Can Hybrid and Electric Vehicles Really Help You Save Money?

Electric vehicles have been growing rapidly in popularity in Singapore. Just earlier this year, for insance, the Land Transport Authority reported a 70% growth in the number of of petrol-electric hybrid cars in Singapore from 2015 and 2016. While hybrid cars have garnered more popularity due to their low fuel consumption and high rebates, many buyers may not have actually estimated the total savings one can get from buying an EV instead of a petrol-fueled car. According to our calculation, however, the cost advantage of hybrid cars are not yet significant. In fact, for most drivers, they are unlikely to actually benefit economically from purchasing a hybrid car than its traditional alternative.

Hybrid Cars: Savings Over 10 Years Insufficient to Offset Its Higher Price

According to ValuePenguin's calculation, a car owner saves about S$300 per year by purchasing a petrol-electric hybrid car instead of a traditional car. However, this is no where close to being big enough to offset the S$26,000 of cost difference between buying a normal car and buying a hybrid vehicle.

To estimate this, we gathered data on two of the most popular car models in Singapore: Toyota Corolla Altis 1.6 and Toyota Prius 1.8. The former costs about S$106,988 to purchase, while the latter costs about S$130,988 even with the CEVS rebate, resulting a difference of S$24,000. Furthermore, we estimate that the higher price tag leads to a bigger car loan, adding around S$2,000 of extra cost in interest. Given that the maintenance cost of these vehicles are more or less similar, the major cost differences resulted from petrol cost and road tax you pay on the vehicle every year.

Prius 1.8Altis 1.6
Purchase PriceS$130,988S$106,988
Interest Cost on Car Loan (60% LTV)S$11,003S$8,987
Annual Road TaxS$1,118 x 10S$742 x 10
Annual Petrol CostS$1,036 x 10S$1,708 x 10
Total Net CostS$163,533.59S$140,472.26

Savings from Petrol Cost

First, Prius 1.8 consumes about 3.7 litre per 100 km, while Altis 1.6 comes with 6.1 litre per 100km, less than than 2x higher. Given that an average person drives about 17,500km per year in Singapore, this results in an annual petrol savings of 420 litre. At S$2 per litre and saving about 20% on petrol purchases with petrol credit cards, one can save about S$672 per year on petrol by driving a hybrid car instead of a traditional sedan. This would result in total saving of S$6,720 over the span of 10 years, and would take about 39 years to offset the S$26,000 in higher price tag and interest cost. Compared to this, most cars in Singapore can only be driven for 10-20 years b/c of COE restrictions.

Savings from Road Tax

Secondly, because a Prius 1.8 has a higher engine capacity than an Altis 1.6, it requires a higher road tax payment every 6 month. This is about S$376.53 per year that offsets the petrol savings that we mentioned above, resulting in a lower net annual saving of S$295.47. To offset the S$26,000 in cost difference between the two car models, then, it requires about 88 years for an average driver. Of course, if he purchases a hybrid car with an equal engine capacity as the traditional car like an Altis 1.6, he will be able to increase his annual savings as we mentioned above. However, it likely won't result in a big enough of a difference to matter.

A Surprising Discovery: No Difference in Car Insurance Cost

While we expected car insurance to be more expensive for the more expensive, we surprisingly found that the cost of car insurance for these vehicles were not all that different. For instance, FWD, one of the cheapest car insurance providers in Singapore, charged S$674.77 per year for Prius 1.8 and S$682.15 for Altis 1.6. These estimates were based on a 45 year old, male driver with more than 5 years of driving experience and a NCD discount of 50%.

Are Hybrid Vehicles Really Worth It?

Given that hybrid and electric cars on the rise, it was surprising to see that hybrid cars are actually still not uneconomical compared to buying just a traditional car. Perhaps, the environmental issues and concerns around climate change are finally having positive impact on human behavior.

However, one should also consider the downside of purchasing a hybrid car, namely the bigger overall cost and upfront payment and the limited number of choice. Not only does it cost you more upfront to purchase a hybrid car, it can take more than 8 years before you see its true economic benefit. Therefore, it may not be the right choice for you if you don't plan on keeping your car for that long. This is especially the case for car-aficionados who have deep emotional attachments to specific models of cars they want to own, as there aren't that many EV models available in the Singaporean market just yet.

*This article has been modified to reflect the correct fuel consumption of Corolla Altis 1.6. The Toyota Singapore's website had incorrect information that we based our initial calculation on, as shown in the screen shot below. Toyota's own website had inconsistent information regarding Altis 1.6's fuel consumption, and the correct fuel consumption should actually be 6.1 litre per 100 km.

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