WSJ article on hybrids

JackDodge · 12-25-2005, 09:33 AM

Pretty good article on hybrids. It comes from the WSJ but was reprinted by my local newspaper. There's a neat image too but I just noticed that I can't put attachments on this post. Perhaps I can post the entire thing in pdf format on a reply post.

Drive Buy: Hybrids Now Are a Better Deal
BY KELLY K. SPORS

Most people buy hybrid cars because they want to save the environment. Soon the cars may save you money, too.
Come Jan. 1, most consumers who buy new hybrid gasoline-electric automobiles will be eligible for tax credits that may save as much as $3,400 in income tax. The new credits, coupled with the introduction of several new hybrid models, are likely to jumpstart hybrid sales in the new year. “We’re expecting to see hybrids fly off lots a lot faster now,” says Kateri Callahan, president of the Alliance to Save Energy, a Washington, D.C., nonprofit advocacy group.
Roughly 400,000 hybrids have been sold in the U.S. since their introduction six years ago, and they currently make up about 1% of total U.S. vehicle sales. But forecasters project hybrids could reach as much as 5% of sales by 2010.
Hybrids generally sell for between $2,000 and $5,000 more than comparable gasoline-engine vehicles. It typically takes years to recoup that higher price through savings from buying less gas. But the new credits will significantly lower the payback time on some hybrids, experts say, and certain models could even prove less costly to own over time than the comparable standard autos.
Here’s a look at the economics of buying a hybrid:
Purchase Price
Car shoppers comparing the price of a hybrid to a standard vehicle need to consider the appropriate model to look at. The 2006 Honda Civic hybrid, with a $21,850 sticker price, is frequently considered most like the conventional 2006 Honda Civic EX sedan, a fully loaded Civic that retails for $19,060–or $2,790 less.
Other hybrids, such as the Toyota Prius, the top-selling hybrid so far, are harder to match up. Most observers say the features of the 2006 Prius (suggested retail: $21,725) fall somewhere between those of a Toyota Camry, which starts at about $18,500, and a Toyota Corolla, which starts at around $14,000.
Some hybrids occasionally sell above sticker price, because of high demand.
Tax Credits
The new tax credits replace a $2,000 tax deduction on hybrids that’s been available in recent years. Credits are usually far more lucrative than deductions, because credits reduce your tax bill dollar for dollar, while deductions reduce your taxable income. For someone in the top 35% tax bracket, the old $2,000 deduction produced a $700 tax savings.
The Internal Revenue Service has yet to release final guidance on the credits, but energy-conservation advocacy groups estimate the credits will range from $250 to $3,400, based on fuel economy and vehicle weight.
To see a list of the estimated tax credits on current and expected hybrid car models, check out www.aceee.org/transportation/ hybtaxcred.htm online. Of 21 hybrids listed, 14 have estimated credits in excess of $1,000. Three probably won’t be eligible for credits. (At least one state, Colorado, has a state tax credit, too.)
Fuel Savings
Hybrids use less fuel because they switch between an electric motor and a gasoline engine. Some can go 60 miles on a gallon of gasoline. That greater fuel efficiency has become more valuable as oil prices have risen. And the combination of the gasoline savings and the new tax credits will allow buyers to recoup the hybrids’ higher price tags much sooner than in the past.
With a $3,150 estimated tax credit, a buyer of a Toyota Prius should recoup the extra cost compared to a Camry in just under a year—or in about 6.7 years compared to a Corolla, according to the Alliance to Save Energy.
One caveat: “Just because it’s a hybrid doesn’t mean you’re going to get 50 miles per gallon,” says David Garman, U.S. undersecretary of energy. Some auto makers have adopted a hybrid design primarily to enhance a vehicle’s power and handling. For hybrids that are highly fuel efficient, Mr. Garman says,“obviously, the more you drive, the more you’ll save.”
Repairs and Maintenance
One tricky question about hybrids is how their maintenance and repair costs will compare to conventional vehicles over time. Since most hybrids are relatively new, it’s difficult to gauge how well they’ll hold up in old age.
Most hybrids come with manufacturers’ warranties of up to three years or 36,000 miles, whichever comes first, similar to standard vehicles, though certain components are covered for longer.
Hybrid owners are more limited in the mechanics they can use, says Jesse Toprak, senior analyst for Edmunds.com. Hybrid owners often must take the vehicles back to the dealership for repairs since the technology is rather new and few mechanics are trained to repair hybrids. As far as the amount of repairs and maintenance needed, though, hybrids seem very similar to standard vehicles, he says.
Insurers say there’s currently no difference in premium for insuring hybrids compared with comparable gasoline-engine vehicles. That could change over time as more information about repair costs becomes available, says Dick Luedke, a spokesman for State Farm Insurance.
The Battery Question
Another big question about the long-term costs of owning a hybrid concerns the possible need to replace the battery.
Hybrids require a nickel-metal hydride battery pack that can cost $3,000 to replace. To protect customers, most manufacturers guarantee to fix or replace those batteries for up to eight years or 100,000 miles, whichever comes first. But some auto experts worry that hybrid owners could be surprised if the battery fails after the guarantee period.
Cindy Knight, a Toyota spokeswoman, says the company’s battery packs are designed to last at least 120,000 miles, or the typical life of the vehicle. So far, “we haven’t had any replacements that [owners] themselves have had to pay for,” she says. A small number of batteries have been replaced under warranty, usually because of a crash, she adds.
Mr. Garman of the Department of Energy notes that battery prices already have fallen, and are likely to continue to fall as the technology becomes more mainstream. But for now, fear of having to replace the battery as hybrids age could affect their resale value, especially when the warranty nears expiration, says Mr. Toprak of Edmunds.com.
He recommends hybrid buyers who plan to keep their vehicles for more than 100,000 miles buy an extended warranty on the battery, if possible: The battery issue “is definitely something that makes people worried.”
Email: kelly.spors@wsj.com

