Cost and Benefits of Hybrid Cars Essay

Have you pulled your car up to the gas pump lately and been shocked by the high prices of gasoline? The Auto industry has the technology necessary to address this concern. . It’s the hybrid car. Today, there are many different models out there in the market and most major manufacturers are involved in developing them. Hybrid cars will save the drivers a lot of money. The purpose of this paper is to identify the costs and show the benefits of this awesome vehicle. Identifying Costs. This section is designed to compare and contrast all the costs that we will see in the decision of purchasing a new hybrid car. It’ll include all monetary costs and all non-monetary costs. I will be comparing the costs of buying a new hybrid to other regular non-hybrid vehicles in order to better see the differences. A. Gasoline & Car Loan People are obsessed with spending less money on gas. Websites have even been created to help the penny-pinching consumer find the cheapest option close to home. Hybrid cars get really good MPG (miles per gallon). In my opinion, the best way to find out if switching over to a new hybrid car is a good idea is to compare the prices and costs. I’ll use my own car as an example, if I were to replace my paid-off 1999 Honda Accord, which only gets 25 mpg, with something more economical; I would consider a Toyota Prius or a Corolla. The following chart shows how much money I would save if I made the change. |2012 Auto |Miles per Gallon (MPG)|Monthly Gas |Sticker Price |Monthly Payment |Net Monthly | | | |Savings | | |Savings | |Toyota Prius |55 |$ 70. 71 |$21,275. 00 |$386. 56 |$(315. 85) | |Toyota Corolla |36 |$ 34. 72 |$14,005. 00 |$227. 83 |$(193. 10) | The table above, shows us how much more it is to save if purchasing a Prius over a Corolla (Hensley 2011). On the other hand we can see that the sticker price of a Toyota Prius is more expensive than the Corolla. The monthly payment above is calculated at a 5. 5% APR. However in the long run we will be saving so much more if we chose the Prius, because the money that we are saving on gas every month could be used to pay off the difference in the Sticker Price. With gas prices skyrocketing again like they did in 2008, this will be the best decision to make. The following chart will give us more insight on gas prices (Hensley 2011). [pic] B. Taxes Even though the final selling price is including taxes, there are many things to note about tax credits per hybrid car. There is no set tax credit, and it depends on what vehicle you buy, so remember not to only take into account the miles per gallon and price, but also the varying tax break incentives. The list of IRS-certified vehicles is not always the same; automakers keep producing hybrids that are qualified and adding them to the list, we need to make sure we look at the updated data. Also, another thing about hybrid tax credit is that they are reduced every year and eventually is eliminated, so make sure to check out the phase out dates that are determined by different manufacturers. Credit amounts begin to phase out for a given manufacturer once it has sold over 60,000 eligible vehicles. It is all depending on the year, for example if we go back to 2005, you can save anywhere from $500 all the way up to about $3,400 (Fuel Economy. gov). Sometimes, it can be a guessing game, but remember, we will be saving something and it adds up! Vehicles purchased after December 31, 2010 are not eligible for this credit (Fuel Economy. gov). C. Registration Fees and Other Monetary Costs The registration fee is the amount charged by the state to register a new car, assign a title (legal proof of ownership) and cover the cost of license plates. The dealer provides this service for you; saving you a trip to the DMV or registry but the money goes to the state. There are other fees that need to be paid when buying a new car such as: doc fees, taxing the trade-in, taxing rebates and dealer fees. However; when buying a Prius those fees will be the same as buying a regular car so further explanation is not necessary (Karim, Layton). D. Non-monetary costs The time it takes to go buy a car would be one non-monetary cost. Let’s say I was going to go buy today. Since I work 40-hours a week and get paid $9. 00/hr, I would have to get at least 10 hours, 5 hours off of work and 5 hours off my personal time. I could use this time to go to the dealership pick out the car and do all the loans and transactions necessary. Filling out all that paper work can take a lot of time, and since I am a college student I need time for school as well. Therefore my Non-monetary cost is 10 hours of my time from my work-time/personal time. Another cost would be the amount of gas that it takes to drive to the dealership and the time it takes me to travel there. If someone is accompanying me and helping me decide which car I want, I am also using their time which could be almost as much as my time. Benefits 1. Savings at the Pump All Hybrids get a better fuel economy than their counterparts. 2. Lower Insurance Rates Insurance rates can depend on many things such as your driving record, your age, and it can also depend on the model car you drive. Driving a Prius will lower your insurance rate from 5-10%! 3. Government Assistance The Federal Tax credit was also a great benefit although they stopped giving it at the end of 2010(Fuel Economy.gov). 4. Lower Emissions A fact that should be considered is that 97% of all vehicles in the U. S are dependent on Oil. Also with lower emissions it’ll help less Carbon Monoxide adding to Global Warming. In fact, Regular vehicles create 1/3 of the greenhouse effect (Karim, Layton). The key thing here is that the amount of pollution allowed does not depend on the mileage your car gets. But a car that burns twice as much gas to go a mile will generate approximately twice as much pollution. That pollution will have to be removed by the emissions control equipment on the car. So decreasing the fuel consumption of the car is one of the surest ways to decrease emissions (Karim, Layton). 5. Special Car-Pool Lanes In some states if you own a hybrid car, you are allowed to use a special car-pool lane regardless how many people are in the vehicle. After identifying all the monetary and non-monetary costs. We can see that the Sticker price is more expensive than purchasing a regular vehicle. However, in the long run with the gas mileage we will be receiving from this awesome hybrid technology it will payoff for everything that we’ve spent. It’s sort of an investment. If we add all the benefits, we can see that we are not only benefiting ourselves when we purchase a hybrid but we are helping the environment and our world (Fuel Economy. gov). More people are buying more hybrid cars everyday, the sales of hybrid cars increased 141% from 2004-2005 (Karim, Layton). In conclusion, I recommend everyone that if they are looking to buy a new vehicle, hybrid is the way to go. All the benefits we receive from it are totally worth it, and although the cost might be somewhat high in comparison to other cars, it’s worth it. Not only will we be saving gas driving to work, school and other places, but also we won’t take into as much consideration the price of gas next time we stop at the gas station! References Fuel Economy. gov. (n. d. ). Retrieved from http://www. fueleconomy. gov/feg/hybrid_sbs_cars. shtml Hensley, R. , Knupfer, S. M. , & Krieger, A. (2011). The fast lane to the adoption of electric cars. Mckinsey Quarterly, (1), 10-14. Nice, Karim, and Julia Layton. â€Å"How Hybrid Cars Work† 20 July 2000. HowStuffWorks. com. 04 April 2012.