payback period for 3 hybrids 30 years, just looking at the economic aspect of buying a hybrid.

[JohnWxy]

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=115x193994

[thevoiceofreason]

1. One significant missing piece

Probably not available in reliable fashion right now - resale value at some set point. With the hybrids you probably don't have enough data to plug that in. But if they perform like the Prius has, their resale value is huge compared to their regular cousins. This should reduce the net outlay figure (actually, to do it completely right, you should take a discounted cah flow version too, although inflation is non-existent right now, so that might balance ot with the flat $2.00 gas assumption.

Because I drive 30,000 miles a year, and I would assume a much higher resale value at 5 years, my breakeven point is between 4 and 5 years.

[JohnWxy]

2. I didn't get into DCFs as I was trying to keep it simple and wanted to avoid getting into

a couple more estimates - that of inflation of gas prices and inflation in general. Keep in mind when petroleum prices go up that affects the price of almost everything else. As general inflation occurs it tends to drive up incomes too. The relative inflation value of oil vs inflation in general would invarialbly put me into a situation of having to present ranges of variable values since fair minded people will disagree on where those values will be in the future. This would have complicated the presentation (something which I personally don't mind but people in general have a tendency to "tune-out" from your presentation rather quickly when you start talking about a number of scenarios (or results) based on varying parameter values). IF you figure gas will inflate at 5% per annum over inflation in general and you choose a Cost of Money rate of 6% your present value of savings will be less than not using the DCF analysis. - but who would believe me on that (unless I was talking to a group of accountants an actuaries :)).

ONe admittedly, very simple way to approach that unknown is just to put in a gas cost you feel will represent - let's say the average price of gas in the future (over the period you would own the car - (just estimate to the midpoint of likely ownership period) (discounted by the average increase in prices in general to the midpoint of ownership period). So you might put in $3.00 - then just enter that into the cell containing the price of gas and it will give you an answer. I know, this is poor excuse for a DCF analysis but like I said, I was trying to keep it simple so as not to drive people away.

On resale value, I can't say I go along with you re hybrids. I think the second buyer will inevitably be considering the cost of replacement of batteries (at somewhere around 100,000 miles - again here is a figure I don't really have any info on so it would be an assumption without much basis - which I'm prepared to use (with disclosure and expanation) but this is another variable parameter (read: 'complication') which makes listeners "tune out"). Anyway, at some point the batteries will have to be replaced and batteries for a hybrid are a significant investment which the buyer of a standared ICE powered car does not have to take into consideration. So I think battery replacement would be a considerable discount to resale value. - but I have not checked into whether data is available on this (hybrids not having been sold for too long). Does the Prius have a high % resale value?

thanks for the comment. It's valid. Maybe I'll change the spreadsheet to a DCF basis (competing projects being the time limiting factor:argh:). (of course, anybody can download the spreadsheet and make whatever improvements they feel are warranted. (Hint-hint).

Of course, this is just an economic analysis. But i thought it was relevant as many people do such an analysis before making such a considerable purchase. I think the current economic situation has exacerbated that reality and unfortunately, I don't think this situation will improve that rapidly.

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on edit: ... I just put in $4.00 for gas price and got 16 to 18 years break even.__JW