Do hybrids save money?

No. That's the conclusion of Joe White, Detroit Bureau Chief for The Wall Street Journal, who looked into buying a Prius for his own daily driver. White was interviewed on NPR's Morning Edition September 30. (Audio here)
White first looked at trading in his Subaru for a Prius, and found that at roughly $3 per gallon for gas, he wouldn't recover his financing costs. Joe figured that at his annual mileage, he'd save about $746 a year in fuel costs, but it would take too long to recover the premium he'd pay for the hybrid.

Next he looked at the hypothetical situation of someone without a car looking to buy either a Honda Civic or the Prius. In this case, the fuel savings were roughly $506 per year, versus a purchase price difference of about $8,000. Without even considering cost-of-money issues, it would take nearly 16 years just to break even.

With the current tax deduction of $2,000 converting to a $2,000 tax credit January 1, which decreases every year thereafter, the government subsidies don?t make the switch economically feasible, either.

The bottom line? Unless gas prices go a lot higher, or the government increases hybrid subsidies, or both, buying a hybrid probably won?t save you money. Of course, there are the intangible but real benefits of reducing your personal environmental impact, but then you have to ask yourself if you?re really getting the biggest bang for your environmental investment.