, I’m leaning towards the conventional rav 4 or crv. I have also been looking at the Subaru Forester.
There definitely is a higher upfront cost to a hybrid. But I’ve seen most hybrids getting the claimed MPG. As for battery replacement, I’m sure there are some that need batteries replaced in 5-7 but most car manufacturers claim 10 years of battery life. Some even include a battery warranty with the purchase of the car. For example, Toyota now offers a 10 year/150,000 mile warranty on the battery. This isn’t like an extended warranty, it comes with the car.
Comments are closed.