mehrenst · 12-25-2005, 01:27 PM

DUH!

Is this the same WSJ that was happily trashing the Prius/Hybrids as beeing totally overpriced just a few weeks ago?

JackDodge · 12-25-2005, 01:34 PM

Quote:

Originally posted by mehrenst@Dec 25 2005, 01:27 PM
DUH!

Is this the same WSJ that was happily trashing the Prius/Hybrids as beeing totally overpriced just a few weeks ago?

[snapback]178877[/snapback]

You'd have to look up that other article and see who the author was. WSJ, as with all publications, has many reporters with their own opinions and each article has a different take on a given subject so it's not unusual to see contradictory articles appear in the same publication.

**tag** · 12-25-2005, 01:55 PM

That other article was a satirical op-ed piece by Holman Jenkins. Among other things, he believes:

If Prius owners consume less, there's less demand, prices will be lower and somebody else will step up to consume more than they would at the otherwise higher price. That's the price mechanism at work.....

In the nature of things, the cheapest oil is consumed first, and Mideast oil is the cheapest. Drive a Hummer if you want to reduce America's reliance on Arab oil....

mdmikemd · 12-25-2005, 04:17 PM

At least they "compared" it to a Camry. I read articles comparing the Prius to a Corolla which then allows them to say you can same $6000 on a Corolla. When we were shopping for a new car, we never considered the Corolla...too small inside. It was between the Prius, Camry and Rav4.

**Tideland Prius** · 12-25-2005, 06:27 PM

I was considering a Corolla when I was shopping. The only difference was, I was looking at a fully loaded LE model with all the trimmings, not their base CE 5-spd version.

mdmikemd · 12-25-2005, 06:31 PM

Quote:

Originally posted by Tideland Prius@Dec 25 2005, 06:27 PM
I was considering a Corolla when I was shopping. The only difference was, I was looking at a fully loaded LE model with all the trimmings, not their base CE 5-spd version.

[snapback]178955[/snapback]

The Prius had more headroom, I'm 6'2" and have plenty of extra room in the Prius. In the Corolla, my head was rubbing on the ceiling...

djasonw · 12-25-2005, 08:00 PM

Another article written by someone with a few facts.

Does the Corolla come with:

SE/SS
HIDS
NAV
BLUETOOTH
ETC....

Warranty is NOT just 3/36k. Hybrid power train is 100/8 150/10. Power train 60/5

Life of the vehicle is 120,000???? If that's what they expect, I won't be buying a Toyota anymore.

dipper · 12-27-2005, 02:04 PM

Quote:

He recommends hybrid buyers who plan to keep their vehicles for more than 100,000 miles buy an extended warranty on the battery

I love this quote.

Who will sell you a warranty beyond 100k (especially when the battery is already warrantied for 100k already)?

p626808 · 12-27-2005, 03:05 PM

Quote:

Originally posted by dipper@Dec 27 2005, 02:04 PM
I love this quote.

