A while back I wrote a post about how to measure cost vs. benefit and talked about how we often make poor choices because we don’t consider all the facts. The example I used was the idea of buying a hybrid car to save money on gas. I was simply pointing out that every person I had talked to who said they were saving money by purchasing a hybrid hadn’t actually done the math. They were actually spending a lot more. Several readers commented that they had purchased a hybrid vehicle because of the pollution impact and were perfectly content to pay more in order to have smaller environmental footprint.
For the past few weeks these comments have bothered me. How could a hybrid vehicle which is basically a regular car with an added electrical power train actually leave less of an environmental foot print than a regular car that gets only slightly lower gas mileage? You basically have to make the parts for a regular car as well as the parts for an electric car, so it seems like the manufacturing processes would produce much more waste than a regular vehicle. On top of that, if a car costs more to purchase, it seems that the price should somehow be related to the energy that went into making it. If hybrids cost more, then it means their manufacturing process should produce more pollutants.
I decided to see if these readers decision making process was based on facts or it it was the very type of decision making process I was trying to bring attention to. If I say something stupid, feel free to let me have it in the comments.
My point with this post is to challenge awareness about how much of our perception of cost vs. benefit is influenced by marketing instead of a real look at the facts. I’m not trying to convince you to buy a particular type of car. I am trying to help make you aware that all of us make at least some decisions based on irrational beliefs instead of a true analysis of cost/benefit.
If your goal is to help the environment there are some cars that will definitely give you a smaller environmental footprint. However, these cars are not hybrids.
First lets look at the idea of buying a new car. If you are really concerned about the environment, your best bet is to keep your existing car (assuming it is an average vehicle and not a cement truck) running for as long as possible. The amount of energy that goes into creating a vehicle in the first place is tremendous. Not only that, but your purchase creates another vehicle that eventually has to be recycled. With hybrids, you also create a bunch of batteries that are environmental hazards that will need to be replaced somewhere in the 100,000 mile range. (Note: Hybrids use Nickel Hydride in their batteries which isn’t nearly as harmful and is much more easily recyclable than the older Nickel Cadmium batteries.)
If your goal is helping the environment and you must get a different vehicle, a used vehicle that gets decent gas mileage will have a much smaller impact on the environment than buying a new car. In fact, if you look carefully you can buy a used vehicle that gets just as good of gas mileage as a hybrid for just a few thousand dollars. Even if you have to spend a couple thousand more to repair things, it is still a better environmental choice. I used to drive a 1994 Geo Metro. It only had three cylinders and got between 38 and 55 miles per gallon. The average for normal driving was around 47 or so. That is no worse than what my friends get on their hybrids. In fact it is better than what most of them get. If you also compare the environmental cost of creating the hybrid in the first place, with the environmental cost of buying a used Geo Metro and keeping running, the hybrid has a much larger footprint.
There was a report published where a group attempted to calculate the cost per mile for a variety of vehicles. The idea was to consider all of the energy costs associated with the vehicle over it’s entire lifetime and divide that number by the number of miles the vehicle would probably be driven. This roughly translates into the environmental impact of each vehicle because all modern methods of consuming energy involve some type of waste in the environment. The higher the total energy cost over the life of a vehicle, the higher impact it will have on the environment.
