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Only One Hybrid Car Pays Back Its Owners; Know Which One?

 
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Mercedes-Benz S 400 Hybrid

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2010 Mercedes-Benz S400 Hybrid

2010 Mercedes-Benz S400 Hybrid

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One of the criticisms of hybrid cars has historically been that there's no payback, especially given the cheap gasoline prices in the U.S.

The extra money you spend on a hybrid isn't returned in gas savings, say critics.

Well, that may be true, especially when regular gasoline is averaging $2.77 a gallon this week.


But as we often point out, most people don't buy hybrids for payback--they buy them to make a statement about wanting to drive green.

Nevertheless, a Canadian study has now looked at the question of hybrid payback in a country whose gasoline is more expensive than ours (roughly $3.70 per gallon this week), with surprising results.

One out of 16

The British Columbia Automobile Association projected the fuel costs of 16 hybrids over five years against their purchase price and financing fees. In a study released in late July, only a single one of the 16 cost less to buy and run than its gasoline counterpart.

And it may not be the one you think. Is it the 2010 Toyota Prius, that quintessential hybrid, now in its third generation and well past one million units built?

A big Benz ?!?!?

Nope. Not at all. It's one you may not even have put on your short list: the 2010 Mercedes-Benz S 400 Hybrid, a mild-hybrid version of the large, pricey, prestigious full-size luxury sedan.

It cost about $5,000 less over five years than its counterpart with a gasoline engine. (That payback will likely be smaller in the U.S., where gas is cheaper and model pricing may differ as well.)

The hybrids that imposed the smallest cost premium over their gasoline equivalents were three Toyotas--the Prius, Camry Hybrid, and Highlander Hybrid--along with the Lexus HS 250h, plus Honda's pair of 2010 hybrids, the Insight and Civic Hybrid.

How does the S 400 Hybrid pay back, pray tell? In the States, it's the least expensive S-Class, and the only one fitted with a V-6 engine rather than a V-8, but it still maintains all of the traditional S-Class luxuries.

It provides decent performance and a remarkable 27 miles per gallon rating. Mercedes-Benz has deliberately priced it as the entry-level S-Class, which we think is smart--although we're not sure it's profitable, given the cost of its lithium-ion battery pack.

Not about payback

Even the BCAA recognizes that payback isn't the primary reason for buying a hybrid, though.

“BCAA’s research shows that cost is not typically the main motivator for someone looking to purchase a hybrid," said Trace Acres, their director of corporate communications and government relations. “We believe that many consumers are willing to pay a bit more to go hybrid if it will reduce their carbon footprint.”

Payback? It's just not about that.

Benz believes

Mercedes-Benz has obviously come to believe in hybrid technology, as they're preparing to roll out an E-Class Hybrid and may even sell the S-Class only as a hybrid in the U.S. by 2012 or 2013.

The next generation of their hybrid system also works with diesel engines, as previewed in the E300 Bluetec Hybrid on display at the Geneva Motor Show this spring.

There's an even an S-Class plug-in hybrid on the way, previewed by the Vision S500 Plug-In Hybrid Concept, shown a year ago at the Frankfurt Motor Show. It's said to give up to 18.5 miles of running on pure electric power.

[BreakdownCover.org]


HI-RES GALLERY: Mercedes-Benz S 400 Hybrid




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Comments (22)

  1. fb_1001015277 avatar John Briggs Posted: 8/9/2010 10:22am PDT

    Absolutely worthless discussion. Who says that a US$90,000 vehicle is a good payback because the manufacturer is rigged the price to make it look that way. You could buy 3 or 4 Prius for that price and get twice the MPG.
    Oh, and it is 25 MPG in on the highway not 27 as stated in the article.
     
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  2. yiken Posted: 8/9/2010 10:50am PDT

    No the BCAA report is wrong, in fact its even worse. Gas currently costs closer to $4.80/gallon or $1.20 a liter over here, the most expensive gas in Canada.
    I want a Prius!! In gas savings, I can cover the insurance cost of a hybrid by not driving my minivan.
     
