How hybrid electric vehicles can pay off

November 06, 2012 // By Dr. Edward Lovelace
Dr. Edward Lovelace of XL Hybrids examines the energy conumption pay off of hybrid electric vehicles.

This past year has seen the U.S. surpass 388,000 alternative vehicles sold representing 3 percent of new car sales and average market growth of 35 percent per year since 2001. Back then, the only hybrid electric vehicle (HEV) with annual sales over 10,000 was the Toyota Prius, which was first introduced in 1997 1.  While other alternatives have emerged, including plug-in hybrids (PHEV) and the extended range electric vehicle (EREV) subset, full electrics (EVs), hydraulic hybrids in the commercial vehicle sector, and other alternative fuel combustion engine vehicles; hybrids remain the predominant alternative option with the Prius selling more than100,000 vehicles per year over the last seven years, reaching a cumulative total of more than1,000,000 vehicles in 2011. 2

As in previous years, several news reports have questioned and examined the value and future of HEVs. Now, as the U.S. enters the second decade of HEV sales, the question is still examined:

“Why do people buy a hybrid vehicle?”

According to the New York Times research compiled by TrueCars.com, only two HEV models (and one diesel) have a fuel and maintenance savings payback for the incremental cost of the alternative powertrain technologies within a five- to ten-year period at current and recent historical high gas prices. 3  Furthermore, payback is dependent on incentives including the federal tax credit up to $7,500.

These analyses are simplified by assumptions about the conventional vehicle purchase choice that consumers are comparing, which is often not the same vehicle in a non-hybridized option (e.g. your purchase choice may not be between a Chevy Cruze and Volt). But there is some evidence that with the current offerings, the market will begin to level off as early adopters, technology enthusiasts, green purchasers, and those with more complex return on investment assumptions become saturated as indicated by recent market studies suggesting only 35 percent of HEV owners are purchasing another HEV for their next vehicle. 4

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