The Accord experiment
Even as carmakers plan to introduce truckloads of new hybrids in the coming year, Honda has pulled back on one of its offerings, the Accord Hybrid.

Honda announced it was pulling the sedan earlier this year due to lackluster sales.

But just because the Accord didn't sell well doesn't spell doom for hybrids as a whole, says Jonathan Linkov, managing editor of autos for Consumer Reports magazine.

What set the Accord apart from other hybrids was a variation on the philosophy of how to use the hybrid technology.

"What is interesting about hybrids is that there are still misconceptions out there. People think hybrid equals gas savings, but not all hybrids are alike," Linkov says.

That was the case with the Accord Hybrid.

Engineers designed the Accord Hybrid to offer the performance of a V6 while only burning as much fuel as a four-cylinder.

"Hybrids early on got the reputation for being weak and slow," Reed says. "Honda said they would build a performance hybrid rather than one designed around fuel economy."

And while you got the power without the fuel consumption, as well as superior emissions ratings, it turned out hybrid buyers weren't looking for performance, and performance buyers weren't looking for fuel savings.

"The problem was that the vehicle fell between two worlds," Reed says.

Dollars and cents
The question of whether to go hybrid often hinges on the question of dollars. That's because a typical hybrid costs about $3,000 more than a comparably equipped nonhybrid. And for most buyers, the environmental principle of lower fuel consumption isn't enough -- they want a payback.

The place most people look when they think payback is in fuel savings. And while higher gas prices do mean a faster payback, even with $3 per gallon gas, payback gas is a slow proposition.

"It may even be five years or more, depending on the vehicle," Reed says.

To make the financial sting more palatable, many people then turn to the federal tax credit designed to stoke hybrid sales.

To illustrate, consider the 2007 Honda Civic Hybrid. According to Edmunds.com, the manufacturers suggested retail price is $22,600. After the $2,100 tax credit, the true cost of the car comes down to $20,500.

Compared with the Civic EX, with an MSRP of $19,510, that is a difference of only $1,010.

The hybrid uses $879 per year in gas, while the traditional engine uses $1,230 each year. This makes an annual difference of $351. At that rate, it takes three years to earn back the premium, proving the tax credit is key to making the deal financially sound.

Another place hybrid owners stand to gain a substantial payback is on the trade-in.

Again, for illustration, consider the Civic. According to Edmunds.com, a 2004 Civic Hybrid has a trade-in value of $13,686. The gasoline engine's resale fetches just $10,733. That means even after recouping your initial investment through fuel savings and tax credits, you would still get a nearly $3,000 premium at resale.