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Bankrate's 2007 New Car Guide
Going green
Environmental concerns are bringing major changes -- right down to the cars we drive.
Going green
The lowdown on hybrids
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"Hybrids have shown very good reliability data so far, and that is showing in the resale value," Linkov says.

But for many buyers, the decision to go hybrid is less of a financial one than one of principle.

"If you are excited about using less foreign oil, you can't put a dollar value on that," Linkov says. "If you are pushing reduced emissions, it's hard to quantify that in dollars and cents. But if you are looking just at your checkbook, look for the ones with a tax credit."

That is an important distinction to make because the most popular hybrid on the market, the Prius, is about to become a victim of its own success.

State governments and local communities across the country are serving up their own slate of incentives to promote the clean cars.

In some places, those perks include outright cash incentives, such as rebates or discounts on sales tax. Other places offer more intangible benefits, such as exemptions to allow drivers of hybrids to take the high occupancy vehicle lane even if they have no other passengers. Other communities give free parking at city meters and discounted license registration fees.

In an extreme case, California offered a limited number of HOV exemptions. Now that those stickers aren't being issued anymore, they have turned out to have an unexpected consequence -- added value to the car.

Reed says used hybrids with HOV stickers retail for as much as $4,000 more than ones without stickers.

Battery worries
The biggest boogieman for hybrids so far is the question of battery life.

Many buyers worry that with a payback period potentially as long as seven years, they might get hit with a daunting battery replacement bill just as they break even on the purchase. According to some estimates, battery pack replacements can cost as much as $3,000, not counting labor.

But, the good news is that seven years since the first Prius models hit the road in the United States, those horror stories have not yet come true.

"We get a fair amount of anecdotal feedback, and we have lots of forums with lots of traffic talking about hybrids," Reed says. "Surprisingly, so far we have seen no alarming trends about batteries and hybrids."

To lay most people's fears to rest, every hybrid on the road comes with a substantial warranty backing the battery, typically eight years or 100,000 miles.

And while most hybrids haven't been around long enough to test those warranties to the limits, a few accounts, such as a Canadian taxicab driver who has put more than 200,000 miles on his 2000 Prius, give owners confidence that the battery packs aren't just waiting another year to all expire at once.

-- Posted: Aug. 2, 2007
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