If you're considering purchasing one of the new hybrid vehicles you probably want to know if you'll actually save money. Traditional hybrid vehicles are rapidly gaining popularity. With the new plug-in hybrid now available to consumers, there are more choices than ever when choosing a car, but that makes calculating the potential fuel savings versus the added cost of the vehicle that much more important.

What Is a Hybrid Vehicle?
A hybrid vehicle combines two different technologies in an attempt to capture the best that each has to offer. In the case of residential automobiles, hybrids employ the use of both a gasoline engine and electricity. Electric motors are very efficient, but since they rely on batteries, they may only have a 50 to 100 mile range before recharging. Plug-in hybrids have even less.

Gasoline motors are more powerful and have a longer range, but as all drivers know, with gas prices on the rise and increasing pressure to end our reliance on fossil fuels, the gasoline powered engine isn't cost-efficient. Most hybrid vehicles use the electric motor to "help" the gasoline-powered engine allowing the manufacturer to install a smaller, more fuel-efficient gasoline engine.

Do They Save Money?
To answer this question, let's look at the 2012 Honda Civic Sedan and the Civic Hybrid. The Civic Sedan starts at \$15,995 and, according to Honda, gets 28 miles per gallon in the city and 39 on the highway. The Civic Hybrid starts at \$24,200 and gets 44 miles per gallon in both the city and the highway.

The average amount of miles driven by a person ages 20-34 is 15,098 a year, according to the U.S. Department of Transportation. Let's round it down to 15,000. Next, let's assume that the average miles per gallon for the traditional Civic is 33. That would make the annual fuel cost \$1,818 assuming gas is \$4 per gallon. In the Civic Hybrid, the annual fuel cost would be \$1,363. That's an annual savings of \$455 if you own the hybrid.

But here's where the math isn't so consumer friendly. Since the cost of the hybrid was \$8,205 more, it will take 18 years to recoup the extra cost of the hybrid. Asking a car to last 18 years or 270,000 miles isn't practical, so the only realistic way to recoup those costs is to drive more miles or capitalize on the fuel efficiency and receive a tax credit.

During the early years of hybrids, the federal government offered tax credits of up to \$3,400 when a consumer purchased a hybrid vehicle, but these credits began to phase out after the manufacturer sold more than 60,000 vehicles. As a result, any hybrid purchase after December 31, 2010 was no longer eligible for the credit. Plug-in hybrids still have a credit of up to \$7,500, but the cost of the vehicle is higher as well.

Plug-in Hybrids
The next generation in hybrid vehicles is the plug in-hybrid. Unlike the traditional hybrid, plug-ins only use the gasoline-powered engine once the batteries run out of charge. These vehicles have a range of around 40 miles using only electricity before the gasoline powered engine has to take over.

Depending on one's normal commute to work, some people can drive to and from work without using the gasoline powered engine. According to Consumer Reports, when these vehicles are running on electricity, they achieve a gasoline equivalent of 99 miles per gallon. It's more difficult to calculate the potential cost savings of a plug-in hybrid because the cost of electricity has to be factored in, but consider this: The 2012 Chevy Volt has a retail sticker price of \$39,145, but with the \$7,500 tax credit, the price comes down to \$31,645. Compare that to the traditional Honda starting at half the price.

The Bottom Line
Although hybrid vehicles are good for the environment, it is still difficult to justify the purchase of a hybrid when looking at the math. As prices continue to come down, or hybrids that employ the use of natural gas become more common, there's no doubt that more consumers will see the worth in owning one of these vehicles.

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