Alternative Fuel Vehicles

By Kristen Castillo

August 9, 2012 5 min read

Most drivers are used to driving traditional gas-fueled vehicles, but more and more are hitting the road in hybrids: vehicles that use two or more energy sources for power.

The U.S. Energy Information Administration estimates there were more than 1.9 million hybrid electronic vehicles in the U.S. in 2010.

HEVs charge themselves through regenerative braking and their internal combustion engine. The U.S. Department of Energy explains that a vehicle's battery "provides extra power during acceleration and auxiliary power when idling."

*Traditional Cars vs. Hybrids

Hybrids are easier to handle than many drivers think.

"What is most remarkable about most hybrids is how unremarkable they are to drive," explains Jack R. Nerad, executive editorial director and executive market analyst for Kelley Blue Book's "They operate like conventional gasoline-powered vehicles and handle like them.

"With the exception of plug-in hybrids, which, of course, plug in to recharge their batteries, the typical hybrid seems like a conventional car. It just uses less gas and produces fewer exhaust emissions."

*Environmental Benefits

Until recently, hybrids were popular mostly with environmentalists. But nowadays, the concept of driving a hybrid is more mainstream.

Hybrids tend to have high fuel economy and low emissions, which are good for the environment and a driver's bottom line, but the initial investment can be steep.

"If it is important to you to use less fuel and that your car produce fewer emissions, then the premium you pay for a hybrid may well be worth it," says Nerad. "If you don't care -- or don't put that value in the thousands of dollars -- you probably won't see value in the hybrid experience."

A recent KBB report finds hybrid sales are remaining steady, even at a time when gas prices are falling.

"Hybrid sales have been aided by new entries to the market -- notably the lower-priced Prius C -- and by the fact that the Chevrolet Volt now qualifies for HOV (carpool) stickers in California, a big hybrid market," says Nerad.

*Tax Incentives

No federal tax incentives are available now, but many people who buy a hybrid can qualify for local and state incentives.

According to the Energy Department, drivers in California benefit from a Farmers Insurance "discount of up to 10 percent on all major insurance coverage for HEV and AFV owners," while in Utah, the state offers an "income tax credit of 35 percent of the vehicle purchase price, up to $2,500, for an original equipment manufacturer compressed natural gas vehicle registered in Utah."

The Texas Commission on Environmental Quality helps provide vehicle replacement assistance vouchers up to $3,500 for the purchase of a "hybrid electric, battery electric or natural gas vehicle that is up to three model years old."

Michigan has an Alternative Fuel Vehicle Tax Exemption for vehicles that use natural gas or fuel blends, as well as for electric vehicles and hybrid electric vehicles.

*Price Comparisons

"Hybrids are most often much more expensive than conventional vehicles of the same size and carrying capacity," says Nerad, who compares Prius C's retail price of $20,000 with the "similarly sized" Yaris, which sells for about $15,000.

"The Yaris also offers excellent fuel economy, but not to the stellar levels of the Prius C," he says.

To see whether a hybrid could work for you and your budget, compare vehicles on the Energy Department website Check out comparisons for categories including make, model and fuel economy for city, highway and combined driving. Select up to four vehicles to compare side by side.

For example, comparing fuel prices for family sedans, the 2012 Honda Insight averages about $1,250 a year, and the 2012 Toyota Camry Hybrid LE averages $1,300 a year.

Buying a hybrid is definitely a pricier option than a traditional gas-powered vehicle, but it can be worth the price if you're more interested in the environmental impacts and the long-term savings on fuel.

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