Paul B

I don't have an agenda in doing this. I think those deciding for either model have made a good decision. And my numbers may not be exactly apples to apples, but they're as reasonable as I can make them, unless I've forgotten some things, and I probably have. Based on gas savings and initial cost differences, I'm trying to come up with a simplified but reasonably accurate way to compare break even costs of the two models, given the initial price differences and gas savings. I'm ignoring any additional savings relating to extra brake life from the hybrid models or greater trade-in value of the hybrid. I don't know what the trade in will be 10 years from now on the hybrid, but it will be more than the base model. Also the hybrid will include additional items not included in the base model, so I wanted to take a rough cut at it and still be reasonably accurate. Please let me know how this should be further refined.

Okay, on the Lexus web site for 2013 models, the cost of the RX 350h is $47,310. and the base AWD is $40,710 leaving a difference of $6,600. Figuring the vehicles are driven 10,000 miles per year, to make the numbers simpler, and using Lexus published figures of 29 MPG combined city and highway mileage for the hybrid, and 20 MPG for the base model AWD, the RX 350 will use 500 gallons and the hybrid will use 345 gallons. Since Lexus says that regular gas can be used in the base model, I used a $4.00 per gallon price versus $4.20 per gallon for the hybrid since Lexus says it should run on premium fuel. 500 gallons x $4.00/gal. = $2000. per year for the base and 345 gallons x $4.20 per gallon for the hybrid = $1449.

Dividing the $6600. initial premium for the hybrid by the roughly $550. per year saved in gas cost yields a break even of 12 years. Let's say one can bargain down the initial $8000. premium for the hybrid down to $4000. The break even then becomes roughly 6 years. As gas prices go up and as mileage driven goes up, the break even is reduced further, and the increased trade-in value may reduce it even further.

This exercise is just meant to stimulate discussion and not to provide a comprehensive judgment on the merits of one vehicle over the other.

JimH2

I went through a similar exercise when I was trying to decide on purchasing the RX450h vs a new Acura MDX back in 2010; while using average difference in MPG, and difference in initial purchase cost in similar fashion as you mention. My break-even point in miles came out to ~ 80K miles (and believe I used $ 5,000 cost difference in the 2 vehicles at that time). Since I plan to keep the RX450h until at least that mileage, I thought it was a reasonable trade-off to get the RX450h. In addition, there are other desirable features of the RX450h that I liked better.

ejm3

Its no secret that hybrids rarely pay off from a strict dollars and cents standpoint.
I did this same math when I was looking at the Highlander vs Hybrid model. It just didn't add up.

The other things you need consider:
1) Time value of money. You're ponying up $8k today for future returns. Money today is worth more than money 10 years out.
2) Your calculation assumes gas consistent at today's prices. Who knows what gas will be 4,5,10 years in the future. If it doubles the calculaion looks a lot different.
3) Your driving habits matter. If you do a lot of city driving it will make a big difference. In pure stop & go traffic you'll get more like 17 MPG not 20, while hybrids really shine in city driving when you're using the electric motor more, so 29 MPG is likely low. If you drive on the highway the opposite is true. In other words where and how you drive could change the calculation.
4) If you plan on keeping the car a long time battery replacement could be expensive down the road.
5) Can you put a price on the sense of self-satisfaction you get driving a hybrid? If so, what is that price?

Paul B

All good points ejm3. I did consider the present value of $8K spent today vs. the future, but it becomes overly complicated for a back of the napkin analysis. If you drive 20,000 or more miles per year, you change the return somewhat also. If Lexus can figure out how to increase production and efficiency to drive down the delta of $8000. in the initial purchase price, a lot more people will become hybrid owners.

Cruiter

Paul
Your math is off on the pricing. I was just online checking. The base RX 450h starts at $45,910 and the base RX 350 starts at $39,310 making the difference and even $6600. I don't know where you got your hybrid base of $ $47, 310 but it's $1,400 too high. Other than that you're on track. Plus the 450h is considered a higher model and comes with more trim and features such as VDIM as standard equipment and is now only available on the 350 as part of the Sport package so I don't know what it's price point would be. Just keeping the facts straight.

Paul B

I got the prices off the Lexus web site. The price you mentioned of $45,910 is for the FWD hybrid. The $47, 310 price I used is for the AWD hybrid. In this case I was trying to compare AWD to AWD pricing for each model. But I did use the FWD price of the base RX 350 that I have now changed. You're right Jim, either way the difference is $6600.

