Will alternative auto power make sense in '07?

The math goes something like this:

At a city/highway average fuel economy of 55 mpg (your actually mileage will certainly be less), it would cost you about $5,454 to drive 100,000 miles.

Computing fuel cost

• 100,000 miles / 55 miles per gallon = 1,818 gallons • 1,818 gallons x $3 per gallon = $5,454 (5.5 cents per mile)

The most fuel-efficient automatic transmission Corolla, which is similar in size and power to a Prius, is rated at 30 mpg city and 38 mpg highway, with an average of 34 mpg (and, again, your mileage will almost certainly be less). It will cost about $8,823 to drive 100,000 miles.

Computing fuel cost

• 100,000 miles / 34 miles per gallon = 2,941 gallons • 2,941 gallons x $3 per gallon = $8,823 (8.8 cents per mile)

So it will cost $3,368 less in gas to run the Prius for the first 100,000 miles. Next, a base Prius lists for $21,725. A Corolla LE lists for $16,115 -- a difference of $5,610. So based on gas costs alone, at 100,000 miles a Prius costs $2,242 more to run for 100,000 miles.

Computing fuel cost

Vehicle cost Fuel cost Total Prius: $21,725 $5,454 $27,179 Corolla LE: $16,115 $8,823 $24,938 Difference: $2,241

But, you ask, what about those big tax breaks?

Here's where it gets complicated and where quick action might save you thousands.

When Congress passed a comprehensive energy bill last summer, it allowed for one-time-only tax credit for buyers of hybrid vehicles, with the most fuel-efficient of the hybrids getting the largest break.

The Prius qualifies for a $3,150 tax credit, which would more than make up for the $2,241 higher operating expense over the first 100,000 miles.

But as with all things political, nothing is as simple as it should be. The tax credits, which went into effect Jan. 1, are skewed to helping the Detroit manufacturers, who have been late to the hybrid game.

The law says that after a manufacturer sells 60,000 hybrids, the tax break begins to go away. Toyota hit that mark earlier this year, so starting with cars delivered after Oct. 1, 2006, the tax credit will be cut in half. On April 1, 2007, the credit gets cut in half again and disappears entirely Oct. 1, 2007.

Honda buyers have a slightly longer window, since Honda hasn't yet hit the 60,000 limit.

Buyers of hybrids from Ford, Chevrolet and Chrysler, which currently doesn't offer a hybrid, can wait quite a while. As of June, only about 15,000 hybrids have come out of Detroit, most of them from Ford. The two-wheel-drive Ford Escape Hybrid qualifies for a $2,600 tax credit, the highest among the domestic vehicles.

Nongovernmental incentives
The potential tax benefits and credits for buying a hybrid don't necessarily stop with the federal government. Depending on where you live and who you work for, you could reap added money that would make a hybrid more attractive.