Here's a general calculation to estimate the payback period:
1. Calculate the fuel cost savings:
- Determine the fuel economy of the hybrid and gasoline-powered vehicles in miles per gallon (mpg).
- Multiply the annual mileage driven by the difference in fuel economy to find the annual fuel savings in gallons.
- Multiply the annual fuel savings in gallons by the cost of fuel per gallon to find the annual fuel cost savings.
2. Calculate the total cost difference:
- Subtract the resale value of the gasoline-powered vehicle from its initial price.
- Subtract the resale value of the hybrid car from its initial price.
3. Calculate the payback period:
- Divide the total cost difference by the annual fuel cost savings to find the payback period in years.
For example, let's assume the following:
- Initial price difference between hybrid and gasoline car: $5,000
- Hybrid car fuel economy: 50 mpg
- Gasoline car fuel economy: 30 mpg
- Annual mileage driven: 15,000 miles
- Cost of fuel: $4 per gallon
1. Calculate the fuel cost savings:
- Annual fuel savings in gallons = (50 mpg - 30 mpg) * 15,000 miles = 3,000 gallons
- Annual fuel cost savings = 3,000 gallons * $4 per gallon = $12,000
2. Calculate the total cost difference:
- Resale value of gasoline car = $10,000
- Initial price of gasoline car = $20,000
- Resale value of hybrid car = $14,000
- Initial price of hybrid car = $25,000
- Total cost difference = ($20,000 - $10,000) - ($25,000 - $14,000) = $1,000
3. Calculate the payback period:
- Payback period = $1,000 / $12,000 = 0.083 years or approximately 1 month
In this example, it would take about 1 month for the hybrid car to pay itself off based on the fuel savings alone. However, it's important to note that other factors like maintenance costs and insurance premiums can affect the actual payback period.
Remember that these calculations are just estimates and can vary depending on specific circumstances and market conditions. It's always a good idea to research and compare different vehicle options, consider your driving habits, and consult with financial advisors to make an informed decision when purchasing a hybrid car.
