Hybrid Payback Period: Lexus
We’re often asked if a hybrid vehicle makes more sense than its gasoline sibling. While there are several factors that can influence the decision about whether to go with the hybrid, including environmental impact and the social image associated with it, the price difference between models is usually given the most weight. In this series we’ll look at hybrid offerings from each brand where there is also a gasoline option, and calculate the payback period of choosing the hybrid powertrain.
There are a number of factors that impact the calculation of a payback period. The biggest considerations are miles driver per year and the cost of gasoline. For this analysis we assumed 12,000 miles per year (roughly the average in California), and $4.00/gallon. We also assumed no time-value for money (0% interest), and equivalent maintenance, insurance and depreciation between models to keep it simple.
Lexus currently offers five hybrid models, and three of the five have a gasoline option in the same model. Here’s how they compare:
ES 300h vs. ES 350
|ES 300h||ES 350|
|Fuel economy||39 mpg city/40 highway/40 combined||21 mpg city/31 highway/24 combined|
Price premium for the hybrid: $2,880
Payback period: 3.6 years, or 43,200 miles
The ES has the narrowest price premium to step up to the hybrid option in the Lexus model lineup, and therefore a very reasonable time and mileage period before the hybrid starts saving money. Additionally, the ES 300h is one of the least expensive midsized hybrid luxury vehicles on the market.
RX 450h AWD vs. RX 350 AWD
|RX 450h AWD||RX 350 AWD|
|Fuel economy||30 mpg city/28 highway/29 combined||18 mpg city/24 highway/20 combined|
Price premium for the hybrid: $6,475
Payback period: 8.7 years, or 104,300 miles
Unlike the ES where the hybrid means a little less performance in exchange for better fuel economy, the hybrid RX offers more horsepower and greater fuel economy compared to the RX 350. This best-of-both-worlds does add up to a greater price difference between models, however, and that translates to a longer payback period before the hybrid makes sense from a financial perspective.
GS 450h vs. GS 350
|GS 450h||GS 350|
|Fuel economy||29 mpg city/34 highway/31 combined||19 mpg city/29 highway/23 combined|
Price premium for the hybrid: $12,760
Payback period: 23.7 years, or 284,300 miles
We’ll admit that this isn’t exactly a fair comparison, but given the closer comparisons between the ES and RX models, we are often asked how the hybrid stacks up in the GS.
Competing brands like BMW and Mercedes-Benz offer both 6-cylinder and 8-cylinder engine options in their midsized sedans. Because the 8-cylinder engine offers increased performance, it usually costs about $10,000 more than the 6-cylinder engine. Therefore, the two engine options aren’t really comparable—one isn’t meant to compete with the other as they serve different buyers; the 6-cylinder for the buyer looking to save money and get a little better fuel economy, and the 8-cylinder for the buyer looking for the best performance.
Lexus chose to forgo an 8-cylinder engine in the GS and instead offers a performance-oriented hybrid model in its place. The GS 450h performs like an 8-cylinder model, but because it’s a hybrid with a 6-cylinder engine, it also provides better fuel economy than an 8-cylinder engine would have delivered. To line up with the 6-cylinder and 8-cylinder engines in competing brands, Lexus prices these two models about $10,000 apart. Therefore, most buyers choose the hybrid GS because they want the added performance—not the extra fuel economy.
Whether a Lexus or any other brand is the next car you want, Cartelligent can help you get a great deal on exactly what you want. Call our team of car-buying experts at 888-427-4270 or get started today.