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January 4th, 2009

Yesterday I was driving through East Texas and I saw for the first time a Cadillac Escalade Hybrid. Shwanky, I know. But I got to thinking – I wonder what the math on that guy is. So I looked it up…here we go:

The standard 2009 Escalade MSRP pricing starts at $60, 985, while the hybrid version starts at $70, 685, a difference of $9, 700. This is the premium you pay for the hybrid engine. Now, I’ll ignore the slightly less powerful motor on the hybrid version, as I suspect with over 300 horsepower there is still sufficient strength to do whatever you need.

OK, so let’s figure out the break-even analysis on that $9, 700 premium. GM claims the hybrid gets 50% better fuel economy in the city, and 20% better on the highway. For city driving, that brings the MPG up from 12 to 18. The average driver covers just over 1, 000 miles per month, so I’ll use 1, 200. That’s 67 gallons of fuel versus 100 gallons required for the standard gasoline engine, as savings of 33 gallons. At our current bargain-basement petroleum costs, that’s a savings of about $50 a month. If gasoline remains at this price (ha, I know), it’s going to take about 16 years to break even and start saving money with the hybrid.

Now let’s say oil prices begin to rebound as everyone expects they will, and they rise again to a $3 average. Of course that means it will only take 8 years to reach break-even point and start seeing green. Much more reasonable, don’t you think? Now obviously if you drive twice as much as the average driver and put 25, 000 miles a year on your hybrid, you can look forward to break-even point just as that odometer rolls over the 100, 000 mile mark.

Now let’s not forget the best-case scenario for hyrbrid owners. If gasoline skyrockets to a $5 average, it’s just going to take the average driver a little less than 5 years to reach fruitfulness. But keep in mind, this assumes 100% city driving, and no highway travel. So I consider this the ultimate best case scenario.

Maybe this kind of math is why GM is looking for a bailout about now, what do you think?

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