Cars like a Rolls Royce, Bentley and Maybach cost somewhere a little above $10 per mile to drive. Here is a list of the hybrid vehicles:
- Honda Insight ($2.94 per mile)
- Ford Escape Hybrid ($3.18 per mile)
- Honda Civic Hybrid ($3.24 per mile)
- Toyota Prius ($3.25 per mile)
- Honda Accord Hybrid ($3.30 per mile)
Here are the top 10 least expensive cars from a total energy consumed perspective. (Note: This is energy cost, not purchase price.):
- Scion xB ($0.48 per mile)
- Ford Escort (0.57 per mile)
- Jeep Wrangler ($0.60 per mile)
- Chevrolet Tracker ($0.69 per mile)
- Toyota Echo ($0.70 per mile)
- Saturn Ion ($0.71 per mile)
- Hyundai Elantra ($0.72 per mile)
- Dodge Neon ($0.73 per mile)
- Toyota Corolla ($0.73 per mile)
- Scion xA ($0.74 per mile)
I was pretty surprised to see Jeep Wrangler on the list. However I think it is showing up not because of its great gas mileage but because the average lifespan of a Wrangler is 207,000 miles, while the average vehicle is only driven for 178,000 miles. This is inline with my previous statement that the longer you can keep a car running the smaller your total footprint. The Hummer H3 was an interesting surprise at $1.949 per mile. That is still a pretty expensive vehicle in terms of the amount of energy used, but it still beats every one of the hybrids.
There has been some criticism of this report saying that hybrid vehicles can be driven for many more miles than what was used in the calculation (100,000 to 150,000 depending on the model). So lets assume that somehow the hybrids last twice as long as they estimated. So here is the revised list:
- Honda Insight ($1.47 per mile)
- Ford Escape Hybrid ($1.59 per mile)
- Honda Civic Hybrid ($1.62 per mile)
- Toyota Prius ($1.62 per mile)
- Honda Accord Hybrid ($1.65 per mile)
Notice that the hybrids still use twice as much energy per drivable mile than any of the top 10 vehicles. So if someone wants to choose a vehicle based on environmental considerations, buying a hybrid causes twice as much environmental damage as any one of 10 other choices that are not hybrids.
Based on this research the Scion xB (a Toyota brand) has the smallest environmental impact per mile driven. Keep in mind that this number reflects the cost of the energy to make, drive, and recycle the car. It doesn’t say anything about the cost of the vehicle in the first place. The Scion only costs $12,000 to $15,000. So the most environmentally friendly vehicle is also one of the less expensive vehicles available. This probably seems counter intuitive to people who have convinced themselves to pay an extra $7,000 for a hybrid vehicle to help the environment, but really it is just common sense. If a vehicle requires less natural resources to produce, it should cost less.
I don’t care what vehicle you drive. There are many factors that influence which vehicle is best for you. (The last vehicle we purchased was primarily based on what would be easy to repair in Mexico and had enough range to get us through the desert areas without refueling.) However, don’t let a sales person, friends, or marketing hype convince you to purchase something just because they say it is good for the environment. If you want a hybrid, by all means buy one. They are very cool little vehicles and I think the idea of using electric motors to provide high torque acceleration. Just don’t trick yourself into thinking it somehow makes you more environmentally friendly than the average person. When it comes to total environmental impact, a Suburban or Expedition is a better choice.
If you want to look at the research, you can find it here.
Thank you.. thank you… thank you!
I’ve never understood the logic of buying a brand-spanking new car as a cost-effective or environmentally friendly choice. Until truly energy-friendly cars are developed, a hybrid will remain one of the worst choices for the environment.
The only argument for buying one is that by doing so you create a more diverse market, one in which car manufacturers are willing to spend time and money researching efficient cars and manufacturing plants.
You say “If hybrids cost more, then it means their manufacturing process should produce more pollutants.” which is a HUGE assumption. Companies set prices based on many factors other than cost.
The biggest problem with the ‘study’ you are referencing isn’t just the assumptions on which their numbers are based. It also involves the ‘new’ technology vs the ‘old’ technology calculation of energy. Since hybrid cars are based off of ‘new’ technology, the cost in energy related to the research is much higher than those that are based on ‘old’ technology, like the Jeep. As modern hybrids have only been on the road for a decade, their cost related to research energy is still very high. Give it a few more years and that cost to benefit ratio will come way down.
The rest of your argument based on buying smaller cars is very true. But it’s not necessarily practical for everyone. Sometimes people want or need larger cars (or SUVs or trucks) and don’t feel like they can go out and buy a GEO. Hybrid technology allows you to buy bigger, but still pay less.