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  3. fb_1001015277 avatar John Briggs Posted: 8/9/2010 10:58am PDT

    Toyota Highlander 27/26 mpg vs. MB S400 Hybrid 19/25 mpg and the highlander is 120lbs heavier. Highlander is less than half price. MB has a long way to go.
     
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  4. Greko Posted: 8/9/2010 1:45pm PDT

    The comparison is fatally flawed by the ridiculously short time frame.
    Why is the time-frame of the comparison only 5 years, when a modern car will last 15 years? Hybrid powertrains come with even a 7 or 10 year warranty now.
     
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  5. David Murray Posted: 8/9/2010 2:42pm PDT

    I would like to know how they could possibly calculate the gas savings of a Prius or Honda Insight versus their gasoline counterpart? After all, those carts are only sold as Hybrids and no other way, so what vehicle are they comparing them to? How are they calculating the cost of the hybrid powertrain in those cars? The whole argument is flawed for a variety of reasons. Lets say I was in the market to buy a new car and I'm planning to spend $25,000. I could choose to buy a Prius or a Camry. Now, I'm going to spend $25,000 anyway, so if I buy the Prius, I'm going to save a lot on gasoline. There will be some payback, no question asked.
     
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  6. Ray Boyer Posted: 8/9/2010 6:22pm PDT

    This study was probably funded (and rigged) by Benz, in their favor. It all comes down to simple math... A car costing 4X as much as another car, with the same mileage and distance specs, would take 4X as long to see the same amount of payback. Simply put, the car with the lowest price and highest mileage and distance is the most efficient.
     
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  7. john_v avatar John Voelcker Posted: 8/9/2010 6:28pm PDT

    @David Murray: Customarily in tests like these, dedicated hybrids like the Prius, Insight, and HS 250h are compared to the nearest gasoline model in the same segment from the same manufacturer. A Prius against a Camry, for instance, since both are midsize. You can read the full
     
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  8. john_v avatar John Voelcker Posted: 8/9/2010 6:30pm PDT

    @JohnBriggs: As you and I discussed at some length this morning on Twitter, my POV is that comparing an S 400 Hybrid to a Highlander Hybrid makes little sense. They may weigh roughly the same, but they are in different segments, they have very different capabilities and levels of equipment, and virtually no one who considers buying an S-Class (at $90K plus) will ever cross-shop it against a Highlander. That's not the car market works.
    And within the universe of S-Class models, the S 400 Hybrid is quite impressive. I erred in not specifying that the 27 mpg figure was my own recorded mileage from a 400-mile test drive last fall, not the EPA figure.
     
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  9. john_v avatar John Voelcker Posted: 8/9/2010 6:32pm PDT

    @yiken: I based my figure for Canadian gas costs on the pump price observed this morning on a pump in Kitchener, Ontario: C$1.01 per litre. If my math is right, that's roughly $3.80/U.S. gallon. Where are you located?
     
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  10. john_v avatar John Voelcker Posted: 8/9/2010 6:34pm PDT

    @Ray Boyer: The absolute cost is not the determining factor. It's the *difference* between the cost of the hybrid and the non-hybrid versions. In the U.S., Mercedes-Benz prices its hybrid below any other S-Class, so automatically you're ahead of the game. This was a Canadian study, as noted, however.
     
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  11. Kunal Posted: 8/9/2010 9:31pm PDT

    Actually, if you read the report that you linked to, the Prius is compared to the Matrix, not to the Camry. Now if you would pay the same for a Matrix as for a hypothetical non-hybrid Prius, that make sense. I personally wouldn't. Comparing to the Camry would make the Prius cheaper by about 4300.
    I think it is hard to find the comparable car. But that makes this study somewhat questionable.
     
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  12. Miguel Posted: 8/10/2010 12:35am PDT

    Why would somebody spending $87,000 MSRP think about savings with a hybrid? Its a green thing? Hmmm. I bought because of the savings.
    For me 20K miles per year. If I buy a Prius that's 400 tanks per year. Assume 10g per fill for $4000 of gas per year. If I bought an s400 Hybrid with 25mpg that's 800 tanks per year for $8K. Over 5 years, 20K plus another 60K in price difference to spend on anything but a car while driving something that is a marvel.
    I suppose driving an s400 would be nice if I could burn 80k of green.
     
