Let’s talk some numbers:
Go to www.honda.ca and try to price a basic Civic Sedan vs. basic Civic Hybrid (sedan as well).
Civic Sedan (including all the fees and taxes):$20,549.05 – $1,000 government rebate = $19,549.05
Civic Hybrid ((including all the fees and taxes): $31,238.85 – $2,000 government rebate = $29,238.85
Difference in price? $9,689.80
1) ZERO cost of money, to be conservative (in reality, that difference in price will be even MORE, when you factor in the cost of money (the interest));
2) average 20,000 km per year mileage;
3) fuel consumption estimated as (highway+city)/2:
Civic Sedan: (7.4+5.4)/2 = 6.4 L per 100 km
Civic Hybrid: (4.7+4.3)/2 = 4.5 L per 100 km
Civic Sedan consumes 20,000/100*6.4 = 1280 litres per year
Civic Hybrid consumes 20,000/100*4.5 = 900 litres per year
Savings? 380 litres of gas per year
4) average cost of TWO dollars per litre (currently it’s $1.25-$1.30)
Total savings per year? 380*2 = $760
So what do we got?
Pay $9,689.80 more up front to save $760 per year.
How many years do we need to BREAK EVEN? (again, that’s assuming zero cost of money)
$9,689.80/$760 = 12.75 years
Doesn’t look like such a hot proposal economically, does it?
Most people own their cars for 4-8 years, if that.
That compensation of $2,000 for the buyers of hybrids should be increased so that the break even period is UNDER 2-3 years, in my opinion.
Was the government to compensate $10,000 for buying those Hybrids, the break even period would be:
$1,689.80/$760 = 2.22 years – that would make MANY people to seriously consider buying a hybrid