The interest for using hybrid cars is stronger than ever as more people are getting concerned with preserving the environment. Additionally, fuel price increases are a continuous threat to gas-consuming drivers. Because it partly runs on batteries, hybrids have lower emissions and gas consumption is decreased. Also, with almost all manufacturers racing to produce their own, hybrids are now available with a widening assortment of accessories and options.

Automobile stakeholders are studying whether the hybrid is a good choice if based exclusively on financial standards. Several variables can be considered whether the car should be categorized as more practical financially:

• Purchase Price: The initial purchase price is 20% higher than a regular gas-powered vehicles, equating to several thousand dollars in up-front costs and taxes. The current Edmunds Carfinder shows 2007 and 2008 hybrid cars have a price range of $20,000 to over a $100,000.

• Gas Costs: The cost of gasoline needed to run the hybrid may seem lower because it partly runs on a rechargeable motor. Therefore, longer distances are covered by hybrids between gasoline fill-ups.

However, if gas money saved is the main basis for the financial practicality, Edmunds.com thinks the hybrid is not as savings-savvy as it seems. In their October 2007 study, "Do Hybrids Make Financial Sense Yet?" regular vehicles were compared to equivalent hybrid models to find how long it takes for the purchase price to break even through gas cost-savings.

Results showed that gas vehicles broke even faster. The hybrid equivalent takes longer to save enough gas money to offset the additional cost it required (from 2.9 years to 15.5 years, depending on the model). However, with expectations of gas prices to rise, the hybrid may reach this break even price point sooner.

• Maintenance: In some models, oil and maintenance costs are comparable to regular vehicles. In earlier hybrids, the narrower tires were reported to wear more easily. However, these have been appropriately corrected with newer models.

• Warranty: Manufacturers present longer warranty coverage for hybrid parts, usually eight years.

• Tax Incentives: In the previous years, state governments offered varying tax incentives to buyers of hybrid cars. These incentives are cut when a model reaches its 60,000 units selling mark. The Toyota Prius, for example, now has a much lower tax cut (from as high as $3,150 in 2005, now down to $1,575) compared to the previous years.

• Insurance: Some insurance companies offer discounts for hybrids, but this savings may be offset by other carriers who charge more.

Based on break-even points and sticker prices, hybrids may seem more costly. But factoring in the other costs to keep the car, or the sentimental reasons a buyer may have for a car purchase, hybrids may be smart for individual drivers.


References

Consumer Reports. The Dollars and Sense of Hybrid Cars.

Coombes, Andrea. Buying a Hybrid Car Makes More Economic Sense Today.

Edmunds.com, Edmunds Study: Do Hybrids Make Financial Sense Yet?

Edmunds.com, What You Should Know Before You Buy a Hybrid.