Back on the first of January of this year, Honda's hybrid tax credits began their slide down towards zero due to the fact that the automaker passed sixty-thousand hybrid sales. While you can argue with the reasoning behind the credits in the first place along with the arbitrary number of people who will get them, but the rules are what they are. So, starting on July 1, the tax credit for any Honda hybrid vehicle will be halved yet again, bringing the available credit to just one-fourth of the original level.

As of today, the Honda Civic hybrid gets a credit of $1,050. From July 1 to December 31, that credit will be $525. Don't complain too much, though, as the credit will officially run out on January 1, 2009. Ford, General Motors and Nissan have yet to hit the magic sixty-thousand number, so the full credit still applies for those manufacturers. Toyota hybrids are no longer eligible for any credit at all, as it has sold way too many Priuses to qualify any longer.

[Source: FuelEconomy.gov]

According to Edmunds.com, a hybrid costs between $1,200 and $7,000 more than its gas-consuming counterpart, so it comes a no surprise that people often buy hybrids for reasons other than saving money. Last February, Edmunds conducted a survey and found the top five factors were:

1) To make a statement
2) High gas prices
3) Tax credits
4) The environment
5) The thrill of using new technologies

As gas prices continue to rise, the viability of saving money by buying a hybrid becomes evermore realistic. So where's the tipping point? Reuters reports on a different study recently conducted by Edmunds in which they present actual savings for hybrid owners. Assuming you drive 15,000 miles per year, always fill up with gas costing $3 per gallon and received the maximum federal tax credits for your hybrid, a Toyota Prius or a Ford Escape Hybrid would show savings in about 3 years. If, instead, you opted for the hybrid version of the Saturn Vue, Toyota Camry or Honda Civic you would see those savings in about 6 years.

In adding to the study's assumptions, the break-even estimates were calculated with the notion that the consumer would have otherwise purchased the gas-powered version of the same car. In the case of the Prius, Reuters points to Edmunds' use of the gas-only Toyota Camry as a benchmark for comparison.

An article in Auto Industry points to a similar study conducted by Consumer Reports in April. They found that in most cases the combination of tax credits and gas savings failed to offset the additional cost of a hybrid over its gas-powered twin until about 5 years or 75,000 miles into ownership.

Future buyers of hybrids should also consider that federal tax credits are in a process of waning. On October 1st, buyers of Toyota hybrids will only receive half of the tax credit that is currently being offered. In April of 2007, those tax credits will be again reduced to 25%, and in October 2007, they will be eliminated completely. Yet as gas prices continue to rise, so will the gas savings of hybrid owners.

[Source: Reuters]