Frugal Motoring – Should I buy a hybrid?

In Frugal Motoring I discuss how I run cheap cars, the pros and cons for various purchasing methods (straight up cash, loan, PCP, lease), diesel vs petrol vs hybrid vs electric, ongoing political/ government motoring related machinations and how to keep your car running. Here I’ll look at the pros and cons of hybrid cars, some of the history and some worked costings.

Which hybrids am I talking about?

Hybrid vehicles have been around for as long as there has been motorised transport. Petrol-electric hybrid trams were first patented in 1889 (1). The Woods “Dual Power” of 1915 used a combined system of electric motor below 15mph and petrol engine up to it’s max of 35mph, which also charged on-board batteries. Just like a modern Prius (1).

It was a commercial failure, as were most attempts at developing electric vehicles up until the turn of the century. Batteries could not provide the range, speed or flexibility required for most users. The energy density of petrol outstripped conventional batteries. Rural communities lacked an electricity grid, and oil-based fuels were much more portable. The idea was ahead of the technology. Lots of companies toyed with electric vehicles, including AMC (developing regenerative breaking systems for the failed Amitron) and Audi (the Audi Duo, a plug-in parallel hybrid 100 Avant quattro), BMW (CVT hybrid-electric E34) and Volvo (with a gas-turbine hybrid 850/S80) (2, 3). It was Toyota with the Prius and Honda with the Insight that were the first mass-produced hybrids, using the trusty petrol engine as backup. Battery technology and the focus on reducing emissions has pushed the pace of change, and since the turn of the century hybrids have begun to become mainstream (1).

Types of hybrid

For sake of simplicity there’s five hybrids I’ll talk about:

  • Mild
  • Series
  • Parallel
  • Series/ Parallel
  • Plug-in (4)

Mild hybrids

A bit of a weird halfway house where the petrol (or diesel) engine is the main driving force, and an electric motor replaces the starter and alternator to provide a boost when accelerating and battery regeneration when breaking. The more powerful electric motor also allows the engine to turn off when coasting or when stopped, as part of stop-start emissions technology (5). The electric motor can’t propel the vehicle on it’s own, and systems are generally at a lower voltage. This is a route taken by most US and European marques, including the Mercedes, BMW, Audi and Peugeot, and allows for greater fuel efficiency with little change to drivetrain structure (5).

Series hybrids

In some ways the simplest design, a series hybrid attaches a fuel-burning engine to the batteries or electric motors. Electric motors provide the drivetrain and motion, and the petrol engine is there to top up the batteries or provide the electricity. This system allows the engine to run continuously at peak efficiency, but requires large batteries and motors to provide sufficient power (6). A clever idea and a solution to range anxiety for those with city cars that occasionally need rural jaunts. Because of the larger motors and batteries they tend to be more expensive, and aren’t really mainstream. The only one I can think of is the BMW I3 REX (Range-extender), which was discontinued (7). Make your own by connecting a diesel generator to an electric milk float.


Parallel hybrids

Here the electric motor and/or the petrol engine power the vehicle by being mated to a combined drivetrain, increasing complexity and potential drivetrain losses, but decreasing energy conversion losses. Here the high-torque nature of electric motors are often used for stop-start, with the petrol/ diesel engine providing the higher power required at higher speeds. The combination means smaller motors and batteries can be used, reducing costs while increasing efficiency. Regenerative breaking recoups the battery losses, with further recharging from the petrol engine’s alternator (4, 6).


Series/ Parallel hybrids

The logical next step in development was to combine these two systems (6, 8). This is what Toyota did with the Hybrid Synergy Drive in the Prius, and what is now found in most hybrid systems (9). In it’s simplest form the transmission is set up so that two modes of driving are available; an electric motor only for low speeds, and a petrol engine for higher speeds that also recharges the batteries at high RPM cruising. In some applications the electric motor is used to provide a power boost at high speeds, and the electric motor can act as a generator through regenerative breaking. The use of more complex transmission systems allows for different proportions of electric motor power and petrol engine power to be used at different times. A further development is the use of engine designs and valve-timing maps in the petrol engine which alternate to the more fuel-efficient but less powerful Atkinson-Miller cycle (9).


Plug-in hybrids

The final step in development was to add the ability to charge the batteries from the mains, rather than being solely dependent on the engine/ regen. These basically do what they say on the tin. They usually have a larger battery capable of 20-30 miles of range, with a mains connector enabling you to run them entirely on electric for short commutes, saving the petrol engine for fast or long journeys. Due to the larger (heavier) battery they can be less efficient than a pure EV or solely petrol car. Examples here are the hugely popular Mitsubishi Outlander (who basically nailed the market by providing eco-conscious chelsea-tractorists the first PHEV 4×4), plus newer Honda Accords, Chevy Volt and Hyundai Ioniq (10).

Mitsubishi Outlander PHEV

Tax benefits

Hybrids are looked on less favourably by HMRC than in the past. Pre-2001 things were just done on engine size. Then HM Gov made efforts to move away from polluting cars, continually driving emissions ratings lower, pushing tax brackets to follow. It got so good that the government got fed up of everyone having fun, so from April 2017 hybrids tax rules were changed to make it harder for hybrids to be used as a tax-break. They also made it a lot more complicated, because they’re politicians. This actually means buying an older car can work out cheaper. Up to March 2017 this was the state of play (11):

Pre-March 2017

So it was as simple as if your car produced less than 100g/km CO2 it was free tax. From April 2017 (post Dieselgate) the Gov implemented a system where tax was calculated based on the Real Driving Emissions 2 (RDE2) standard (take that VAG), with a discount for the first year and a supplement if the car had a list price over £40k payable for the first five years. This looks like this (12):

First PaymentSubsequentSupplement

Notice that this still subsidises cheap EVs, but not hybrids. The other tax benefits to mention for everyday users are that home electricity incurs only 5% VAT rather than the 20% on fuel (13). Company car users get further benefits when selecting a hybrid or pure electric vehicle, through benefit-in-kind (BIK) and various means. Rather than listing them all out here I’d recommend a read of the useful “Tax Benefits for ultra low emission vehicles” cribsheet from the Office for Low Emission Vehicles, and the comprehensive calculator at nextgreencar  (14, 15).