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  13. Ivan Posted: 8/10/2010 1:34am PDT

    This comparison is hilarious. First of all, the Lexus GS 450h with a 3.5L engine has the same performance as the GS 460 4.6L V8...yet they compared it with a 3.5L V6 with lower performance. The whole point of the hybrid system in that car is to add to the performance, and not to save fuel.
    Likewise, they compare the Lexus HS with the IS...cars that share no common parts.
    The cherry on top of the cake is the previous generation Lexus RX 400h to the current generation RX 350 (who's hybrid counterpart is now called the RX 450h).
    However, for the Mercedes, they compare a V8 S450 to the anemic V6 hybrid S400.
    How are they not embarrassed to put out such a "study"? My high school teacher wouldn't have accepted such a report...a reported flawed to the core.
     
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  14. phenotypical Posted: 8/10/2010 2:39am PDT

    The author neglects to mention that fossil-based technologies receive 12 times the subsidies that renewables-based technologies: http://j.mp/bqC2kt
    I wonder what the numbers will look like without those subsidies.
     
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  15. fb_573838022 avatar Walter Lee Posted: 8/10/2010 5:41am PDT

    Any five year cost of ownership is biased to resell value and not operational cost so a expensive luxury car like a Benz S400 (which tends to be sold in a limited number to keep up its resell value will have the advantage). Resell value not fuel efficiency or enviromental impact is all that matters in this type of comparison. Very expensive *hybrids* with low fuel effiency (savings) and high environmental impact are called *hollow hybrids.* The expensive hybrids like a 2010 Benz S400 almost always have a higher environmental impact to manufacture than an economical hybrid like a 2010 Honda Insight or 2010 Toyota Prius.
    A person buying a Prius or Insight is normally looking at an ownership lifetime of 10 years or more SO operational cost and initial purchase price matter
    more than the resell value. The 2010 benz S400 27 mpg rating very low. ( a used conventional gas power car can do better). Two years ago gasoline was
    slightly over 4 dollars a gallon in the USA. To justify the extra expensive of the battery pack a hybrid needs to do atleast 45 mpg and to compete on cost operationally with an EV or a Diesel (e.g. 2010 VW Golf TDI or BlueMotion) it needs to get 50 mpg or better without doing hypermiling tricks. IMHO - if the Aptera 2e ever gets into nationwide distribution - its 10 year/20year *payback* should be very competitive.
     
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  16. Ray Jones Posted: 8/10/2010 5:57am PDT

    “But as we often point out, most people don't buy hybrids for payback--they buy them to make a statement about wanting to drive green.” Is the KEY POINT.
    South Park did a good take off on the subject in an episode titled “Smug Alert” where all the hybrid drivers were sniffing their own anal gases because they were SO SUPERIOR.
    I love reading the comments. Some are good but most are “Ford vs. Chevy” arguments.
    The Lefties/Greens quote from sites about how fossil fuels get 12 times the subsidies of “green” sources but neglect to mention that the site states that is WORLD WIDE and the the US subsides the green power higher than any other country.
    The article also seems to leave out the present cost of charging the battery let alone what the cost will be when “Cap & Tax” regulations take effect.
    Solar power has really done Spain a lot of good pushing the country toward insolvency.
    One thing the greens seem to constantly leave out is the variability of solar and wind power and the necessity of having running backup systems even at peak output.
    They seem to always leave out tidal power which is constant and predictable but I can imagine they may have run the numbers on such systems and found the cost to be really out of wack besides the possibility of screwing up the ocean currents and what that would do to the climate.
     
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  17. usbseawolf2000 Posted: 8/10/2010 6:37am PDT

    John Voelcker,
    Take the responsible action. Fix the conclusion of the article or take it down. Many valuable points were given by hybrid owners that are more familiar because we did our own research when we were shopping.
    The source of your information is more than flawed.
     
