Green Cars Make Cents

published 5 August 2011

This story has been updated since it was first published online.

Sales of hybrid and electric cars jumped nearly 40% in the first quarter of the year. The primary reason: soaring gas prices. More than one-third of consumers now say fuel economy is the most important factor in their next vehicle purchase, according to a recent study by Maritz Research, a market-research firm.

Setting aside their environmental cred, are hybrids, diesels and electric vehicles actually wallet-friendly? Prices on hybrids run about $3,300 higher on average than stickers on their gas-engine siblings. The diesel difference is about $2,800 more. And the two EVs on the market -- the Chevrolet Volt and Nissan Leaf -- are each more than $18,000 pricier than their closest gas-engine match. But the long-term ownership costs are the real measure of whether buying green is worth it.

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Running the numbers. Using five-year ownership costs from Vincentric, an automotive data firm, we compared 2011 hybrid, diesel and electric vehicles with their closest gasoline-engine counterparts. In most cases, that’s the same model with a different powertrain; when a hybrid (like the Prius) had no counterpart, we chose the closest match from the carmaker’s lineup.

The numbers assume you drive 15,000 miles a year and that regular gasoline costs $3.64 a gallon, premium is $3.91, and diesel is $3.97 -- the average prices nationwide in early summer -- with a 3.5% annual increase for each fuel. In addition to fuel costs, depreciation, maintenance and repairs, the math also includes finance costs for a five-year loan after a 15% down payment, insurance and taxes. The Volt and Leaf are both eligible for the $7,500 tax credit for electric vehicles, and that, too, is factored in.

Best deals. Pump prices have a lot to do with making green cars a good value. Two years ago, when gas prices were hovering close to $2 a gallon, few hybrids and diesels earned back their premium price with savings at the pump. But with gas prices now closer to $4, more buyers will save green by buying green.

Perhaps the biggest surprise is that although the Volt and Leaf have stratospheric sticker prices -- nearly double those of the gas-engine Chevrolet Cruze LTZ and Nissan Versa S hatchback -- both have pretty low five-year ownership costs. The Volt’s costs come within $1,600 of the Cruze’s and the Leaf is only $800 more than the Versa over five years. (Run your own comparisons of these models and many more.)

Diesels are likely to recoup their extra cost and save owners money over the long haul. Of the 12 diesel models available this year, nine have long-term costs below those of their gas-engine brethren. But note that these tend to be the pricier vehicles -- including all the Mercedes–Benz and BMW models. Audi’s A3 2.0 TDI scores high as well, saving nearly $3,500 over the 2.0T. The Volkswagen Jetta Sportwagen TDI claims a saving of nearly $800 over its gas-engine sibling.

Hybrids are a mixed bag, with some models producing big savings and others so highly priced that they don’t make sense. The Mercedes–Benz S400 hybrid saves you $7,000 over five years. Other values: the Mercedes ML450H (a $2,900 saving), Lincoln MKZ hybrid ($4,600), Honda Insight ($3,000), and Lexus CT 200h ($5,500) and HS 250h ($1,200). Newly minted for 2011, the Porsche Cayenne S Hybrid costs nearly $800 less than the gas Cayenne over five years, and Hyundai’s Sonata hybrid saves about $400.

Which green cars don’t come out ahead? The diesel models of the Jetta sedan and Golf hatchback are projected to cost more than their counterparts. Likewise with the Audi Q7 TDI, Lexus RX 450h and Toyota Highlander Hybrid. The poster child for green, the Toyota Prius, costs $1,500 more than the Corolla over five years but beats the Camry LE by $3,200.

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Anderson has been with Kiplinger since January 2004, when she joined the staff as a reporter. Since then, she's covered the gamut of personal finance issues—from mortgages and credit to spending wisely—and she heads up Kiplinger's annual automotive rankings. She holds a BA in journalism and mass communication from the University of North Carolina at Chapel Hill. She was the 2012 president of the Washington Automotive Press Association and serves on its board of directors. In 2014, she was selected for the North American Car and Truck Of the Year jury. The awards, presented at the Detroit Auto Show, have come to be regarded as the most prestigious of their kind in the U.S. because they involve no commercial tie-ins. The jury is composed of nationally recognized journalists from across the U.S. and Canada, who are selected on the basis of audience reach, experience, expertise, product knowledge, and reputation in the automotive community.