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TinotopiaLog → Fuel-Efficiency, Economics, and You (12 Mar 2002)
Tuesday 12 March 2002

Fuel-Efficiency, Economics, and You

The other day, I ran across a discussion of car fuel-efficiency and the need for more cars like the Honda Insight, a hybrid car that gets 68 mpg by using an electric motor/generator to replace some of the engine’s power when it makes the greatest difference for fuel consumption.

And people were using the words efficiency and economy pretty interchangeably. So we here at Tino decided to do some investigation.

The Honda Insight gets 68 mpg on the highway, and costs $19,080. The Honda Civic gets 44 mpg on the highway, and costs $13,610. Let’s assume for the moment that the cars are otherwise equivalent (they’re not — the Insight seats only two and is not as fast as the Civic). The Insight is gets 55% better mileage; because the Civic only outweighs the Insight by 31%, this actually represents greater efficiency and not just a reduction in load. If we equalize the weight of the cars, the Insight actually moves a pound of weight more than twice as far on a gallon of fuel. The Insight is very efficient.

All of that said, the Insight is uneconomical for the driver. If you drive the Insight for 100,000 miles, you’ll spend $1,600 on fuel, given current average fuel prices around here of $1.13. The Civic will cost $2,500 to cover the same distance. Big difference, right? But you’re still over $4,600 in the hole, because the Insight costs almost $5,500 more than the Civic.

To recoup that initial investment, assuming that capital is free, you have to drive over 600,000 miles. After almost 604,000 miles, you’ve saved enough on fuel to repay the initial higher investment in the Insight.

Honda, bless them, doesn’t market the Insight as a money-saver. They point out that it saves trees etc. This might result in the Inisight being worth it, but it’s impossible to know: environmentalists are right when they point out that the real cost of using gasoline is not reflected in the price of the stuff.

For the Insight to be financially worth it in 100,000 miles, though, assuming that you taxed gasoline heavily and spent the revenue on cleaning up the environment — fuel would have to cost $6.82 a gallon.

Posted by tino at 13:45 12.03.02
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