Is there a diesel engine in your future? I used to say "no way" because diesel fuel was too expensive in the United States. Diesel fuel is about 2/3 the price of gasoline due to the tax structure in Europe, so diesel sales are about 70% of new car sales. Even S-class and 7-
series are available as diesels -- and they sell very well. But should I now start hedging?
The picture here was taken on 28 August 2005. Diesel is now more expensive than even premium gasoline. Why is that? Isn't diesel a far lower grade of fuel than gasoline, hence requiring less refining? Yes, it is. So why is it more expensive? The oil companies say that it is because of demand and their refinery set up. Then why is it more expensive? It seems that it might be that in this era of much higher fuel prices, diesel has a rather fixed demand due to trucking and commercial uses, so why not make lots of money on diesel fuel and have gasoline demand go down with higher fuel cost. Oil companies make more money that way, and many of the freight uses just pass costs to the consumer.
So which type of car is cheaper to use -- a gasoline-powered car, a diesel-powered car, or a hybrid car? In the real world that we drive in, it depends on how the car is being used.
In the last several months, Toyota arranged a show-and-tell arrangement with the press. Reporters were given a new Lexus RX400h (hybrid), a Lincoln Navigator, and a GMC Yukon to drive across the United States. Note that this is not the best use of a hybrid, but the Lexus got 25 miles per gallon, versus the 15 to 16 of the American truck SUVs. Mercedes took issue with this "contest" and held their own. They had reporters drive across the U.S. in an RX-400h and a European Mercedes ML320CDI diesel. They needed to have European diesel fuel available because the car required the low-sulfur fuel available in Europe. It will be available in the U.S. in 2007. With similar performance and cargo capacity, the Mercedes beat the Lexus by 4 miles per gallon.
This comparison demonstrates the already known facts that new technology diesels are more economical than current hybrids on the highway. In the city, gasoline cars are at a distinct disadvantage to either one, but the hybrid is likely to beat the diesel.
But which type of propulsion system has the advantage in total operational cost? As I said before, it depends on how you drive. Let's look at trying to make some comparisons anyway. First, I will quote a Fiat engineer who said that a diesel engine costs about 50% more to make than a gasoline engine. That translates into a higher cost to the consumer in the showroom. Of course a hybrid powertrain is much more expensive than just a gasoline engine -- because it uses a gasoline engine and a lot of other expensive stuff. This additional cost hasn't been completely passed on to the customer -- yet. But hybrids are still more expensive than conventionally powered cars.
Comparing the cars directly, in Britain, the BMW 330d SE is just over $1000 more than the 330i SE. With diesel performance just slightly inferior, but mileage much better, it doesn't take long to pay for that $1000. With the price of diesel much lower than gasoline, the payoff comes very quickly in Europe.
In the United States (but not California), you can buy a Mercedes E320CDI for $51,125 (base price) and an E320 for $49,220. That's a difference of $1905. The diesel is EPA rated at 27 city and 37 highway. The gasoline model is 20/28. Averaging those numbers and driving 12,000 miles a year, it would take almost 13 years to pay for the difference at the price of premium gas and diesel fuel. That doesn't make sense to me.
Volkswagen offers a Jetta diesel (2005 and not in California). The diesel is $22,430 and is EPA rated at 32/43. The gasoline model is $21,210 and is EPA rated at 24/30. As with the Mercedes, if you average the EPA numbers and drive 12,000 miles a year, it would take 7 years to pay for the difference in initial cost. That's better than the Mercedes, but still wouldn't be something I would consider.
Okay, let's look at the new Lexus RX400h. It's list price is $49,060 (if you can buy one). It's brother, the RX330 is priced at $38,075. That's a big $10,985 difference in initial price. The hybrid is EPA rated at 28/30 and the gasoline model at 18/24. This isn't going to look good, is it? Assuming the same 12,000 miles a year with average freeway and city driving which probably is fairly likely for many Angelinos, it would take 26 years to pay off the difference in fuel cost. I'm not sure what either of those would look like after 26 years. It looks like a fashion statement to me when someone buys an RX400h.
Last, I would like to compare the Prius with something. There are two problems with that comparison. What do I compare it with -- the 4-cylinder Camry? They really aren't the same car like the other comparisons I've made. The other issue is that Toyota has highly optimized the computer programming in the Prius hybrid system to get maximum EPA numbers, and pretty much ignore what the car gets in the real world. Nobody gets the EPA mileage numbers in real-world driving. The numbers are 60 miles per gallon in the city, and 51 miles per gallon on the highway. So I will quote an unbiased source who tested a number of frugal cars last year. Car and Driver's conclusion about the Prius is: "Buy some other frugal car for 20 large -- say it gets only 30 mpg of $2 gas instead of the Prius's 55 mpg (that's the EPA's combined city and highway number)—and that five grand premium on the price of the car applied to gas will take you 75,000 miles. The Prius will have been driven 165,000 miles by the time enough dollars are saved on gas to overcome that extra starting cost."
The other missing parameter in the comparison of costs for a hybrid is the maintenance cost after the warranty runs out. The electric motors and the batteries have really unknown lifetimes. Either one is quite expensive to replace. Yes, Toyotas have great reliability, but still these are undetermined costs that must be considered if you plan on keeping the car beyond the warranty period.
At least with the Prius, you need a passenger in the car pool lanes!