By the way, according to a recent study by Intellichoice, hybrid cars do save you money in the long run. (I’d provide the link to it on my blog, but I don’t want to be seen as spamming yours). Part of that reason is the federal tax credit, but not all of it.
@Gary – Here is what I said.
Yes this is a generalization that generally more expensive vehicles take more energy to manufacture. It is possible that auto manufacturers make the vehicles entirely by hand using no electricity or fossil fuels. This of course would drive the cost way up, without necessarily using more pollution producing energy.
My statement is a very general assumption that I still think is a correct starting point until you are presented with facts otherwise. For example, as far as I’ve seen hybrid vehicles are not being marketed as having a “green” manufacturing process. If the hybrid vehicles were more energy efficient to produce, I’m sure that it would be part of the marketing campaign.
In general the cost of materials is related to the effort required to locate, package, and ship those materials. In almost every case, this effort is somehow translated into the amount of energy expended.
If you are saying that hybrids somehow are priced in a way that is not dependent on the materials and labor/effort required to turn those materials into a car, I’d be very interested in hearing your point of view.
@Hybrid Car Review – I see your point about research costs being more distributed in older technology, but I think that still overlooks the obvious. (Either that or I’m missing something very important here.)
Consider two vehicles of the same model, but one is a hybrid and the other is a regular gas vehicle. Research costs aside, which do you requires more energy to manufacture? Better yet, which do you think produces more pollution? A regular gas vehicle has one engine. A hybrid has a gas and electric engine. I don’t see anyway that the manufacturing processes of a single engine car could produce more pollution than a car with a combustion AND electric engine.
I’m not saying this with my mind already made up. If you have any evidence to support a different conclusion please let me know. The purpose of this post was to point out that people are not good at really measuring how cost effective (or environmentally friendly) a particular decision is. As a result they rely on marketing more than anything else.
I’m the previous post (linked to from the top of the article), I gave my calculations on hybrid vehicles. If you have any calculations to suggest that they are more cost effective, please share them. If you think my calculations are in error, please point it out. I’m open minded about this, but I have yet to talk to anyone who purchased a hybrid who actually used mathematics as part of their purchase decision to decide if it was cost effective. (I looked at your website and couldn’t find the report you mentioned.)
Regarding small vehicles: I wasn’t trying to suggest that everyone go out and buy a Geo Metro. I don’t care what people drive. I’m merely pointing out that a used Geo Metro is a much more environmentally friendly decision that any hybrid vehicle on the market.
Based on everything I’ve been able to find, the person who buys a hybrid Escalade is probably doing more damage to the environment than the person who buys a normal Escalade. If you have anything to suggest otherwise, please share. I’m more than willing to be proven wrong.
(Note: There is the potential that the Escalade purchase will cause automakers to further the development of hybrid technology and one day it will be better for the environment and more cost effective as Phillip pointed out. However, it is probably just as likely that it will cause them to manufacture vehicles based on how they can be marketed rather than true cost effectiveness, so while interesting, this isn’t a good argument. It is just as likely to do damage as help.)
I’m afraid that I get HEAPS more miles per gallon than ANY of those options…
…I get off my [still] fat arse and ride to work!
You would be AMAZED at how easy it is to ride 10-20km to work… and you’d be thrilled to realise that you DON’T USE ANY PETROL AT ALL EVER.
I wish people would stop talking about the CAR options for commuting and start talking about the TRANSPORT options. (And yes, I have own a (second hand) car that sits in my driveway).
Awesome article Mark! I can’t wait to have my husband read this. I did the math on his Honda Civic Hybrid in 2003 and was shocked to see that because of the price difference in buying the more expensive car, etc. it was actually overall far more expensive to own. He gave me the “but it’s good for the environment” and I didn’t see it. I love myth busting and you busted a BIG one! Thanks! : )
ariane – don’t forget that petrol is likely to triple in price in the next 10-20 years and then basically dry up altogether within 50. (divide those numbers b 2-5 depending on your paranoia level). Don’t buy a petrol car with a 15 year payback: in 15 years petrol won’t be an option.
brent, that’s so true! and Hybrid cars still require petrol…probably bio diesel is really going to be the way to go in the future! Forget hybrid AND Hydrogen! : ) My husband has to go all over the state of NJ so biking is not an option for him. He would if he could though! (He’s an engineer – and I think the unspoken trump card in the decision to go hybrid was the “cool gadget” factor. It was like a status symbol among his friends who all wanted one.)
