No 1203: Biofuels and Clean Technology

I’ve been a little luke warm on hybrids. I think it’s my defense mechanism against anything remotely “hippie” (I have the same reaction towards organic foods and vegetarianism). I really shouldn’t have some responses and should give new things a chance. So I wanted to answer some questions about hybrids. In particular, are they really worth the money? The landscape isn’t just Prius’ anymore either. So which of the hybrid options are the best value? I did a back-of-the-napkin analysis and came up with some interesting insights.

Method
This wasn’t a terribly scientific analysis. I got most of the data from Yahoo!Autos. I only considered the lowest entry model MSRP of any car (so no premium packages considered). I also took the EPA-rated mileage which has its own issues associated with it. The only item that has updated data are the mileage ratings on the Prius (EPA: 60/51, I used the 48/45 re-rating).

Models
I took several 2007 models of hybrids and their counterpart standard ICE vehicles:

The one item to note is that I compared the 2007 Prius with the 2007 Toyota Corolla. This is because I think the Corolla is the best comparison for size and weight to the Prius.

I also did some some thought exercises with the 2008 Hybrid Tahoe. We’ll look at that a little later.

Analysis
Mostly, I gathered the MSRP and a combined EPA mileage data and divided them. The combined value is a weighted average of the city and highway MPGs (60% HWY, 40% City). This “mileage value index” (MVI) gives some an indication of value on the purchase price. A lower number indicates some combination of a low price tag and/or a high MPG.

I didn’t include lifetime gas consumption because each individual uses the vehicles in different ways. I wanted to look at the intrinsic value that each model gives on this one variable. Having a low MVI isn’t indicative of the overall value of the car. This is just a quick look at which hybrid gives the most value for the price versus itself and maybe against other models included in this analysis. It’s not terribly rigorous. But most people aren’t terribly rigorous in their purchasing methods. But I wanted to show an easy to use metric for evaluating performance.

Model Comparisons
Question: Which model’s hybrid is a good value over its standard competitor?
Look at the data tables below. A “good” value is a short bar. Generally speaking, models that have close hybrid and standard numbers. A great situation is would be where the hybrid MVI is shorter than the standard model showing a real observable value is delivered to consumers.

Sedans:

SUVs & Crossovers:

Observations:
For sedans, the Saturn Aura Hybrid shows that it has the best value position against its Standard model. I wasn’t expecting that. The Aura Hybrid is considered a “mild hybrid” and gives a strong, but not as significant boost in MPG. The real value is delivered by only a $1700 price premium to get 6 MPG better.

The Toyota Prius compares very well against the Corolla and shows why it is the most successful hybrid. However, the Honda Civic Standard and Hybrid have better MVIs then the Prius.

For SUVs/Crossovers, the Lexus 400h also has a a value advantage over the standard RX350. But also remember, while SUV hybrids in general save a lot of gas over their lifetime (around 100 gallons/yr), the amount of gas $ saved isn’t that high with respect to the higher purchase price. So the value of hybrid gas savings doesn’t work out for saving money. So this performance by the 400h is a great showing.

The Honda Accord Hybrid has horrible numbers. It’s MVI is significantly higher than its standard model. It has a much higher price and doesn’t give much improvement in MPG. It’s not surprising, then, that Honda has discontinued it.

Moreover, other than the Accord, all of the Hybrids perform well with respect to their standard counter parts. This, I think, leaves the door open for hybrids to compete head-to-head on overall value on other points. That’s a great place to be for this technology.

The Chevy Tahoe Hybrid Experiment:
Question: At what price point would the Tahoe Hybrid “break even” with its standard counterpart? Refer to the 2008 Tahoe values above.

I couldn’t find any data on the pricing for the 2008 Tahoe Hybrid. I only found speculation on its MPG (19 and 25 hwy I believe). But I did find data for the standard 08 Tahoe.

So knowing at least speculative data on the Tahoe, I wanted to know what price point I should look for to to see if it has improved value over the Standard version. A goal-seek analysis shows that an entry price point of $44,288 (or $6000 above the standard Tahoe). This is a bit expensive for an entry-level Tahoe, but the value is still delivered at that price. Anything cheaper is probably a good deal. But the price mustn’t be more than 1 or 2% difference.

Best Value
Question: In a battle royal, which of these models would win against each other based only on their MVI values?

This data is interesting as it clearly shows a value segmentation between models. I see the strong performers being the Civic, Prius, Camry, Corolla. The mid-tier is a mixture of sedans (Aura, Accord Standard, Altima) and the Crossovers (Escape, Vue). And lastly, the high end crossovers (Lexus RX, Highlander). We’ll ignore the Accord Hybrid altogether.

This spread is a little expected, I think. The smaller cars have the best performance. And the high-end hybrids make sense as well (they have higher price tags with respect to their mileage improvement). But the interesting element to this is that the Vue and Escape (hybrid and standard) are competing well against their heavier sedans. Of course, the hybrids tend to be at the higher-end of this tier. But they’re all in the mix and I think that gives them a strong competitive placement in the marketplace.