Who will sell you a warranty beyond 100k (especially when the battery is already warrantied for 100k already)?

[snapback]179509[/snapback]

Anyone know how to get this over 100K battery warrenty?

12-25-2005, 09:33 AM	#1
JackDodge Gold Member Join Date: Sep 2005 Location: Bloomfield Hills, MI Posts: 2,375 My Car: Other Hybrid Model: Package: N/A Thanks: 2 Thanked 2 Times in 2 Posts Friends: 0	Pretty good article on hybrids. It comes from the WSJ but was reprinted by my local newspaper. There's a neat image too but I just noticed that I can't put attachments on this post. Perhaps I can post the entire thing in pdf format on a reply post. Drive Buy: Hybrids Now Are a Better Deal BY KELLY K. SPORS Most people buy hybrid cars because they want to save the environment. Soon the cars may save you money, too. Come Jan. 1, most consumers who buy new hybrid gasoline-electric automobiles will be eligible for tax credits that may save as much as $3,400 in income tax. The new credits, coupled with the introduction of several new hybrid models, are likely to jumpstart hybrid sales in the new year. “We’re expecting to see hybrids fly off lots a lot faster now,” says Kateri Callahan, president of the Alliance to Save Energy, a Washington, D.C., nonprofit advocacy group. Roughly 400,000 hybrids have been sold in the U.S. since their introduction six years ago, and they currently make up about 1% of total U.S. vehicle sales. But forecasters project hybrids could reach as much as 5% of sales by 2010. Hybrids generally sell for between $2,000 and $5,000 more than comparable gasoline-engine vehicles. It typically takes years to recoup that higher price through savings from buying less gas. But the new credits will significantly lower the payback time on some hybrids, experts say, and certain models could even prove less costly to own over time than the comparable standard autos. Here’s a look at the economics of buying a hybrid: Purchase Price Car shoppers comparing the price of a hybrid to a standard vehicle need to consider the appropriate model to look at. The 2006 Honda Civic hybrid, with a $21,850 sticker price, is frequently considered most like the conventional 2006 Honda Civic EX sedan, a fully loaded Civic that retails for $19,060–or $2,790 less. Other hybrids, such as the Toyota Prius, the top-selling hybrid so far, are harder to match up. Most observers say the features of the 2006 Prius (suggested retail: $21,725) fall somewhere between those of a Toyota Camry, which starts at about $18,500, and a Toyota Corolla, which starts at around $14,000. Some hybrids occasionally sell above sticker price, because of high demand. Tax Credits The new tax credits replace a $2,000 tax deduction on hybrids that’s been available in recent years. Credits are usually far more lucrative than deductions, because credits reduce your tax bill dollar for dollar, while deductions reduce your taxable income. For someone in the top 35% tax bracket, the old $2,000 deduction produced a $700 tax savings. The Internal Revenue Service has yet to release final guidance on the credits, but energy-conservation advocacy groups estimate the credits will range from $250 to $3,400, based on fuel economy and vehicle weight. To see a list of the estimated tax credits on current and expected hybrid car models, check out www.aceee.org/transportation/ hybtaxcred.htm online. Of 21 hybrids listed, 14 have estimated credits in excess of $1,000. Three probably won’t be eligible for credits. (At least one state, Colorado, has a state tax credit, too.) Fuel Savings Hybrids use less fuel because they switch between an electric motor and a gasoline engine. Some can go 60 miles on a gallon of gasoline. That greater fuel efficiency has become more valuable as oil prices have risen. And the combination of the gasoline savings and the new tax credits will allow buyers to recoup the hybrids’ higher price tags much sooner than in the past. With a $3,150 estimated tax credit, a buyer of a Toyota Prius should recoup the extra cost compared to a Camry in just under a year—or in about 6.7 years compared to a Corolla, according to the Alliance to Save Energy. One caveat: “Just because it’s a hybrid doesn’t mean you’re going to get 50 miles per gallon,” says David Garman, U.S. undersecretary of energy. Some auto makers have adopted a hybrid design primarily to enhance a vehicle’s power and handling. For hybrids that are highly fuel efficient, Mr. Garman says,“obviously, the more you drive, the more you’ll save.” Repairs and Maintenance One tricky question about hybrids is how their maintenance and repair costs will compare to conventional vehicles over time. Since most hybrids are relatively new, it’s difficult to gauge how well they’ll hold up in old age. Most hybrids come with manufacturers’ warranties of up to three years or 36,000 miles, whichever comes first, similar to standard vehicles, though certain components are covered for longer. Hybrid owners are more limited in the mechanics they can use, says Jesse Toprak, senior analyst for Edmunds.com. Hybrid owners often must take the vehicles back to the dealership for repairs since the technology is rather new and few mechanics are trained to repair hybrids. As far as the amount of repairs and maintenance needed, though, hybrids seem very similar to standard vehicles, he says. Insurers say there’s currently no difference in premium for insuring hybrids compared with comparable gasoline-engine vehicles. That could change over time as more information about repair costs becomes available, says Dick Luedke, a spokesman for State Farm Insurance. The Battery Question Another big question about the long-term costs of owning a hybrid concerns the possible need to replace the battery. Hybrids require a nickel-metal hydride battery pack that can cost $3,000 to replace. To protect customers, most manufacturers guarantee to fix or replace those batteries for up to eight years or 100,000 miles, whichever comes first. But some auto experts worry that hybrid owners could be surprised if the battery fails after the guarantee period. Cindy Knight, a Toyota spokeswoman, says the company’s battery packs are designed to last at least 120,000 miles, or the typical life of the vehicle. So far, “we haven’t had any replacements that [owners] themselves have had to pay for,” she says. A small number of batteries have been replaced under warranty, usually because of a crash, she adds. Mr. Garman of the Department of Energy notes that battery prices already have fallen, and are likely to continue to fall as the technology becomes more mainstream. But for now, fear of having to replace the battery as hybrids age could affect their resale value, especially when the warranty nears expiration, says Mr. Toprak of Edmunds.com. He recommends hybrid buyers who plan to keep their vehicles for more than 100,000 miles buy an extended warranty on the battery, if possible: The battery issue “is definitely something that makes people worried.” Email: kelly.spors@wsj.com __________________ "Isolation exists only in isolation. Once shared, it evaporates" - Dr. Breuer from the movie "When Nietzsche Wept"

