Thursday, August 02, 2007

Green, Because They Eat Your Money

Dollars and no sense:

"There is a premium price for hybrid technology, and people weigh that against the tax breaks and gasoline savings they get in return," said Jennifer Moore, manager of corporate communications at Ford.

A study last year by Consumer Reports on six leading hybrids in the U.S. market concluded that each vehicle cost owners more than gas-only models, even when tax incentives and the saving on fuel were factored into the equation.

"None of the six hybrids tested recovered its price in the first five years and 75,000 miles of ownership," the study said. (The mileage equals 120,000 kilometers.) The study noted that the extra cost of owning a hybrid ranged from $3,700 to $13,300 during the first five years, depending on the vehicle.

The Consumer Reports study noted that tax breaks and other incentives helped to cushion the blow of a high price tag for those who are willing to pay a premium for a hybrid.

"But," the magazine concluded, "for those who are considering buying a hybrid for purely financial reasons the figures just don't add up."

Manufacturers say they charge higher prices to reflect greater production costs, not to rake in profits.

A recent report by Sanford C. Bernstein, the consulting group, found that hybrids cost $4,500 to $6,000 more to build than conventional cars.

That is partly because they contain more machinery and more metal. But it is also because the relatively small market for hybrids brings few economies of scale. A larger market would mean lower prices.

"The two go hand in hand," said Marten Wikforss, vice president of media relations at the Volvo Group.

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