Jinn of Quality and Risk

Let's assume, in the best case, that you pay an extra $5,000 for a hybrid car with double the fuel efficiency (30mpg vs 60mpg), ceteris paribus (all other things being equal).

In order to recover the extra payment you've made, you'd need to use 3333 gallons (at $1.50 per gallon) which translates to covering a distance of 200,000 miles. Let's say you keep your car for 10 long years. That's 20,000 miles per year. Are you commuting about 100 miles each day? (I wouldn't.) Will you keep your car for 10 years? (I might, not sure.)

What if you had invested those $5k instead? standard bond rates (6%) would turn that into $9k after 10 years. Historical, average stock market index growth (12%) would turn that into $15k over 10 years. Take into account (deduct $500 a year) the $5k you'd spend on the extra fuel (remember, 30mpg not 60mpg) and at the end of 10 years, you're still much better off having bought the cheaper, non-hybrid car. In fact, you've saved money to buy a new car... Scale: multiply by millions of capitalist citizens.

Hybrid cars are not an economical solution, because capital investment is a very expensive proposition. If you choose to buy a more expensive hybrid car today, you're limiting your options and using capital which could have been allocated to other, more productive and profitable uses. Current market prices and profit rates clearly indicate so. 

You don't need an expensive hybrid car to get better fuel performance: driving habits can make a 20% difference in fuel economy; an automatic is 5% less efficient than a 5-speed manual transmission; air conditioning can cost 10-20% in urban cycle. There are other, mechanical factors. It adds up quickly.

My reasonably powerful 1992 Audi 80 consumed less than 7.5 l/100km (urban cycle), which translates to 38 mpg; a constant 75mph on the highway rated 47 mpg (and 30mpg at 120mph on German highways). Anytime my average fuel consumption was increasing by 10% or more, I knew there was a problem and the car needed servicing (usually small things: change oil, adjust the fuel pump, rotate/balance tires, add cooling liquid, etc.). I sold the car in 1999. Many modern cars in the US are rated at 20-30 mpg for urban/highway drive; this strikes me as too low. Some people get upset about it, and demand that the government do something about fuel prices, the design of car engines, and our dependence on Middle East oil. I would recommend that the do-something-people read The Government Against The Economy — a story of price controls and its far-reaching, negative consequences.