One thing is for sure, if petrol is completely gone in whatever number of years…and if the global warming predictions are true, we’ll have a lot worse problems to worry about than deciding what car to buy!
Ariane,
Bio diesel has the problem that it would basically require us to level the remainder of the amazon (and maybe even the rest of southern america) to feed north america’s appetite for petrol. That biodiesel doesn’t grow itself: those nutrients that make the oil don’t come *pooof* out of nowhere: it’s basically sucking the stuff straight out of the soil the same way that a kid sucks on an icypole.
Any solution that isn’t:
– move closer to work so you can walk
– move closer to work so you can ride
– work from home
…is using too much fuel, and it won’t last.
Foot-power, pedal-power and not-travelling are still the only three transport options that pass the environmental impact test.
@Mark..
Mark – you are confusing ‘costs’ with ‘price’. You’re argument may be accurate that the technologies used to produce the new line of hybrid vehicles has a relativity higher energy ‘cost’ (I don’t personally know that to be true, nor do I know that to be false).
But to assume that higher manufacturing ‘costs’ lead directly to higher ‘price’ is an incorrect assumption. Many things influence the price set for a particuliar item by it’s manufacturer. Demand being a significant one. Until very recently, in my community, there was a 12-month waiting list for the Toyota Prius. There was zero incentive for the dealer to lower his ‘price’.
Your analysis of ‘costs’ is interesting and informative – however it is only one slice of the overall pie that should be considered.
@Gary – I agree that the markup on hybrids is likely to be higher. However, it sounds like you believe that a Hybrid vehicle costs less to produce than it’s non-hybrid counterpart.
Here is a thought experiment: Take a Civic and a hybrid Civic that are otherwise identical. Give these two cars to a research organization and ask them to tell you which costs more to produce. They will take apart the entire car and look at all the individual components and how they are assembled. Can you imagine any scenario, where they would come back saying that the hybrid was less expensive to produce?
If you think the hybrid car is less expensive to produce, then we can stop here because our basic assumptions diverge and we are unlikely to be able to proceed with any meaningful discussion without actually getting the data.
If you agree that the hybrid vehicle is going to be more expensive to produce, then the next step is to ask why. There are two possible reasons. One is that it requires more complexity–more parts, more assembly, etc. The second possibility is that it is manufactured with much more expensive processes that are less efficient in terms of production, but better for the environment.
If the second option was true, I would assume that car companies would be touting that even more than the gas savings. They aren’t, so it seems reasonable to assume that the cars are more expensive because they are more complex and this complexity is the result of using a variety of components all manufactured using traditional processes.
I contend that if you take two products of the same type and one is more complex, this complexity requires more energy to produce. In hybrid cars, this complexity is not only in the assembly process but also in the types of components and materials required. This means that the components purchased from other companies must be made and shipped. It also means that there are many more processes that go into the manufacture of the batteries, electric motors, etc.
There are two reasons I’ve heard people give for buying a Hybrid vehicle:
1. They will save money in gas.
2. It is better for the environment.
Regarding the first item, I have been unable to come up with any scenario involving normal use where the total savings associated with a hybrid vehicle is greater than it’s gas only counter part. I’m interested if anyone has been able to come up with any scenario where it is less expensive.
Regarding the second, the complexity of making a hybrid vehicle is such that people should assume that the manufacturing processes will more than offset the small gas savings in terms of total environmental pollution.