UCSB

I have run this analysis with various models. Breakeven numbers range from 36,000, miles to 72,000 miles. My own feelings are that somewhere between 40,000 and 50,000 miles make sense here in the San Francisco bay area. Your results will be different in different locations around the country.

InRBigness

Statistics as they say can prove anything, even the truth and the fact that 78.6% of all statistics are made up on the spot lead me to believe that your math is faulty. Okay the numbers may be correct but the premise is faulty. Your assumption is that the 450H and the 350 of equal trim will be worth equal money down the road when they are sold. This has not proven to be the case. Although both cars hold their value very well there has been a very high demand on the 450H in the used market. Some members here, including myself have had dealers trying to get them to trade their existing Hybrids in on a new one because they have customers looking for some used. This should be taken into account as well as gas milage.

Here is a thread on one members amazement on the value of his used 450H.

https://www.clublexus.com/forums/hyb...t-2-years.html

UCSB

To build a fair model comparing the 350 and 450h, you must look beyond gas mileage. Here are a few factors that I considered when looking at the two cars.

1) VDIM: Standard on the RX 450h is Vehicle Dynamics Integrated Management handling technology, which anticipates loss of vehicle control and governs all of the vehicle’s dynamic handling systems – the Anti-lock Braking System, Brake Assist, Vehicle Stability Control, and Traction Control – with the electronic throttle control system. The system employs them collectively and seamlessly to help make corrections while allowing higher dynamic capability. This may allow you to avoid an accident, reduce the severity of an accident or help you avoid rolling over in an accident. This is a tricky part of any model because you have to essentially assign an economic value to your improved chances of surviving certain crash scenarios. Some people, myself included, would just rather have the additional safety margin. Another way to approach this difference is to try and research what this type of capability would cost on other cars.

2) Performance: The 350 has something like 270 HP, while the 450h is rated at 295. This performance difference has a value.

3) 450h comes with additional equipment: The 450h has an upgraded CVT transmission. I really like this transmission approach and have these in both of my cars. In addition, the tire pressure sensors show you the actual tire pressure in each of your four tires independently. I really like being able to take a quick look at my tire pressure in each of my tires. The 450h has chrome surrounds on the fog lights. I think this is a much nicer look than the painted surrounds on the 350. The 450h has a slightly different front-end. I like the 450h more than the plainer 350 style. You have to place a value on these additional items.

4) No Smog Checks in CA: I am a CA driver and the 450h does not require a smog check ever. The 350 requires a smog check every other year in order to renew your registration. Place your own value on your time and the cost of the smog check. For me this is a really worthwhile convenience.

5) Gas: This varies around the country. Here is the San Francisco bay area gas is well over $4 a gallon. In the model, you need to determine an economic value for the hedge that the 450h provides against possibly higher gas prices. This will be of different value to different people based on their ability to deal with higher gas prices. I was down in San Francisco today (China Basin near ballpark) and noticed gas was $4.60 regular, $4.80 premium ... so potentially higher prices is not entirely an academic exercise. The model comparing the cars should consider higher gas prices in the future and the effect on gas saving and resale value.

6) Warranty, Maintenance: This is tough to evaluate. Many of the items are listed in the posts above. Plus the hybrid components have a 8 year 100,000 mile warranty. Some components may have additional coverage here in CA beyond the 8 year/100,000 miles; that is a little unclear to me. At any rate, take your best guess here and offset it by any exposure you feel you might have on the hybrid system above 100,000 miles.

7) Driving Experience: Driving a hybrid is often a more serene and quiet experience. Some people value this kind of driving experience. It definitely has a value to those that appreciate it. There may be a difference in engine noise. 350 owners have been complaining about engine noise under acceleration; I don't believe that this is 450h complaint. I am unsure about the exact difference, but strongly suspect the 350 may be more of a problem in this area.

8) Resale Value: Consensus is this will be higher. Assign your best value under varying gas price scenarios. All is not potentially rosy for the 350. If gas prices spiked up, the 350 could really lose value. The mix of vehicles has changed here in N. CA with the threat of high gas prices in the past few years. Large fuel inefficient vehicles could be much less popular. My point is that the hybrid is not alone in terms of some risk in some scenarios.

