Prius vs Echo -- Cost of Ownership

Hi Patrick,

One way to handle a 'gift' is to list the "$0" actual values with a footnote but don't use either the acquistion or disposal cost in the operational expense calculations. This mirrors corporate accounting practices when they have an unusual tax or other one-time fiscal event. You'll still have the operational cost per mile if you are curious.

Cost per mile calculation is entirely optional. For example, I bought a worn out, 1993 Coachman RV for $4,000 and drove it from Florida. I put another $1,000 in repairs. Since we got it to Huntsville, it has just sat on the driveway waiting for my wife's pleasure. It is her 'entertainment.'

This is one of the reasons why "do it yourself," independent mechanics, 3d party, and salvage parts play an important role in extending vehicle service life. Over time, we replace car capital costs with randomly, recurring maintenance. But we also have a backup vehicle so we can continue earning income while dealing with the inevitable failure. It is part of risk management but not every owner has the patience, fiscal resources, or skills to deal with failures.

One of the reasons for hanging around technical forums is to gain clues and insights, lessons learned from the experiences shared. Sharing is key.

Bob Wilson

 

Actually I'm just curious. Before posting our two cars, I also had the three mileage results from the Department of Energy, a total of five samples:

• $0.68/mile - 2001 Echo, Wilson, (first est. $0.43/mile)
• $0.32/mile - 2003 Echo, Wilson (first est. $28/mile)
• $0.41/mile - 2002 Prius, VIN: *79
• $0.55/mile - 2002 Prius, VIN: *36
• $0.60/mile - 2002 Prius, VIN: *05

My initial estimated cost per miles did not include annual tags, maintenance and insurance. When these additional, direct costs were applied, the numbers significantly changed.

We can only compare vehicles that we have data and those publicly shared. But there has been a lot of FUD in the past with everyone from the Consumer Reports screw-up when they failed to include the Federal Tax credit to CNW Marketing's made up numbers.

This is actually leading to a formula in which we can insert various values and generate a set of cost/mile curves. These can be analyzed to find an optimum value. In fact, looking at the initial cost tables, we find one time cost, vehicle ownership is a major part. But in the operational costs, insurance can completely dominate. Fuel and maintenance are the next biggies followed by taxes/tags, repairs, and tires.

Now in the past, I separated the fixed costs from the operational costs. These fixed costs occur even if the car never moves out of the driveway:

• purchase/disposal
• insurance
• tags and taxes

The direct operational costs occur even if the car is a gift and only driven on private roads:

• fuel cost
• annual manitenance
• repairs
• tires

This had been and remains my current practice when looking at vehicles because after the purchase, nothing we do changes the fixed overhead, the capital costs. We can save in operational costs by cutting down on our miles driven or improving our mileage and driving for long life.

Mostly I'm curious and facts and data are the way I use find out what is going on, empiricism.

Bob Wilson

 

Good points but let's solve the problem about how to handle what is an "apples" to "oranges" comparison of fixed, capital costs versus operational costs:

	Column 1	Column 2	Column 3	Column 4	Column 5	Column 6
0	2001 Echo	$ value	frequency	total
1	Purchase	$14	250	1	$14	250
2	Sale	($3	000)	1	($3	000)
3	Insurance / year	$450	9	$4	050
4	tags and taxes	$100	9	$900
5	fixed costs (costs/mile)			$16	200($0.54/mile)
6
7	miles		30	000
8	MPG		34
9	gallons		882
10
11	fuel cost	$2.00	882	$1	764
12	annual maint.	$200	9	$1	800
13	repairs	$500	1	$500
14	tires	$0	0	$0
15	operational costs (costs/mile)			$4	064($0.14/mile)
16
17	total cost			$20	264
18	cost per mile	$20	264	30	000	$0.68

Wilsons' 2001 Echo experience.

So if one wants to Cherry pick their representation, use operational miles per gallon to show the Echo is an excellent choice. Conversely, take the fixed capital costs per mile to show Echo ownership was an expensive luxury (funny using "luxury" when describing an Echo.) The third choice is to combine the two and get the same metric used by:

• Department of Energy - hybrid vehicle study
• CNW Marketing and fantasy numbers - "Dust to Dust" report

Bob Wilson

 

You failed to notice the cost per miles is different between the two posts and more cost elements are included. This blindness to real world facts and data is something you might want to work on.

Bob Wilson

 

There is no implication, it is explicitly stated that these are our real world costs. You may also have real world costs, post them, share them.

How have your vehicles worked out for you and yours?

If you don't want to share, that is perfectly fine with me. I choose to share. Live with it; ignore it; or scream at the moon about it. I don't care (unless you can hold a perfect pitch.)