If there is any evidence to suggest that the manufacture of hybrid vehicles actually produce less pollutants than their non-hybrid counterparts, I am very open to hearing about it. I’m just trying to point out that people are not doing an even basic level of cost benefit analysis in their heads before purchasing a hybrid. I have nothing against people buying hybrids, SUVs, or any other type of car. People can buy whatever they want. It appears that people don’t even do a small amount of cost benefit analysis on a purchase as large as a new vehicle. How likely is it that they will make bad decisions about little things on a daily basis? How likely is it that we are making incorrect cost benefit decisions about how we spend our time?
@Brent – I have a great concern that people will succumb to marketing hype for things like hybrid vehicles and bio-diesel and that the attention focused in there areas will cause us to overlook areas where we could truly save energy–especially things that require us to change our culture.
Better public transportation, cities designed around pedestrian traffic, and working from home are all things that could make a big difference in how we use energy. But since they require us to change the way we approach our lives, they aren’t going to be looked at seriously if everyone is busy looking at flashy marketing materials.
@Mark
I’m getting behind in my day job :)
I’m not stating that I “believe that a Hybrid vehicle costs less to produce than it’s non-hybrid counterpart”. I actually don’t know what it costs to produce a particuliar vehicle – hybrid or not.
I’m mainly concerned that you are arriving at a set of conclusions based on a series of assumptions – that because no one has showed you are false – you ‘assume’ must be true.
While it would ‘seem’ that greater complexity = greater production cost, I don’t believe it’s an absolute truth. Manufacturing on that scale includes many, many factors that influence cost. Vendor concessions, tax benifits, rebates, as well as soft items like advertising costs and media buys. (example: look at the tremendous free press that Toyota has gotten around the Prius).
Additionaly – new technologies often suffer from a variety of increase costs – but spread over the life of the product (or product line) may actually reduce over all operating expense for production.
I’m not saying you are wrong (hell – I don’t actually know), I’m just saying that you are looking at a very large, complicated issue through a very narrow lenes. When I see that I’m always skeptical of the results!
-g
Brent –
Bio Diesel may not be a perfect solution, but neither is expecting that everyone will live near where they work. It’s a great goal, just not realistic that it could happen soon enough…e.g., my husband engineers building automation and his clients are all over the place. Some bio-Diesel is made from waste, if we can harness that – I think it’s a good temporary alternative till we do find a better solution.
@mark
Manufacturing engineers don’t like to admit it, but Lean Manufacturing relies on volume, volume and volume.
Just like anything (cd players, microwaves, MP3 players) when you start to see the volume of hybrid cars go UP you’ll see the costs go DOWN. Way down. They’ll start to dedicate an entire plant in Mexico to producing the hybrid’s steering wheel. They’ll bring in a line of 4 different hybrids, and use standard parts throughout them all: one reason why hybrids are costly to manufacture at the moment is simply that they’re an entirely new thing. Soon the tooling, plants, IP etc will be amortised and they’ll be able to poor more money into development.
Cost of manufacture shouldn’t be an issue: the more hybrids we buy, the cheaper they’ll be.
@Ariane
I know. You’re right, it doesn’t work for everyone.
However, I’m convinced that 60% of people live within 10km of where they work, and 80% live within 20km. I think that the roads are mostly congested by people making relatively short, regular, solitary trips. We don’t ALL have to drop off the kids on the way to work.
You claim that decisions should be based on facts not marketing. The firm that came out with the report that Hummers were greener than Priuses was done by CNW Marketing Research and its results contradict peer-reviewed scientific journals.
Some reading:
http://www.pacinst.org/topics/integrity_of_science/case_studies/hummer_vs_prius.pdf
http://www.truedelta.com/blog/?p=48
http://www.thecarconnection.com/Auto_News/Green_Car_News/Prius_Versus_HUMMER_Exploding_the_Myth.S196.A12220.html?pg=1
“On top of that, if a car costs more to purchase, it seems that the price should somehow be related to the energy that went into making it.”
Price needn’t be related to the energy used to make a product. A price premium may be there because the firm wants to make the product exclusive.
