Cost vs. Benefit Revisited

A while back I wrote a post about how to measure cost vs. benefit and talked about how we often make poor choices because we don’t consider all the facts. The example I used was the idea of buying a hybrid car to save money on gas. I was simply pointing out that every person I had talked to who said they were saving money by purchasing a hybrid hadn’t actually done the math. They were actually spending a lot more. Several readers commented that they had purchased a hybrid vehicle because of the pollution impact and were perfectly content to pay more in order to have smaller environmental footprint.

For the past few weeks these comments have bothered me. How could a hybrid vehicle which is basically a regular car with an added electrical power train actually leave less of an environmental foot print than a regular car that gets only slightly lower gas mileage? You basically have to make the parts for a regular car as well as the parts for an electric car, so it seems like the manufacturing processes would produce much more waste than a regular vehicle. On top of that, if a car costs more to purchase, it seems that the price should somehow be related to the energy that went into making it. If hybrids cost more, then it means their manufacturing process should produce more pollutants.

I decided to see if these readers decision making process was based on facts or it it was the very type of decision making process I was trying to bring attention to. If I say something stupid, feel free to let me have it in the comments.

My point with this post is to challenge awareness about how much of our perception of cost vs. benefit is influenced by marketing instead of a real look at the facts. I’m not trying to convince you to buy a particular type of car. I am trying to help make you aware that all of us make at least some decisions based on irrational beliefs instead of a true analysis of cost/benefit.

If your goal is to help the environment there are some cars that will definitely give you a smaller environmental footprint. However, these cars are not hybrids.

First lets look at the idea of buying a new car. If you are really concerned about the environment, your best bet is to keep your existing car (assuming it is an average vehicle and not a cement truck) running for as long as possible. The amount of energy that goes into creating a vehicle in the first place is tremendous. Not only that, but your purchase creates another vehicle that eventually has to be recycled. With hybrids, you also create a bunch of batteries that are environmental hazards that will need to be replaced somewhere in the 100,000 mile range. (Note: Hybrids use Nickel Hydride in their batteries which isn’t nearly as harmful and is much more easily recyclable than the older Nickel Cadmium batteries.)

If your goal is helping the environment and you must get a different vehicle, a used vehicle that gets decent gas mileage will have a much smaller impact on the environment than buying a new car. In fact, if you look carefully you can buy a used vehicle that gets just as good of gas mileage as a hybrid for just a few thousand dollars. Even if you have to spend a couple thousand more to repair things, it is still a better environmental choice. I use to drive a 1994 Geo Metro. It only had three cylinders and got between 38 and 55 miles per gallon. The average for normal driving was around 47 or so. That is no worse than what my friends get on their hybrids. In fact it is better than what most of them get. If you also compare the environmental cost of creating the hybrid in the first place, with the environmental cost of buying a used Geo Metro and keeping running, the hybrid has a much larger footprint.

There was a report published where a group attempted to calculate the cost per mile for a variety of vehicles. The idea was to consider all of the energy costs associated with the vehicle over it’s entire lifetime and divide that number by the number of miles the vehicle would probably be driven. This roughly translates into the environmental impact of each vehicle because all modern methods of consuming energy involve some type of waste in the environment. The higher the total energy cost over the life of a vehicle, the higher impact it will have on the environment.

Cars like a Rolls Royce, Bentley and Maybach cost somewhere a little above $10 per mile to drive. Here is a list of the hybrid vehicles:

1. Honda Insight ($2.94 per mile)
2. Ford Escape Hybrid ($3.18 per mile)
3. Honda Civic Hybrid ($3.24 per mile)
4. Toyota Prius ($3.25 per mile)
5. Honda Accord Hybrid ($3.30 per mile)

Here are the top 10 least expensive cars from a total energy consumed perspective. (Note: This is energy cost, not purchase price.):

1. Scion xB ($0.48 per mile)
2. Ford Escort (0.57 per mile)
3. Jeep Wrangler ($0.60 per mile)
4. Chevrolet Tracker ($0.69 per mile)
5. Toyota Echo ($0.70 per mile)
6. Saturn Ion ($0.71 per mile)
7. Hyundai Elantra ($0.72 per mile)
8. Dodge Neon ($0.73 per mile)
9. Toyota Corolla ($0.73 per mile)
10. Scion xA ($0.74 per mile)

I was pretty surprised to see Jeep Wrangler on the list. However I think it is showing up not because of its great gas mileage but because the average lifespan of a Wrangler is 207,000 miles, while the average vehicle is only driven for 178,000 miles. This is inline with my previous statement that the longer you can keep a car running the smaller your total footprint. The Hummer H3 was an interesting surprise at $1.949 per mile. That is still a pretty expensive vehicle in terms of the amount of energy used, but it still beats every one of the hybrids.

There has been some criticism of this report saying that hybrid vehicles can be driven for many more miles than what was used in the calculation (100,000 to 150,000 depending on the model). So lets assume that somehow the hybrids last twice as long as they estimated. So here is the revised list:

1. Honda Insight ($1.47 per mile)
2. Ford Escape Hybrid ($1.59 per mile)
3. Honda Civic Hybrid ($1.62 per mile)
4. Toyota Prius ($1.62 per mile)
5. Honda Accord Hybrid ($1.65 per mile)

Notice that the hybrids still use twice as much energy per drivable mile than any of the top 10 vehicles. So if someone wants to choose a vehicle based on environmental considerations, buying a hybrid causes twice as much environmental damage as any one of 10 other choices that are not hybrids.

Based on this research the Scion xB (a Toyota brand) has the smallest environmental impact per mile driven. Keep in mind that this number reflects the cost of the energy to make, drive, and recycle the car. It doesn’t say anything about the cost of the vehicle in the first place. The Scion only costs $12,000 to $15,000. So the most environmentally friendly vehicle is also one of the less expensive vehicles available. This probably seems counter intuitive to people who have convinced themselves to pay an extra $7,000 for a hybrid vehicle to help the environment, but really it is just common sense. If a vehicle requires less natural resources to produce, it should cost less.

I don’t care what vehicle you drive. There are many factors that influence which vehicle is best for you. (The last vehicle we purchased was primarily based on what would be easy to repair in Mexico and had enough range to get us through the desert areas without refueling.) However, don’t let a sales person, friends, or marketing hype convince you to purchase something just because they say it is good for the environment. If you want a hybrid, by all means buy one. They are very cool little vehicles and I think the idea of using electric motors to provide high torque acceleration Just don’t trick yourself into thinking it somehow makes you more environmentally friendly than the average person. When it comes to total environmental impact, a Suburban or Expedition is a better choice.

If you want to look at the research, you can find it here.

« Previous Page