A true cost comparison?

[Sailorman]

A friend asked what I paid for the Clarity I just bought. It is a touring model Plugin hybrid. Up here in Washington, it was the only Touring model within 500 miles according to KBB, and only 11 base models were available as well. The Honda website only lists what it thinks are my local dealers, as far as I could figure out. I bought from a great dealership, Honda Of Kirkland, they include allot of dealer only things for all the new cars they sell, all around great people from the receptionist on up, and I met them all.

I paid 36530 including the transportation and delivery, not so great compared to what some were paying in California a month or more ago,(or maybe even now?) but I feel I am getting allot of value for the money, and the dealerships have to make a profit to stay in business, and these are good people, and I bonded with the salesman, a retired Seattle police officer.

Anyway, back to my friends question, here is how I responded, maybe my logic or math is flawed, so feel free to advise:

The sales price was 36,530. 2,575 taken off the sales tax because of the new law up here, and the 7,500 federal tax credit, what I paid was really just 26,455 before tax. Except even less really, because if I bought a straight dinosaur juice car, I would have paid 2,725 in sales tax on 26,455, and I only paid 1188, so I am paying the same amount of money for the Clarity as I would have if I bought a gas car at a sales price of 25,055. Hard to get a base Camry or Accord for that, and this is Lexus luxury level in many ways. If I got it right, it would be a good sales tool for those selling them. It just blows my mind how good this car is, and how they have not and are not being promoted by Honda. I am wondering if there will be a 2020 model.

 

[Landshark]

It sounds like you will have paid ~$27,500, after you have received all incentives and credits, for a car that has a MSRP of ~$37,500.

Of course if you borrowed $35K for 5 years, you have essentially bought a $35K car. It is possible that you will receive a Federal tax refund of $7500 or more when you file your return next year. Depending on where that refund goes, you may or may not actually realize a $7500 savings.

Will it go into a savings account?
Will it be used to pay down the loan?
Will it pay for that Alaska cruise?

To me the most straightforward way to be clear with your friend, is to tell them that the net cost for the car will be about $10K less than the negotiated price. It is up to each individual to actually “save” the money. You may save a tax refund, but you probably didn’t save the difference in what you would have paid in sales tax for an ICE car and what you actually paid.

The reduced sales tax for an EV in WA, is baked in the cake, so you we’re never going to pay that amount. It is, however, a benefit bestowed upon the Clarity, that is not available to the buyer of a gas car.

 

[Robert_Alabama]

@Sailorman, I think you probably got it right. Not as good a deal in Alabama, but still pretty good economics. I got an out the door price on a touring in July 2018 of $36,600 including tax. The $7500 tax credit gets it down to $29,100. A gasoline powered car would cost me about $750/year for the mileage I get on free electricity (I am fortunate to get free charging at work). So currently, I'm down to about $28,000 right now as to what I have in the car that I could have spent on a gas car and been indifferent economically. In truth, though, I enjoy the Clarity so much that I wouldn't even have considered that.

 

[JustAnotherPoorDriver]

I got the federal and 1,900 from NYS last year. When I bought, I had the cash in hand, but 5 years at %0.9 was too good to pass up, so I put the $$ into something making significantly more than 0.9% and count the significant difference as part of my savings.

 

[Sailorman]

I got the federal and 1,900 from NYS last year. When I bought, I had the cash in hand, but 5 years at %0.9 was too good to pass up, so I put the $$ into something making significantly more than 0.9% and count the significant difference as part of my savings.

Hi Robert, Landshark and Just Another, Thanks for the feedback. If they offered me 0.9 %, I would have done just what you did, but they had nothing close, nothing from Honda at this time, so paid cash. I think I saw a consensus on the theme of they being great cars for the money straight out, and for those that drive allot on electric, it is the gift that keeps on giving, but even for those like me and my wife, doubt we will put more than 7k a year on it. Our older car and truck will now only be used when we both need to go somewhere at the same time, one of the reasons I bought now, I did not want to were them out, now they will last many more years.