“If you are really concerned about the environment, your best bet is to keep your existing car (assuming it is an average vehicle and not a cement truck) running for as long as possible.”
Have you considered the effect that your old car on the second hand car market will have? On aggregate, all cars are used until they break down. Even if one person sells his car after 50,000 miles then someone else will buy that on the second-hand car market and then sell it, etc.
“I use to drive a 1994 Geo Metro. It only had three cylinders and got between 38 and 55 miles per gallon. The average for normal driving was around 47 or so. That is no worse than what my friends get on their hybrids.”
A Geo Metro is a subcompact, very small lightweight car compared to the more practical and safer and Prius, which is classified as a mid-sized car. When looking at costs versus benefits some may want to look at the benefits of space or the future expected health costs if the car doesn’t have a 5-star crash test rating.
@Norakism – Thanks for the thoughtful comment and the links. Here are a couple thoughts:
Actually the car connection article says that Toyota claims the hybrid production process requires more energy than an equivalent non-hybrid vehicle, but they feel that the cost is justified by the savings over the life of the vehicle. (This tends to support the idea that they are priced higher because of higher energy costs.)
If people can go 400,000km and still have the vehicle in good working order, then they are probably right. I haven’t heard of anyone getting those types of miles out of a hybrid, so thanks for the example. It will be very interesting to see if this is typical.
The article also says that Toyota is saying that the study was misleading because it was based on existing hybrids and future ones will be more efficient to manufacture and run longer. This kind of confirms that they may not be the best vehicle to buy right now (unless you just want to help encourage automakers to keep making them).
Good article… you’ve probably realized by now that some people will never accept your conclusion no matter how thought out.
@Brent- I agree with your sentiments, however with your 60%/10km, 80%/20km guideline I believe it is more like 5%/10km and 50 km where I live. Plus for 4 months of the year when there is over a foot of snow and 5 degrees F (not C) bicycles would be useless.
Besides there’s more than enough oil if the government would let us drill for it.
I meant to say 5%/10km and 50%/20 km
“If people can go 400,000km and still have the vehicle in good working order, then they are probably right. I haven’t heard of anyone getting those types of miles out of a hybrid, so thanks for the example.”
Well, below is a story about a Prius taxi that went over 400,000km
http://www.dailytech.com/article.aspx?newsid=8046
Good article, but I am uncertain what is meant by total energy cost. Is this the cost of gasoline, plus the cost of electricy used to recharge the batteries, ie the basic costs, or does it also include the manufacturing costs for the vehicle or its components?
I understand that EPA defines estimated mileage as only the gasoline consumed and does not consider energy for recharging (or the ethanol or biodiesel as used in other fuels) when conputing mileage costs.
I would like to see basic costs for fuel only that include recharging and total bio-fuels.
@Jack – It has been a bit since I looked at the research, but I believe they were trying to account for all the energy involved in creating and transporting the parts, putting it together, and the energy used over the life of the vehicle.
Too often bloggers take the time to write quality detailed posts like this and people fly back, absorb, and move on.I want to thank you for sharing this in depth knowledge with us. Hope you can keep up your blog and not fall into the 80% who eventually abandon their blog.
All of us who have ever done business directly with clients, in any line of work, have run into a situation or two where the project at hand grew out of proportion to the income generated by the job. Sometimes, a client needs so much hand-holding that it demands all your time, so when you divide the estimate by the number of hours spent, you find that you’re making minimum wage or less.
i HOPE I DID THE RIGHT THING. I BOUGHT A YSED PRIUS TO GET THE 45 MILES PER GALLON OF GAS AT 3.00 PER GALLON I AM SAVING. I WAS ONLY GETTING 15 MILES PER GALLON ON MY PICKUP. I DID THE MATH IT WILL TAKE 50000 MILES TO BREAK EVEN. THEY I WILL START SAVING MONEY AND STILL OWN THE VEHICLE. IF GAS GOES HIGHER ILL GET IT BACK FASTER.
Did you calculate how long it would take to break even on a similar sized car that wasn’t a hybrid?