Buying A New Car - Doing The Hybrid Math To Help Your Wallet And The Environment

Welcome to Saving Money with Andrew!

Last week, we bought our first car. The experience was surprisingly easy. I fired up TrueCar, found the best offer on the car we were looking for, and then called the other Honda dealers in the area to ask if they could match or beat the best offer.[1]

With the best offer in hand, we told the dealer that we wanted the car delivered to our house with all paperwork completed at delivery. Then, we picked up a certified check at our bank and bought auto insurance online. 24 hours later, our new car arrived.

So, what did we buy? A 2021 Honda CR-V Hybrid EX. We currently drive a regular CR-V, and have found it to be a comfortable and practical family car, so the big question was whether to go hybrid or not.

The hybrid CR-V was $30,000, $2,193 more than the equivalent non-hybrid model. Was this a good investment? I’ve pasted the spreadsheet we used to model the savings, and here’s a summary of the findings:

• In real-world usage, we achieve approximately 40mpg (miles per gallon) with the CR-V Hybrid versus 22mpg with the non-hybrid CR-V that we drive. We drive in a lot of stop and go traffic, where hybrids tend to shine.

• Driving the car 10,000 miles per year (the average American drives 13,500 miles per year, we drive less often), this equates to 455 gallons per year for the non-hybrid versus 250 gallons for the hybrid.

• One gallon of gas currently costs $2.80 where we are, yielding a savings of $573 per year for the hybrid.

• From an environmental standpoint, one gallon of gasoline generates 19.6 lbs of carbon emissions, meaning that the hybrid reduces our annual carbon footprint by just under 2 tons per year. The average American generates 16 tons of carbon annually, so this is a pretty substantial reduction.[2]

So, is this a good investment? In less than four years, the savings pay for itself. And over a 10-year ownership period, the overall savings is over $5,500, on top of the environmental and time savings of not having to go to the gas station as often.[3]

Overall, buying the hybrid model of our car was a win-win-win for us, saving us time and money while also reducing our carbon footprint. Definitely worth considering next time you are looking for a car.

And now…Andrew’s pick(s) of the week:

I’m having a great time reading The Body by Bill Bryson, a fascinating read about how our bodies work. Tons of great stories about the extremely complicated systems that keep us going each day.

I hope this has been helpful. If you liked it, please share it on social media! Also, please send me your feedback, requests, and success stories.

[1] This is my favorite way to get the best deal on a car (although this is our first car, I’ve negotiated and handled the buying process for others). Basically, keep shopping the TrueCar offer (generally a good but not great deal) around until you can’t find a dealer willing to match or beat the best offer. And if anyone tells you that you have to come to the dealership (in the midst of COVID, no less!) just insist that you want to do everything over text, phone, or email. If they won’t do that, move on to another dealer. There are certainly reasons you might want to come in and test drive a car, but in our case we already knew the make and model we wanted.

[2] In fairness, this does not take into account any incremental CO2 emissions in manufacturing the car, though some brief research suggests that the incremental CO2 emissions in producing the very small (1.4kWh) battery is less than one-quarter of a ton, and thus fairly negligible in relation to the emissions savings.

[3] If you like to think in terms of return on investment (the additional $2,193 spent on the hybrid versus the standard model), the implied rate of return is 23% over a 10-year period. Of course, the return will vary based on gas price assumptions, miles driven, etc, but it is difficult to come up with plausible assumptions that yield a low return.