9) Intangibles: These are individual and the value will vary from individual to individual. But, driving a hybrid may be an attempt to pick a more sustainable approach environmentally. Some people, myself include, just might not be able to pump $4.50 gas into a car and get 16 MPG around town and feel good about it. There is an attraction to driving a car with more technological content.

10) Usage: People need to model how they will be using the car. If you are a heavy in town user, there will be much bigger differences between the cars than if you are primarily a freeway driver. This factor can really accelerated breakeven. Also, hybrids in general make more sense to higher mileage owners.

11) Insurance: Many insurance companies, including mine, offer discounts on your auto insurance policy for hybrids. I get 5% a year.

In building a model to compare the cars, assign your own values to the items above and this will give you a better idea of what the gas mileage difference has to overcome. This will give you a better idea of what the actual difference in value or cost might be between the two cars. It is really unfortunate that Lexus placed the price differential so high. On many other cars, like the Camry hybrid, the difference is a more modest $1,500 or so. It will be interesting to see what they do on the new ES hybrid.

Paul B

Very well reasoned analysis UCSB.

UCSB

Thank you. I should have added one more item, potentially improved performance. The 350 is rated at something like 270 HP while the hybrid is rated at 295. This difference will have a value to some people. Most hybrid drivers are not tapping this power much, but it is there when you need/want it. It has a real value.

People need to build their individual models because using the stock gas mileage numbers does not tell the whole story. People that have a lot of in town driving, that would be me, will see a much bigger difference between the 350 and 450h.

gqscholar

I'm also researching this topic

Paul you should use realistic prices.

For example dealers were offering up to 5 k off of 2012 rx 350, but not off the 2012 rx hybrid versions.

Dealers were also offereing 0.9 percent interest over 60 months on the non hybrid 2012 rx 350 model but I don't believe they were offering that for the hybrid models. Thats a 3k - 4k savings.


I know your using the 2013 models, but this time next year, I wouldn't be surprised if the non hybrid 2013 will have a 5k or so discount, that will further sperate the price of the hyrid vx non hybrid.

Also like I believe was pointed out, x amount of thousands today is worth much more than x amount of thousands 7-10 years from now.

Enjoy shopping.

Cruiter

Bill, you really did a good point by point (rather than strictly window sticker) on what you really get in going a model line up. Someone pointed out that there were differences in negotiating power between the 350 and hybrid version but that just testifies to the value of the 450h that's built in smaller quantities. Due diligence in shopping different dealers can mitigate the difference more in your favor.

ejm3

it is important to look at the "real" price difference between the cars.
The MSRP difference of $6600 or $8000 or whatever is only mildly interesting.

The real question is what's the difference in price between what you can actually buy the car for.

If the dealer is willing to discount the RX350 by $5000 but the 450 only by $2000 because its more in demand then that makes a pretty large difference in the calculation.

This is very subjective but you have to also determine what the added equipment in the 450 is actually worth to you. If you don't really need the extra 15 HP and some of the other items then you're paying for nothing.

InRBigness

Just paying less now may also be a false economy as down the road the Hybrid has proved to hold its value very well. If you dont feel or need to pay for some of the equipment on the 450H then you should indeed look at the 350 as well as the MDX the Hylander and others. IThe 450 Hybrid offers somthing that no other vehicle in its class does and that is that it is a premium top end SUV that is a hybrid and gets great gas milage.

As for discounts, I factory ordered my 2012 450 H and got the super duper extra premium with no chance of option envy later package and paid just over $72k all in. I got 1.9% financing through Lexus. Now before you go thats rediculous price, it was the canadian price and included tax (12% Federal and Provincial) PDI, delivery, blockheater, trailer hitch and wiring installed, extra set of rubber mats and cargo mat, bumper protector, roor rail crossbars and all the inside goodies like RSES, HUD, Radar cruise etc..

The list on that vehicle was $76,500 plus so I saved about 8 grand off full retail. They had a 2010 almost the same toys on the lot with 4,000 Km on it and sold it for 70K plus taxes to someone that was not willing to wait for the 3 months that I did. That tells me that the Hybrid market is strong and resale should also be strong.

I a plan to keep my truck for at least 7 years maybe 10 like my last few. I do approx 60/40 city highway and i consistantly get 750 km/ on a 65 liter fill. or 460 miles on 17 US gallons.