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12-25-2005, 01:27 PM	#2
mehrenst Senior Member Join Date: May 2005 Location: San Jose, CA Posts: 411 My Car: Model: Package: Thanks: 0 Thanked 0 Times in 0 Posts Friends: 0	DUH! Is this the same WSJ that was happily trashing the Prius/Hybrids as beeing totally overpriced just a few weeks ago?

12-25-2005, 01:55 PM	#4
tag Super Moderator Join Date: Nov 2003 Location: Chicago Posts: 2,527 My Car: Model: Package: Thanks: 0 Thanked 2 Times in 1 Post Friends: 0	That other article was a satirical op-ed piece by Holman Jenkins. Among other things, he believes: If Prius owners consume less, there's less demand, prices will be lower and somebody else will step up to consume more than they would at the otherwise higher price. That's the price mechanism at work..... In the nature of things, the cheapest oil is consumed first, and Mideast oil is the cheapest. Drive a Hummer if you want to reduce America's reliance on Arab oil....

12-25-2005, 04:17 PM	#5
mdmikemd Senior Member Join Date: Dec 2005 Location: Minneapolis Posts: 428 My Car: Model: Package: Thanks: 1 Thanked 0 Times in 0 Posts Friends: 0	At least they "compared" it to a Camry. I read articles comparing the Prius to a Corolla which then allows them to say you can same $6000 on a Corolla. When we were shopping for a new car, we never considered the Corolla...too small inside. It was between the Prius, Camry and Rav4.

12-25-2005, 06:27 PM	#6
Tideland Prius Moderator of the North Join Date: Oct 2004 Location: Canada Posts: 19,633 My Car: 2010 Prius Model: N/A Package: Technology Package (Canada) Thanks: 229 Thanked 345 Times in 244 Posts Friends: 23	I was considering a Corolla when I was shopping. The only difference was, I was looking at a fully loaded LE model with all the trimmings, not their base CE 5-spd version.

12-25-2005, 08:00 PM	#8
djasonw Senior Member Join Date: Jul 2004 Location: Belle Harbor, NY Posts: 644 My Car: 2004 Prius Model: Package: #9 Thanks: 26 Thanked 20 Times in 19 Posts Friends: 1	Another article written by someone with a few facts. Does the Corolla come with: SE/SS HIDS NAV BLUETOOTH ETC.... Warranty is NOT just 3/36k. Hybrid power train is 100/8 150/10. Power train 60/5 Life of the vehicle is 120,000???? If that's what they expect, I won't be buying a Toyota anymore.