RateCity.com.au
powering smart financial decisions
RateCity.com.au

Should I choose a petrol, hybrid, or electric engine for my new car?

Should I choose a petrol, hybrid, or electric engine for my new car?

Buying a new car is a big commitment, particularly if you plan to hold onto it for the next five to ten years. So, does it still make sense to buy a car with a petrol engine, or should you future-proof your purchase by considering a hybrid or electric vehicle?

More and more car manufacturers are rolling out hybrid vehicles at achievable price points, giving more Aussies the opportunity to make the environmentally conscious switch.

In fact, there are a number of hybrid versions of pre-existing car models that are only a few thousand dollars more in price, including the Toyota Rav4 GX (petrol from $38,716, hybrid from $41,163), the Toyota Yaris SX (petrol from $30,591, hybrid from $32,651), and the Honda Accord VTi-LX (petrol from $57,190, hybrid from $60,506).

Even battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) are slowly but surely becoming more accessible in Australia, with 28 models now available for purchase across the two categories. They do, however, have a higher price point on average when compared to hybrids, and require access to a charging station.

So, given the increasing accessibility and popularity of both hybrid and electric vehicles, along with the important environmental benefits, the question is – is it worth buying a hybrid or electric vehicle over a petrol vehicle?

Weighing up the trade-offs

While there isn’t a cut-and-dried answer to choosing between a petrol, hybrid or electric vehicle, there are some important considerations that may help you arrive at a decision.

Purchase price

Even though the purchase price of hybrid and battery electric vehicles are gradually becoming more competitive, they are still more expensive when compared to the petrol option of the same (or a comparable) vehicle. So, you’ll have to ensure the extra cost doesn’t blow your budget.

Fuel costs

It could be argued that it’s possible to recoup the purchase price difference in petrol savings, and while that may be true, it is likely to take several years. Plus, in the case of electric vehicles, you’ll also need to consider the cost of the electricity required to recharge, as well as the installation of a home charging station.

Resale value

With an increasing number of manufacturers offering hybrid and electric vehicles, there is a chance that, should you want to sell your car down the track, an alternative fuel powered vehicle could have a higher resale value than a petrol vehicle.

If you decide against opting for a hybrid or electric car, and the demand for them continues to increase, you may not see the same kind of return for your used petrol car.

Environmental impact

What is arguably one of the most important considerations is the environmental impact of each option.

Petrol engine vehicles tend to be the least environmentally friendly option as they produce the largest amount of greenhouse gas emissions.

In comparison, hybrid vehicles typically produce fewer greenhouse gas emissions than petrol-only vehicles, but they do still rely on petrol (alongside the electric motor) which is responsible for the production of exhaust emissions.

And while electric vehicles don’t produce exhaust emissions, they do contribute to emissions produced by the energy used to charge them.

Keep in mind that across the board, newer model vehicles tend to be more environmentally friendly than older models. The Australian Government’s Green Vehicle Guide provides information on the environmental performance of vehicles sold in Australia, with the help of a CO2 emissions meter. You might like to consider taking a look before you decide on a new car.

Financing options

Did you know that many credit providers offer green car loans specifically for the purchase of eco-friendly vehicles? Often, they will have more competitive interest rates on offer, too, as a way of incentivising buyers to make an environmentally conscious purchase.

However, it’s also worth noting that car loans for new cars will typically already have lower interest rates than car loans for used cars. So, even if you do decide on a petrol engine, you will likely still have plenty of competitive options available to you.

Company
Product

Green Car Loan (Fixed)

Real Time Rating™

3.42

/ 5

Winner of Best Green Car Loans, RateCity Gold Awards 2022

Interest Rate

4.99

% p.a

Fixed

Comparison Rate*

5.54

% p.a

Monthly repayment

$566

Real Time Rating™

3.42

/ 5
Go to site

Winner of Best Green Car Loans, RateCity Gold Awards 2022

Company
Product

Green Road Personal Loan

Real Time Rating™

3.52

/ 5
Interest Rate

5.24

% p.a

Variable

Comparison Rate*

5.51

% p.a

Monthly repayment

$569

Real Time Rating™

3.52

/ 5
Go to site
Company
Product

Green Car Loan (Special)

Real Time Rating™

3.49

/ 5
Interest Rate

5.29

% p.a

Variable

Comparison Rate*

5.56

% p.a

Monthly repayment

$570

Real Time Rating™

3.49

/ 5
Go to site
Company
Product

Fixed Car Loan (with Low Emission Vehicle discount)

Real Time Rating™

3.36

/ 5
Interest Rate

5.45

% p.a

Fixed

Comparison Rate*

5.45

% p.a

Monthly repayment

$572

Real Time Rating™

3.36

/ 5
Go to site

special

Offset your car’s carbon emissions for the life of the loan
Company
Product

Green Car Loan - Green Car Loan

Real Time Rating™

3.02

/ 5
Interest Rate

6.75

% p.a

Variable

Comparison Rate*

6.79

% p.a

Monthly repayment

$591

Real Time Rating™

3.02

/ 5
Go to site

Benefits and disadvantages

To summarise, here are some of the top benefits and disadvantages of all three options:

Petrol vehicles

Pros:

  • Petrol vehicles typically have a lower purchase price compared to alternative fuel powered options.
  • There are many more makes and models of petrol vehicles currently available in Australia compared to hybrid and electric cars.

Cons:

  • They typically produce a higher level of greenhouse gas emissions making them the least environmentally friendly option.
  • They could be overtaken in popularity in the coming years, which could see the potential resale value reduced.

Hybrid vehicles

Pros:

  • Hybrid vehicles generally produce less greenhouse gas emissions than petrol vehicles, making them more environmentally friendly.
  • They allow you to keep fuel costs lower.

Cons:

  • They have a higher purchase price than petrol vehicles.
  • The range of makes and models available in Australia is more limited than petrol vehicles.

Electric vehicles

Pros:

  • They produce the least greenhouse gas emissions, making them the most environmentally friendly option.
  • They could have a higher resale value than petrol vehicles if the electric vehicle market continues to gain momentum.
  • They eliminate the need for and cost of petrol.

Cons:

  • The current purchase prices of most electric vehicles are likely out of reach for many Aussies.
  • The range of makes and models available in Australia is currently limited to just 28 models.
  • Buyers will need to consider the cost of electricity for refuelling, as well as the installation of home charging stations.

Did you find this helpful? Why not share this article?

This article was reviewed by Personal Finance Editor Mark Bristow before it was published as part of RateCity's Fact Check process.

Advertisement

RateCity

Related articles