Bob Wilson

 

When I scanned the thread this morning, I posted my "thanks." But I've started work on a better table, a better way to represent vehicle costs:

	Column 1	Column 2	Column 3	Column 4	Column 5	Column 6
0	2003 Honda Element	$ value	frequency	total
1	Purchase	$20	800	1	$20	800
2	Sale	($6	500)	1	($6	500)
3	Insurance / year	$_??	7	$_??
4	tags and taxes	$_??	7	$_??
5	fixed costs (costs/mile)			$_??($0.??/mile)
6
7	miles		96	000
8	MPG		23
9	gallons		4	174
10
11	fuel cost	$2.50	4	174	$10	435
12	annual maint.	$_??	7	$_??
13	repairs	$_??	?	$_??
14	tires	$_??	?	$_??
15	operational costs (costs/mile)			$_??($0.??/mile)
16
17	total cost			$_??
18	cost per mile	$_??	96	000	$0._??

Midpack's 2003 Honda Element experience.

One of the best things within a thread is our interaction, feedback, that leads to improved understanding. My initial posting was what we call in engineering, "back of the envelope." This is used to get a rough order of magnitude understanding. I then made a table with more of the costs. This version of the table separates the fixed and variable costs.

Perhaps you could pickup the table and add the missing elements?

Thanks,
Bob Wilson

 

Well let's see what you posted:

I notice there is no purchase price nor disposition or sale price. This is called a capital or fixed expense. In fact, none of the normal fixed costs or duration of ownership is included in your posting.

Cost of ownership means all costs, not selected. When I was asked to add the other costs, I did it and put it in a table to make it clear which is which:

	Column 1	Column 2	Column 3	Column 4	Column 5	Column 6
0	2001 Echo	$ value	frequency	total
1	Purchase	$14	250	1	$14	250
2	Sale	($3	000)	1	($3	000)
3	Insurance / year	$450	9	$4	050
4	tags and taxes	$100	9	$900
5	fixed costs (costs/mile)			$16	200($0.54/mile)
6
7	miles		30	000
8	MPG		34
9	gallons		882
10
11	fuel cost	$2.00	882	$1	764
12	annual maint.	$200	9	$1	800
13	repairs	$500	1	$500
14	tires	$0	0	$0
15	operational costs (costs/mile)			$4	064($0.14/mile)
16
17	total cost			$20	264
18	cost per mile	$20	264	30	000	$0.68

Wilsons' 2001 Echo experience.

Understand, I don't fault you for omitting these critical pieces of data. After all, the facts and data are often intimidating if someone has an ox to gore. I don't, I'm only curious. Most of all, I enjoy sharing because of the insights it brings.

Bob Wilson

 

Perhaps this posting in the "Visiting a 2001 Prius" thread?

BTW, here is a photo of the traction battery replacement in Daryl's 250,000 mile Prius:

I appreciate another opportunity you've made to show our work.

In the case of the office skeptic discussing the 250,000 mile Prius, we addressed exactly what the office skeptic asked for in the form the office skeptic had asked. But I believe serveral folks were interested in the question the office skeptic failed to ask, what is the impact of $1,700 traction battery on total cost of ownership.

So this new thread was started that includes what is know, the cost of ownership of our 2001 Echo and 2003 Prius. Our 2003 Prius only has 75,000 miles, not the 250,000 miles of Daryl's 2001 Prius. So now we have a more inclusive model:

	Column 1	Column 2	Column 3	Column 4	Column 5	Column 6
0	2001 Echo	$ value	frequency	total
1	Purchase	$14	250	1	$14	250
2	Sale	($3	000)	1	($3	000)
3	Insurance / year	$450	9	$4	050
4	tags and taxes	$100	9	$900
5	fixed costs (costs/mile)			$16	200($0.54/mile)
6
7	miles		30	000
8	MPG		34
9	gallons		882
10
11	fuel cost	$2.00	882	$1	764
12	annual maint.	$200	9	$1	800
13	repairs	$500	1	$500
14	tires	$0	0	$0
15	operational costs (costs/mile)			$4	064($0.14/mile)
16
17	total cost			$20	264
18	cost per mile	$20	264	30	000	$0.68

Wilsons' 2001 Echo experience.

	Column 1	Column 2	Column 3	Column 4	Column 5	Column 6
0	2003 Prius	$ value	frequency	total
1	Purchase	$17	300	1	$17	300
2	Sale	$0	1	$0
3	Insurance / year	$450	5	$2	250
4	tags and taxes	$100	5	$500
5	fixed costs (costs/mile)			$20	050($0.26/mile)
6
7	miles		75	000
8	MPG		52
9	gallons		1442
10
11	fuel cost	$2.50	882	$2	205
12	annual maint.	$200	5	$1	000
13	repairs	$500	1	$500
14	tires	$225	2	$450
15	operational costs (costs/mile)			$4	155($0.06/mile)
16
17	total cost			$24	205
18	cost per mile	$24	205	75	000	$0.32

Wilsons' Prius experience. Thanks to your posting it got me to reformat the 2003 Prius table.

Obviously, I can't include Daryl's traction battery replacement in either of my tables. We've not had to replace the traction battery. Is there some additional information you think needs to be in either of these tables?

Bob Wilson