4 ms·
Great question! The answer is that it won't always, but it will sometimes. Because this is very counterintuitive. Here's my back of the napkin model, caveat em
by brownbat 9y ago
Great question! The answer is that it won't always, but it will sometimes. Because this is very counterintuitive.
Here's my back of the napkin model, caveat emptor.
Say we're calculating total cost per mile. What inputs do we need?
Fuel price, fuel efficiency, amortized vehicle cost, maintenance/repair costs... both of those last two are dependent on length of ownership in both time and miles, and how old the vehicle was when it was purchased. Purpose of the vehicle is a secondary factor too, affecting efficiency and wear/maintenance.
I'm going to ignore or hold constant some of those but toy with others.
Say fuel is very expensive at $10 a gallon, and also there's a lot of low hanging fruit to increase the efficiency of a vehicle. Say you can get another 5 miles per gallon over your 20 mpg by raising the cost of the vehicle by only $500. And say you don't significantly increase its complexity or repair costs while doing so.
Before you drove 100 miles per week at $50/wk. Now you drive 100 miles per week at $40/wk. You plan to own the vehicle for 10 years. You pay off the difference and get pure profit by the end of the first year.
Sometimes fuel won't be $10 a gallon though. Let's say fuel is cheap, and the low hanging efficiencies have already been exploited. Let's say fuel is $2 a gallon, and you can only get wring 35 mpg up to 36 mpg for another $500.
Now how long does it take for the improved efficiency to pay off the premium?
Just over 60 years.
Increasing the miles driven per week pushes it back the other way. It all depends on your assumptions.
Basically we're looking at a benefit to the driver whenever:
(price_per_gallon * miles_per_week / old_miles_per_gallon) - (price_per_gallon * miles_per_week / new_miles_per_gallon) >= increased_vehicle_cost / lifetime_weeks_owned
- jstanley 9y agoIf it were true that more efficient cars were cheaper overall, people would prefer to buy them without any regulation required. That regulation is required implies that is not the case.
- Broken_Hippo 9y agoRegulation being required is only a sign that some of the companies aren't willing to produce such cars without regulation. People aren't always rational about price. You might want a more efficient car, but those are newer. You have $1000 and your older car just broke. The repairs cost more than the money you have, and you need to get to work. You would like a nice, efficient car but in your price range, you get gas guzzlers. Oh well, it is better than losing your job. There are lots of factors like this folks face when purchasing things. Overall cost isn't always a factor even when it should be in a perfect world .
- opencl 9y agoCheap cars aren't gas guzzlers though. There are plenty of cheap cars with good fuel economy. The absolute cheapest new car you can buy in the US today (Nissan Versa) gets 31 city/39 highway. If you have $1000 you can buy a 20 year old Corolla, they get 31 city/38 highway. The main problem is not cheap cars being gas guzzlers, it's everyone insisting on buying far larger vehicles than they actually need.
- larkeith 9y agoOne crucial factor to consider is that people are really, really bad at long-term planning - even if a more efficient vehicle would pay itself off relatively quickly, many people might go for the less expensive option, thanks to the immediate reward.
- donatj 9y agoGenerally speaking they don’t pay themselves off. I buy $1-$3k cars every ~4 years. No amount of gas savings would justify a $30k car. It’s simply opulence.