Hybrids cost more.
According to the government's fuel economy.gov website, there's a "clean fuel" deduction of $2,000 for most hybrids, if they are placed in service by the end of 2005. The new highway bill signed into law last month also provides for some purchase incentives. All told, deductions defray some of the premium price tagged onto hybrid vehicles, with the exception of the Toyota Prius, with is competitively priced with non-hybrid vehicles at around $20,000. As for the others, a hybrid buyer in the 27 percent tax bracket will save in the neighborhood of $500, based on the $2,000 tax incentive currently being offered. And by 2007, that tax break will probably go away. But if you're in the market now, take that $500, subtract a buck or two for fuel savings, which for the 2005 Ford Escape Hybrid works out to be about $500 a year, and hybrids still cost more.

And that's on paper. In real-world terms, the price gap is more like a gulf when you factor in real fuel economy and the dealer markup driven by limited availability and few choices. Hybrid sedan shoppers are limited to the Toyota Prius or the Honda Accord Hybrid so as a result, there's more demand and the price goes up. Conversely, a savvy shopper can buy an overstocked sedan and all they have to do is move the cash they've piled up on the hood. There are so many different types of vehicles on the market now, that it's ridiculous to restrict yourself to only a few cars that have a waiting list. The fact that what you're buying is barely proven technology may also up the cost of these vehicles, thanks to a potential free fall in their value as used vehicles.