The price of going green

Until recently, hybrids were a curiosity embraced mainly by the environmentally conscious and the early-adopter crowd. But with gasoline prices in the stratosphere, a lot of car buyers are checking out the new crop of gas-electric hybrids.

About 200,000 hybrids will be sold this year in the United States, a fraction of the nearly 17 million total vehicles sold. Although customers typically pay a $3,000 premium for a hybrid, you'll pay $5,000 more for a Lexus RX 400h than for a comparably equipped RX 330. And some dealers are taking advantage of high demand to tack on big markups to the sticker price.

So is a hybrid worth the money?

Financially speaking, no. You won't necessarily get your money back from savings at the pump.

Edmunds.com recently calculated the five-year ownership cost of 2005-model hybrids versus their conventional gasoline engine counterparts. For the vehicles to have identical costs, fuel would have to cost from $5.60 a gallon (for the Ford Escape Hybrid versus the Escape XLT AWD) to $10.10 a gallon (for the Toyota Prius versus the fuel-efficient Toyota Corolla). Compare the Prius with the best-selling Toyota Camry LE, and you break even when gas costs $2.28 per gallon. At today's pump prices, you'd come out ahead.

But for some people, the feel-good factor is, if not priceless, at least worth a few grand.

"People buy a car for the emotional component, and they buy it for the bundle of features it offers them," says Bradley Berman, editor of HybridCars.com, a Web site packed with information about hybrids. "These cars are fun to drive, and it's fun to try to increase fuel economy by watching the gauges and changing your driving habits."

Tax incentives also help make the math more friendly. If you buy a hybrid in 2005, you can claim a $2,000 one-time deduction on your tax return (the Edmunds analysis accounted for the tax breaks). If you buy a hybrid in 2006, you're eligible for a tax credit based on a complex formula that takes into account lifetime fuel savings of individual hybrids (the Edmunds calculations don't consider this credit).

Credits will range from about $650 for the Honda Accord Hybrid to $3,150 for the Toyota Prius. But the law sets a limit: Only buyers of the first 60,000 hybrids sold per carmaker get the full credit. After that, credits will decrease, and they will end entirely after 15 months. If you want the full credit, buy early in 2006.