Added Cost of a Hybrid

Yes, hybrids cost more than conventional vehicles. They bring a lot of additional equipment to the highway including electric-drive motors, computer control, advanced batteries and often electrically driven or enhanced subsystems like braking, steering and air conditioning. All this comes at a cost that's difficult to quantify because automakers don't break out their hybrid component costs.

Automakers have not been forthcoming about whether they're making money on sales of hybrid vehicles these days, or still taking a loss for every unit sold as has been the case in the past. Regardless, it's all part of a process that's creating a substantial market for hybrids and that's been deemed worth the investment.

Registrations for new hybrid vehicles jumped 81 percent from 2003 to 2004, according to R.L. Polk & Company.

Early on, automakers determined that a retail cost of under $20,000 was an important threshold, which is why the Honda Insight, Honda Civic Hybrid and Toyota Prius were initially priced below that figure. The Insight still starts at $19,330, though the second-generation Prius and Civic Hybrid have crept up above the $21,000 mark. Hybrid price-points now vary widely because hybrid SUVs are on the scene. Plus, some hybrids like the Honda Accord Hybrid are positioned as top-of-the-line trim levels that command higher prices because of their performance or luxury appointments.

There has been much discussion in the media on hybrid purchases in terms of time it would take to recoup the added expense. It's tough to determine exactly what a differential cost for a hybrid model might be, because some hybrids offer features not found on conventionally powered counterparts, and there is no conventional counterpart for Toyota's Prius or Honda's Insight. Still, there seems to be an inordinate focus on this with several studies pointing out that hybrids do not make sense because gas savings alone may never make up a perceived differential cost.

This emphasis on recouping the purchase-price premium of a hybrid through fuel savings is misguided. A large number of buyers aren't comparison shopping hybrids and conventionally powered variants of the same model. What they're doing is looking to get out of the inefficient vehicle they're now driving and into a better and more economical vehicle with accompanying cost savings at the pump. It's a lifestyle choice. If fuel savings help offset the purchase price over time, all the better. But it's not necessarily a make-or-break part of the purchase equation.

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