Wednesday, June 25, 2014

Hybrid Investments

I have fielded several accidental questions recently about cars. I don’t know why people are asking me. I think cars are terrible investments. They are expensive and lose value constantly.

My philosophy with cars is similar to my philosophy with Israeli bank accounts: try to have the absolute minimum that you need for the lowest price that you can find. 

Ideally, you should have no bank accounts and no cars.

Hybrid or Regular?

When I am in the market to purchase a car, I always want to buy a hybrid. Maybe it’s because I am somewhat of a hybrid myself. On the one hand, I sprout wisdom like a cedar of Lebanon. On the other hand, I read leftover People magazines that my wife hasn’t yet passed on to the next reader in the ex-pat Sisterhood of the Travelling Magazines.

Also, I really want to save money on gasoline. The trouble is that saving money on gasoline with hybrids seems to be very expensive.
                                                                                                                             
Hybrid Economics

The most popular hybrid is the Toyota Prius. I want to buy one because I want to save the environment, but I can never justify the purchase. The best comparison vehicle to the Prius would be the Corolla. It is also made by Toyota and is similar in size and popularity. Here are the economics:
                                                                                                                             
Car
List Price
Prius
155,000 NIS
Corolla
129,990 NIS
Difference
25,010 NIS

The Prius demands a premium of 25,000 shekel, but offers superior gas mileage: 25 km/liter versus 17 km/liter for the Corolla.

Here is the payback for gas at 8 shekel per liter:


10,000 km
15,000 km
20,000 km
Prius
3,200
4,800
6,400
Corolla
4,706
7,059
9,412
Savings
1,056
2,259
3,012
Payback
16 Years
11 Years
8 Years

In other words, this is a very expensive way to save money on gasoline.

A Call for Hybrids

I thought that perhaps the Prius is an exception and other hybrid vehicles make more economic sense. I ran the numbers with the Prius+ versus the Toyota Verso, but I found the payback to be about the same.

At first, the hybrid version of the Toyota Yaris seemed like a good possibility. It is 12,800 shekel more expensive than the non-hybrid version but gets 27 km/liter versus 18.9 km/liter for the gas. Here is the payback:


10,000 km
15,000 km
20,000 km
Yaris Hybrid
3,042
4,561
6,084
Yaris
4,571
6,851
9,143
Savings
1,529
2,250
3,059
Payback
8 Years
5 Years
4 Years

If you drive a lot, this level of savings looks like it could theoretically makes sense. The trouble is that people report on blogs that you can trust (just like this one) that they cannot even get close to the reported gas mileage for the hybrid. Adjusting for a more realistic gas mileage of around 22 km/liter, the payback may never materialize.

But, I am crazy and kept looking until I found the hybrid Toyota Auris. It costs only 5,910 shekel more than the gas version of the same car and claims gas mileage of 26.3 km/liter versus 17.5 for the gas version.

Here is the payback:


10,000 km
15,000 km
20,000 km
Auris Hybrid
3,042
4,563
6,084
Auris
4,571
6,857
9,143
Savings
1,529
2,294
3,059
Payback
4 Years
3 Years
2 Years

However, whether you can actually get 26.3 km/liter is questionable. According to most opinions, you only get the posted gas mileage for hybrids if you drive long distances at less than 30 mph.

In other words, a hybrid is a good buy if you drive a cab in New York City.

If so, why are people buying hybrids?

To figure this out, I asked at least two of them. Here is what they told me:

“I had one before and I liked it so I got another one. Why? Is there something cheaper?”

“I like trees.”

These answers make me think that people are not buying hybrids to save money on gasoline.

Frius

I ran the hybrid calculations by my Friend. He is an engineer and understands “energy” which makes him an expert on this topic. He told me that it is highly doubtful that a hybrid will save you money as the technology is very expensive, both initially and to maintain over time. In fact, he doubts that even the Auris hybrid will have an overall lower cost of ownership as compared to the gas version.

My Friend suggested that this is an excellent opportunity to open a new consulting business, which can turn any gasoline powered car into a hybrid. We can call our new business, Frius.

Frius will offer a personalized energy saving consultation service, or the Frius Orderly Energy Lifetime Deployment Usage Program (“FUEL UP”). You will pay us just 25,000 shekel, and we will come to your home and perform a comprehensive energy audit.

You can trust us, just like you trust all auditors, because we will be independent and objective. At the end of your audit, we will present you with a customized plan on how you can save more trees. All you will need to do is click “I Accept” at the bottom of the form. By doing so, you have saved trees.

To demonstrate your commitment to our energy program, we will provide you with bumper stickers that read, “Approved to FUEL UP!” which you can place on all of your cars, effectively converting them to hybrid vehicles.

Call now and we will give you a special discount of 20% off your audit.

8 comments:

  1. Dude - you are way off base. You are in high tech and you get free lease cars. The BMW M3 is better than the Prius!

    http://videos.sapo.pt/r0bBS2HGTBOV9B2a2oQj

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    Replies
    1. Totally. I have a great bumper sticker for it!

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  2. woah - you get a BMW M3 lease car for working in Microsoft ? How do I join?

    ReplyDelete
  3. It looks like they are no jobs in the Microsoft ILDC: http://ildcghana.com/ildc_hr.htm

    ReplyDelete
    Replies
    1. try this one: http://careers.microsoft.com/careers/en/il/ildc.aspx

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  4. THANK YOU!!!!!!!!!!!!!!!

    What team do recommend?

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  5. What about Tesla? or will electricity be forever so expensive in Israel, the electric car will never be reasonable to have. we need to build a nuclear power plant to make electricity!

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    Replies
    1. I think that a nuclear powered car would be terrific. We should really reach out to Ukraine and ask if they can help us out on this one.

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