How much green does it take to “go green”?

Vincentric is an automotive industry data compilation and analysis firm headquartered in Bloomfield, Mich. The firm performed a fleet-centric lifecycle cost analysis on hybrid models and their straight-gas counterparts at three and five years. Vincentric calculated 20,000 annual miles and gas prices as of May 31, 2007. Due to the low availability of hybrids for fleet buyers, cap costs for hybrids were figured using Vincentric’s retail Market Price, which estimates the typical price a retail buyer pays.

Vincentric’s calculations also reflect the recently released revised Environmental Protection Agency estimated mpg totals, based on real-world city and highway driving conditions..

To get the most accurate real-world cost per mile as possible, Vincentric included in its analysis such costs as financing, opportu-nity cost (the interest income that could have been earned on out-of-pocket costs), fees and taxes (including hybrid tax credits) and insurance.

As this is strictly a cost calculation, hybrid availability for specific models is not taken into account. Until recently, fleets generally have had to wait in line for most hybrid models just like the general public.

* Calculated using new EPA method
Lowest Costs Per Mile
Looking at the three-year totals, the Toyota Prius wins the hybrid lifecycle crown at 43 cents per mile, followed by the Ford Escape and Mercury Mariner hybrids at 46 cents per mile. The hybrid version of the Honda Civic comes in third at 47 cents per mile.

Vincentric’s analysis found that four hybrids — the Ford 4WD and FWD Escapes, Mercury Mariner FWD, and Saturn Vue — beat their gas counterparts in three-year cost-per-mile totals.

The costs per mile of the Civic and VUE hybrids are virtually tied with their gas models or off by a penny, depending on trim level.

The Highlander hybrid, on the other hand, gets an average of 6.5 mpg over the gas vehicle, and carries a $3,819 premium. The cost per mile of the Highlander hybrid is just two cents more than its traditional twin.

From a three-year cost-per-mile standpoint, the Lexus luxury hybrids GS 450h and RX 400h record the highest cost per mile of any vehicle in this analysis at 97 and 71 cents per mile, respectively. The costs for both GS 430 and 450h models are dead even, with the 430’s advantage in depreciation costs balanced by lower fuel costs for the 450h.

These “performance” hybrids offer more horsepower and more standard features, but they are not the first choice when choosing green vehicles.

In doing any financial analysis of hybrids, it becomes clear that as the price of fuel continues to climb, the cost-per-mile gap between green models and their gas-powered counterparts is closing. Many traditional models deliver a better cost per mile than hybrids, and many with excellent fuel economy.

As a benchmark for all vehicles, the gas-powered Toyota Corolla, with the lowest acquisition cost in this bunch and excellent fuel mileage, ties the Prius and beats all other hybrids and gas-powered vehicles in this analysis at 43 cents per mile.
Five-Year Analysis
One might think that aging a hybrid in fleet would bring the costs in line with the gas-powered vehicles by allowing the hybrid more time to recoup fuel savings.

At five years, the hybrids gain only about two to four cents in costs per mile. A few — the Ford Escape, Civic, Lexus GS 450h, and Mariner FWD — actually beat their gas-powered versions by as much as three cents per mile. Two others — the Mariner 4WD and Vue — match costs for both hybrid and traditional versions.
These Numbers Will Change
Hybrid tax credits are moving targets. The tax credit begins phasing out in the second calendar quarter after each manufacturer sells 60,000 hybrids.

Toyota passed that milestone in the second quarter of 2006. (The credit for the Prius shrank from $3,150 to $1,575.) Honda will likely reach that mark in fourth quarter this year. Ford has a ways to go.
The Green Price Tag
With cost advantages evening out or growing for hybrids as fuel prices rise, they may serve best as insurance against future higher fuel costs. Additionally, a corporate green initiative pays ancillary dividends. It demonstrates to employees and clients that your company values the environment, and it can help align your company with a progressive, environmentally conscious niche in the marketplace.

And, simply, conserving the Earth’s resources is the right thing to do.

The question is, can your company afford it? This analysis will help put a price tag on greening your fleet with hybrids. Click here for PDF version