Pay Less at the Pump: The Hybrid Revolution

Enlarge Image Image Gallery Author John Rockhold test drives a Toyota Prius in Topeka, Kan. MATTHEW T. STALLBAUMER

Six years after the release of the Honda Insight — the bulletlike two-seater that was the first gasoline/electric hybrid vehicle available in the United States — high fuel economy without compromise is here to stay. Praised by motorheads and environmentalists alike, hybrids represent the most exciting advancement in personal transportation since, well, the internal-combustion engine. Spearheaded by the Toyota Prius, hybrids’ popularity surge shows that a rapidly growing number of people want to be on the cusp of the hybrid revolution. Furthermore, with skyrocketing gas prices and dwindling global oil supplies, hybrids are becoming an increasingly wise investment.

In 2004, more than 83,000 hybrids were sold. In just the first half of this year, more than 90,000 were sold; final 2005 sales may eclipse 200,000. Right now, hybrids account for less than 1 percent of the automobiles sold in the United States. But given their growth rate and the dozens of new models that will be available in the next several years — Toyota alone plans to introduce 10 more hybrid models within the next seven years — hybrids will soon have a significant share of the auto market. Already there are more hybrids in more size categories than most thought possible when the Insight arrived. Meanwhile, sales of large sport utility vehicles and trucks are dwindling.

Car-buyers also are willing to pay extra for hybrids — anywhere from $1,000 to $10,000 more than conventional vehicles. But with tax incentives for hybrids and the rising cost of gas, it’s possible to make up the low end of that hybrid premium in about five years. For example, compare a conventional vehicle with the average U.S. fuel economy of 21 miles per gallon to a 46-mpg hybrid (the average of the Accord, Civic, Escape, Insight and Prius hybrids). Assume you pay $2.20 a gallon for gasoline, with that price rising 10 cents annually (a modest estimate; inflation alone will increase prices by at least 5 cents a year). After five years, you’ll save $4,658 with a hybrid; after 10 years, $10,287. (See "Hybrid Payback," below, for more examples.)

Still, the hybrid premium can be intimidating at first glance. In a survey conducted by the Polk Center for Automotive Studies, 61 percent of those polled said the extra cost would be a deterrent to buying a hybrid. But if we’re willing to pay hundreds or thousands extra for options such as larger engines, four-wheel drive or leather seats, why not invest in a technology that will actually pay dividends for years to come?

“There are a lot of features that aren’t worth the extra cost, but people pay for them because they want those features,” says Terry Penney, technology manager for advanced vehicle technologies at the National Renewable Energy Laboratory (NREL). Penney and his team have worked to develop and improve hybrid systems since the early 1990s. “You have to take the longer view, the real cost of gas and the environmental consequences of pollution. People have recently seen how gas prices can be volatile. Oil is now about $60 a barrel — where’s it going to stop?”