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TheGarcipian (34.00)

Mr. Hyped Technologies

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July 11, 2007 – Comments (2)

Ok, so maybe I've got a little steam to blow off about this huge run-up over the last 4 days for Inbred Technologies, er, Hybrid Technologies (symbol: HYBT.OB). It's in its death throes, so I suppose this gag-up is just the sputum rising in its withering throat. It's expected, but it won't last long...

As far as hyping the hybrid hype goes, I wouldn't bet on Americans switching over in droves to electric cars. Not yet anyway. Besides the generalized rationale behind the "avoid change, follow tradition" mentality of the human species, Americans won't swap out their cars for electric versions unless there are huge federal and/or state incentives (lots of tax breaks, and I do mean LOTS!). Have you ever done the math, really sat down and crunched the numbers to see how much a new electric car costs you in terms of gallons of gasoline saved? If not, here's are two quick back-of-the-envelope calculations (warning: your mileage may vary)...

First, let's figure out how long it will take you to break-even on the purchase of an electric car. Then, we'll figure out how much you'd have to pay in gasoline charges (per gallon) in order to make an electric car affordable.

In order to compute how long it’ll take you to break-even for the higher electric car price, we can use the equation: DeltaCarPrice = DeltaGasCosts/year * YearsDriving.  For simplicity's sake, we'll keep all other variables (maintenance, insurance, etc.) out of consideration.

Depending on where you buy your electric car and what model you choose, you'll pay about $10k-$12k more for the privilege of owning such a car over a similarly sized & equipped car. Let's assume your current mode of transportation gets you 20mpg. Current reports show Prius owners averaging 40-50mpg (the higher end is from driving very evenly and without the AC on). So, at best, you'll average more like 40-45mpg, or 20-25mpg more than via your fossil fuel friend. If you’re currently paying $3.00/gallon for gasoline, then for every 25 miles you drive your gas hog, you’re paying approximately $3. Most people average 12,000 miles driven per year. So, the fossil fuel car will cost you an extra:

($3.00/gal) / (25miles/gal)  * 12,000 miles/year = $1440/year in extra fuel costs.

Q. So how long would you have to drive that new electric car in order to break-even on the extra gas costs? Ans: YearsDriving = DeltaCarPrice / (DeltaGasCosts/year), or $12,000 / $1440/year = 8.33 years (if you use the $10k sticker price difference, you’ll get 6.94 years). Since most people keep their cars for only about 7 years, it’s pretty much a wash. Obviously, the less you pay for the electric car (e.g., buy it used) or the more/less you drive in a year, or the price of gasoline all affect that break-even-year calculation.

Which brings up a good hypothetical question: how much would gasoline have to cost per gallon to make economical sense for me to buy an electric car (considering all things else to be equal)? If I wanted the electric car to be paying for itself going into the 4th year (i.e., expecting the break-even to occur after 3 years) and I’d paid $12k more for it over a similar gasoline-based vehicle, gasoline would have to cost:

DeltaCarPrice / YearsDriving = DeltaGasCosts/year, where DeltaGasCosts/year is (GasCostPerGallon * MilesDrivenPerYear) / DeltaMPG.

Substituting the above figures in and solving for GasCostPerGallon, we find GasCostPerGallon = $8.33/gal.

And we’re a long way from $8 per gallon gasoline…

Of course, there are plenty of other good reasons for owning an electric car (aesthetics, environmentally sound, etc.). Just don't try to pass off fuel cost savings as one of them, not to me anyway...

Oh yeah, this company's financials suck resources like a 1970 Dodge Charger -- BIG TIME!  And Mr. HYBT.OB, you can stop the hype; I ain't buying it nor you... Big thumbs down. Out the exhaust manifold like the vapor trail that you are!

2 Comments – Post Your Own

#1) On July 12, 2007 at 1:59 PM, LaughingRaven (94.68) wrote:

I can't say I like HYBT either; as far as I'm concerned, any investment in alternative energy companies right now is pure speculation.

Still, I wouldn't write hybrid vehicles off just yet.  The technology is still pretty young.  The next generation Prius (top seller in the industry) is expected to get about 80 miles to the gallon, and rumor has it that short trips (< 9 miles) will run entirely on electricity.  Toyota also expects that by 2010, that $3K difference in the sticker price (not sure where you got $10K) will be gone, thanks to cheaper components.  With other automakers (even Hyundai) working on their own hybrid technology, we should see some interesting advancements in the next few years.

Still, I agree with your overall point.  Betting on a cash-bleeding company, whose lofty share price is driven entirely by hype and pixie dust, isn't very smart.

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#2) On July 13, 2007 at 12:41 AM, TheGarcipian (34.00) wrote:

Hey LaughingRaven, thanks for the update on sticker price differences. My $10K delta was from personal info collected from  neighbors and friends who'd bought their vehicles, but that was a few years ago. Glad to know the delta has come down so much. That will certainly make it cheaper to switch over to a hybrid. I love the technology, but don't care when people talk solely about the gas mileage difference without doing the math. And, from what you're saying, it sounds like the math is getting better and better!  Cool.

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