With more and more non-hybrids achieving 40 mpg, at least on the highway, does anyone really need a hybrid or plug-in?

Is the Chevy Cruze a better deal than a Prius or a Volt?

I say yes, but the numbers aren’t always clear

40 mpg. That’s the new metric that automakers seem to be touting these days, especially as gas prices keep rising. Consequently, there have been a number of articles such as CNN’s With cars like these who needs hybrids? hitting the press in recent weeks.

Yet, do these new 40 mpg cars really achieve hybrid-like fuel economy? Are they more cost-effective than hybrid cars or plug-in vehicles?

“With gas prices rising again, hybrid car sales are up. But a new crop of cars that manage to reach the fuel efficiency heights without relying on extra battery power are getting attention, too. And these cars could make hybrids a tougher sell by getting their big fuel economy gains at a lower cost,” suggests CNN.

Of course, these new non-hybrids achieve their best mileage on the highway. City fuel economy isn’t quite as stellar. Thus are these non-hybrids really a better deal with their lower up-front costs? I’ll get back to that later.

For now, let’s check out those mileage numbers.

Interestingly, CNN followed up on this 40 mpg spin by comparing the Chevy Volt and the Chevy Cruze Eco. Ironically, when driving these vehicles in New York City, CNN found that the Cruze Eco achieved far under EPA fuel economy estimates. In fact, the Cruze Eco averaged less than 20 mpg. So, in tough urban conditions some of these 40 mpg cars actually achieve less than 20 mpg.

On the other hand, in the same driving conditions the Volt used barely any gas.

And, if a Toyota Prius were tested, it would probably achieve 50 mpg or more – more than twice the fuel economy of the Cruze in tough urban congestion.

Of course, that’s only one side of the story.

The Chevy Cruze Eco starts at $18,000, $5000 less than the Prius and $15,000 less than the Volt after subtracting the $7500 tax credit. Otherwise, the Volt would cost well over twice as much as the Eco. Thus, on the face of it, those lower upfront costs are hard to ignore. Maybe this new 40 mpg club has some real legs, or wheels?

Then again, this isn’t an apples to apples comparison. The Cruze Eco, for instance, is offered with a manual transmission for this price and isn’t quite as loaded as either a Prius or especially the Volt. Additionally, the Prius offers more interior room.

Nevertheless, we’re gonna keep it simple, because that’s what consumers seem to be doing.

Based on EPA fuel economy averages, it will take about 9 years for the Prius to recover its costs compared to the Cruze Eco using just fuel savings of $3.57 per gallon gasoline. Of course, in New York congestion, extra time would have to be shaved off this comparison because of much lower fuel economy for cars like the Cruze. Likewise, in many large urban areas like New York gas prices are already over $4.00, shaving even more time off this cost-recovery – perhaps even a couple of extra years.

The difference between the Eco and the Volt – using only electricity –  is about 14 years. Again, a few years can be shaved off if driving in NY-like congestion and gas prices. Furthermore, the Volt in many areas will have access to even cheaper electricity prices, bringing down payback time even more. Of course, if the Volt uses gasoline, then years would be added.

But that’s still not the whole story.

Other factors include maintenance, insurance, and resale value. Unfortunately, it’s too early to speculate on these factors for the Volt and plug-in vehicles just yet, however, for the Prius low insurance and maintenance costs, as well as high resale value, have made the likes of Forbes, Kipplingers, JD Power and Consumer Reports, etc. name the Prius one of the 10 best values in the auto market.

How can the Prius be such a great value when it costs $5000 more than a Cruze Eco?

If the Prius retains its value much better after 5 years compared to the Eco, for instance, then the Cruze’s lower upfront numbers mean significantly less, and the same resale value advantage might also work in the Volt’s favor. Couple that resale value with much cheaper fuel costs, and the Prius could easily be the better investment within 5 years or less compared to the Cruze.

But, it’s never that simple is it? Obviously, if you finance more up front to cover the cost of your Prius compared to the Cruze, there’s also higher interest payments, for instance.

Nevertheless, it’s quite clear that the Prius can be a better investment than the Cruze Eco, particularly for urban drivers. On the other hand, the Cruze Eco might make more economic sense than the Prius for rural and suburban drivers, especially if you simply have less money to spend up front.

In summary, a cheap 40 mpg car might not actually be a 40 mpg car, nor as cost-effective as some hybrids despite lower sticker prices, especially when it comes time to sell. Ultimately, driving conditions will have a big say in this story. In the simplest terms, if you’re a highway driver, a hybrid or plug-in probably doesn’t make the most cost-effective sense. But the more citified your commute, the better the economics for hybrids and plug-ins.


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