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  18. Larry Posted: 8/10/2010 6:49am PDT

    In his first sentence, the author states "one of the criticisms" and proceeds to address that specific criticism with his own experience. (Don't forget who owns this website.)
    There's no right or wrong here. It's all about having a 'choice'. My choice is to wait a year or two and buy used, with an emphasis on keeping it on the road for years to come.
    Isn't it great to have a choice? For most of us, an automobile is not an investment, it's just a means to get to and from work (for those of us who still subscribe to the dream) - albeit an expensive one.
    If you truly want to be 'green', ride a bicycle, walk, or take the bus, train or subway. Most importantly, don't look down upon those who do.
     
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  19. Allen Posted: 8/10/2010 10:38am PDT

    What is the point in comparing cars against other cars in this so-called study? The only metric that makes sense in view of the conclusion is how much MONEY an owner of each of these cars would have at the end of 5 years. There is NO NEED to compare the cars against any other otherwise the conclusions drawn are meaningless.
     
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  20. Ken Posted: 8/10/2010 4:11pm PDT

    It is unfortunate when people ascribe motives to others. I didn't buy a Civic hybrid in 2003 to feel smug. I don't care if others know I drive a hybrid or not. But I do believe we are using fossil fuels faster than they are being created and that means we will eventually run out. I bought a hybrid to do what I could reasonably do to help delay that.
    My value comparison was simple - was the premium compared to a Civic EX going to be returned over the life of the vehicle. For me, it won't. Gas would have to be more expensive, I would have to drive more during the life of the vehicle, etc. And I have already had a $4000 warranty replacement of the battery - if it happens out of warranty that will be it for the vehicle.
    We faced another purchasing decision in 2005 - and our second car is a Civic EX, not another hybrid. I felt we had paid enough for the privilege of saving gas for the planet. And the EX is better on the highway where my wife does some of her driving.
    So a hybrid isn't necessarily a message to anyone. Car purchases are for most people both utilitarian decisions and "feel-good" decisions. The good feeling coming from saving gas outweighed the additional cost for me. Perhaps an expensive hybrid luxury car carries more cachet than an ordinary luxury car - but that would not have been on my radar even if these other hybrids had existed at the time.
     
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  21. Kunal Posted: 8/10/2010 9:26pm PDT

    I am surprised the author of the article hasn't added an update yet. Clearly he believed:
    "@David Murray: Customarily in tests like these, dedicated hybrids like the Prius, Insight, and HS 250h are compared to the nearest gasoline model in the same segment from the same manufacturer. A Prius against a Camry, for instance, since both are midsize. You can read the full"
    When in fact on reading the full, one realizes that the comparison of the prisu was to the matrix, which is signifantly cheaper than the matrix.
     
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  22. fb_573838022 avatar Walter Lee Posted: 8/11/2010 4:55pm PDT

    When I bought my 1990 Honda Accord LX for about 14K in August 1990, gasoline was about 1.25/gallon and I was getting about 23mpg. In following twenty years I saw gasoline spike to about $4.25/gallon. Given the past history of the price of gas it would be ill advise to make a judgement that *cheap* gas at $2.77 will stay that way. In the next 20 years, gas will likely spike to $10/gallon or more. So when the time came to get a new car, I decide that I needed a car that got atleast twice the FE of my old Accord which now was only getting 22 mpg after twenty years. That meant I was looking for a car with atleast an overall FE of 44 mpg! I end up buying a 2010 Prius for 22k (the overall FE that I am getting is about 60 mpg). Depending on the price of gas I expect the breakeven point to be from 4 years (average $10/gallon) to 14 years(average $3/gallon) when I compare cost of the Prius to buying a conventional gasoline car like the Corolla and an estimated annual mileage of 10,000 miles. Atleast for me, driving green means driving something that is economically affordable for the next 10 to 20 years.
    The only other car that came close to competing (for my dollar) with the Toyota Prius was the redesigned Honda Insight.
     
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