Worked examples

One of the reasons for this article is we’re deliberating replacing MrsShrink’s car with a hybrid or electric. We wanted to run the numbers to see if we could actually save money by replacing. We’d be buying second-hand which means we can navigate the tax system to our benefit with plenty of online guides to help, but for the purposes of this calculation I’ll also include some PCP options (16, 17, 18). The benefit of second-hand is that the 20% increase in new purchase price of a hybrid is mostly lost (although still present) due to depreciation (19). We’ve chosen to look at a new Hyundai Ioniq, a three-year old Mitsubishi Outlander, a six-year old Prius and an eight-year old CR-Z. The Ioniq is Whatcar’s 2019 hybrid car of the year, coming with a five-year warranty and looking super sleek and futuristic (20). For the purposes of this calculation I’ve used PCP (it’s the cheapest, but read the reasons I hate PCP here) over two years, with a £3k deposit and 10,000 mile limit on the base model PHEV (cheapest) (21). My table includes Hyundai’s claimed 252mpg but I’ve used the real-world figure obtained when by a couple of different magazines who ran a long-term test Ioniq hybrid for MPG calculations (22, 23). CO2 emissions of 26g/km mean it’s tax free for the first year. A Hyundai yearly service is quoted at ~£130.

The second contender is the Mitsubishi Outlander (24). The best-selling hybrid 4×4. Autotrader found me a 2016 PHEV model with 30k on the clock for a reasonable £260/month, again on PCP. Same £3k deposit. Mitsubishi claims between 139 (RDE2) and 156mpg depending on where you look, but again real road tests find it more like 40mpg average (25, 26). 46g/km of CO2 means free tax. A quick google finds people on car forums quoting £300 from Mitsubishi for a service. At 3 years old I’d hope the tyres would be ok, but we’ll throw in £30/month to cover a couple of replacements over the course of the year.

Next is our old friend the Prius. 2013 models come in a range of prices depending on spec. Straight-up hybrids start about ~£9k, with around 80k on the clock, whilst PHEVs start at £14-15k. This time we’ll take a standard hybrid and purchase it outright with our £3k deposit and a £6k credit card at 0% interest, with the intention of paying back in 24 months. We would intend to own for five years, and so we’ll take a guestimate at residual values by looking at what an eleven-year old Prius currently costs; between £4-6k. If we say £5k then we’ve essentially paid £4k to own a car for five years. For the sums I’ve used the credit card £6k over two years, plus the sum of the final residual value minus the deposit over the five year ownership; i.e. (credit card/24) + ((residual value-deposit)/60). This simulates financing the depreciation (like PCP) and what you would need to save over five years to go from £3k to £5k deposit (without interest). Stated MPG for the Prius is 70.6mpg, but real world appears to be more like 55mpg (still bloody impressive) (27, 28, 29). Yearly servicing stands between £180 for a minor to £350 for a major (so we’ll call it £250). As a six year old car I’d expect higher consumables, so I’ll add £50/month to cover wear and tear repairs/ tyres etc. For a 2013 model the 92g/km of CO2 means free tax.

The final contender is the Honda CR-Z, a quirky little coupe which was billed as the first hybrid sportscar (30). It’s a proper oddball, not as quick as it’s looks suggest, not big enough to be particularly usable for a family (31, 32). Made from 2010 to 2015, a 2011 model with 50-70k miles can be had for as little as £5.5k. We’ll take one of those for the maths, with £2.5 on a 0% credit card over two years. Residual is more difficult, but I’ll lowball an estimate of £2k after five years, losing £3.5k of value. Same formula for this as the Prius when calculating depreciation costs, just changed slightly to account for the drop of residual versus deposit. CO2 of 117g/km means a tax cost of £20/year. MPG is quoted at 56, but real world tests find it to be closer to 45-50 (a bit pants TBH) (33) Servicing is quoted at £200/year, and as an older car again I’d expect a bit more in terms of wear and tear although most places agree the build quality is high.

So how do the sums add up when compared to my daily Green Car. I’ve tracked all 40,000 miles with an average MPG around 33, it costs me £25/month in tax, and over the four years of ownership I’ve spent £2000 on purchase and another £2.4k on servicing and wear and tear, for a total of £92.40/month. Here’s the final breakdown:



The sums say it all. On paper, my cheap and cheerful petrol car has cost me less to run for four years than a new hybrid would. The old lump is not pretty, it’s not fancy and it’s more polluting, but it serves it’s purpose. Ignoring the depreciation costs I would still spend more than half what I do now to run a hybrid. The MPG and tax improvement is not significant enough to offset the purchase cost. Hybrids have two powertrains, they’re heavier than a car with one powertrain; they shoot themselves in the MPG foot. There are also concerns about the durability of batteries, although the number of Prius taxis with 250k miles under their belt seems to disprove this. The volume of EVs and hybrids sold continues to rise in the face of falling wider car demand (34). I think I’ll wait for further depreciation to bring hybrids into my price bracket, and we’ll have to see if they’re a technological dead-end to be overtaken by pure electric vehicles, or will remain as a market option in the future.



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