The high upfront cost keeps many consumers away from making the change to a hybrid car, no matter how much they read about how hybrids offer a great return on investment. Truthfully, pretty much all green technology suffers from this problem. How do you get over the sticker shock in order to consider how much money you’ll save in the long run? According to Edmunds, hybrids can cost up to 20 percent more than the average gas-powered automobile, although the real difference in price depends on the make and model. But along with the higher price, the Prius and vehicles like it get 20-35 percent better gas mileage than their conventional counterparts. That’s only the tip of the iceberg when it comes ways a green car can end up paying for itself, especially if you keep it around for a few years.
1. Gas Money
It’s all well and good to know you’re getting better gas mileage, but what does that really mean for the cost of fuel? The U.S. Department of Energy actually offers a calculation system on their website that will help you figure out how much money you will save on gas per year and over the entire time you expect to own your car. Depending on your choice of hybrid, the results may vary, but they state unequivocally that a car that gets 30mpg costs around $900 less in gas per year than one that gets 20mpg. If your Prius was about $5,000 more than a regular car, you’ll get that money back from gas prices alone in a little over 5 years.
2. Tax Credits
As of 2013, the federal government is still handing out large credits to hybrid owners, which average between $2,500 to $7,500 depending on the size of the hybrid’s battery pack. If you’re the car’s first owner and you didn’t lease your vehicle, your tax credit will probably pay most or all of the difference in price between a hybrid and a regular car. The federal benefits to owning and operating a hybrid are numerous, and you’ll likely need an accountant or other tax preparer to help you get the maximum amount you can. Many state governments offer additional incentives on top of the federal ones, as well.
3. Retail and Employer Incentives
n increasingly large number of companies, including Google and Bank of America, are offering to pay a portion of the cost of a hybrid vehicle for their workers. Other places, including colleges and universities, offer discounted or free parking for staff and students who drive hybrids. Many regional and local incentives are available for hybrid drivers in almost every state, including free hotel parking, purchase rebates, and reduced registration fees. It’s worth it to look into what’s available for you to offset the costs of your hybrid where you live and work. Most corporations and local governments have a vested interest in conserving resources and cutting energy costs, and if you’re helping them meet their goals, they are surprisingly good about giving back to the consumer.
4. Auto Insurance Discounts
Most of the major car insurance companies offer a discount on policy rates to hybrid drivers. Not only do these drivers travel fewer miles overall, they’re also statistically safer and usually owned by drivers with a good record. The major companies offer 5-10 percent off their premiums, which can definitely add up over a year. But it’s important to stay safe from accidents – collision claims are nearly $200 more for hybrids because the parts are harder to find, and until that changes, it’s still a drawback if something goes wrong. Still, hybrid parts are often designed to last much longer than conventional automobile engines. And smaller insurance companies may be able to offer you a more comprehensive discount.
5. Resale Value
Though the resale price for your hybrid will depend on its age and model, hybrids are consistently worth more than their gas-fueled counterparts when it comes time to sell them used. Hybrid owners typically make back the purchase premium on their new hybrids through tax incentives and gas savings, so selling a used hybrid can yield a pretty significant profit. In fact, Kelley Bluebook regularly reports that top-selling hybrids like the Ford Fusion retain over nearly 45 percent of their value 60 months after purchase. That’s true even as the overall price of hybrids drops and the technology becomes increasingly mainstream.
So it’s true that the initial price of a hybrid is a little higher than average, even though they are falling all the time. But it’s also true that an investment in a green vehicle will pay off in all kinds of ways, and if you can justify the down payment, you might be grateful you did in a few years time. Sometimes doing your part for the environment just doesn’t seem practical on the surface, but sometimes – more often than ever before, actually – it’s what makes the most sense.