Saturday, December 29, 2012

Diesel Math With the VW Jetta

Diesel price in green
Clean diesel systems offer fuel efficiency - 30 percent better than gas - and environmental friendliness - up to 25 percent less CO2 emissions with no loss of power or performance vs. gas. When it comes to cost - the diesel vehicle and fuel - are more expensive. Diesel engines are said to be very dependable, require less maintenance and have a lower depreciation rate after 100,000 miles of use than gasoline engines and hybrid vehicles. According to there are now no federal tax credits for owning a diesel engine vehicle.

The Volkswagen Jetta with the 140 horsepower 2.0 liter TDI diesel engine starts at $22,990 MSRP, 13.2% more than the 170 horsepower 2.5 liter gas engine Jetta SE with the convenience package which starts at $20,310. The diesel engine gets 43 miles per gallon, 27.3% better highway mileage and 30.4% better city mileage than the gas engine. Take this recent fuel price sign in California where the unleaded cash price is $3.49 per gallon and the cash diesel price is $3.97 per gallon. Diesel costs 13.75% more than gasoline.

Let's assume you drive 12,000 miles per year, half the time in the city and half on the highway. With the Jetta TDI diesel at 36mpg you will use 333 gallons, so at $3.97 per gallon will spend $1,322. With the gas Jetta at 28mpg you will use 429 gallons, so at $3.49 per gallon your annual fuel cost is $1,497. The diesel saves just $175 per year. The diesel vehicle costs $2,680 more so it would take 15.3 years for diesel to pay off despite diesel being 28.6% more fuel efficient. Also, it's a little more difficult finding service stations that sell diesel fuel.

In Europe, governments subsidize diesel through lower taxes to make the pump price cheaper than gas in most countries which helps explain why more than half the cars sold in Europe are diesel. In the U.S., consumer diesel vehicle sales are fewer than hybrids at about a 3 percent market share with Volkswagen offering the most choices at affordable prices. Conclusion is that there's no major advantage in owning a diesel sedan in the U.S. with the current diesel vehicle and fuel price differences and lack of government incentives.

Now if you're comparing a large SUV, like the Audi Q7, the TDI gets a combined city/highway of 22 mpg while the gas engine is at 18 mpg. At 12,000 miles per year, you're saving about $300 per year on fuel cost with the diesel but you're paying $5,200 more for the TDI vehicle, so it takes more than 17 years to breakeven. If you're mainly a highway driver then the Q7 TDI's 28 mpg highway is 6 mpg more than the Q7 gas at 22 mpg but still only saves you $312 per year in fuel cost. (Using the premium unleaded gas cost for the gas version). In any case, with the pricing, you need to own the vehicle nearly 20 years to make it pay off. I invite your comments and discussion.