Psst! Buddy! Wanna Buy a Cheap Hybrid?

When is a "hybrid" not a hybrid? (See answer below.)

Everybody wants "in" on the Hybrid-Electric Revolution these days. One-time electric car pioneer General Motors (NYSE: GM  ) , is back in the game, shipping Chevy Volts to car lots across the nation (and around the world.) GM's got an early vote of support from General Electric's (NYSE: GE  ) mega electric-car-buy, but it's also got a lot of competition. Toyota's (NYSE: TM  ) got the Prius, and Nissan the all-electric Leaf. Ford (NYSE: F  ) makes the electric Focus. Why, even Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  ) has skin in the game, with a multi-million-dollar investment in China's BYD Co.

Problem is, the cars in question don't cost much less than their gas-guzzling counterparts.  Ranging from an entry-level price of $30,000-and-change (for Nissan's Leaf), ranging as high as $40,000 or more for the Chevy Volt. Prepare to part with upwards of $100,000 for one of Tesla's (Nasdaq: TSLA  ) electric supercars. Given all this, there's a very real risk that consumers won't bite. Even with generous government subsidies, most hybrid and electric cars planned or already for sale carry high price tags, and that's before you factor in the cost of an optional home-charging station, or the risk of being stranded when you cannot find a charger away from home.

And that's great news for General Motors.

Wanna buy a cheap hybrid? How about a free one?

In an era of $3 gasoline, everybody wants to save money on gas, but the number of folks willing to pay for the privilege remains in doubt. As reported in this month's issue of Popular Science, GM has found a solution to this problem, in the form of a mild hybrid transmission that offers real improvement on gas mileage.

Using energy captured from braking, combined with smart technology that turns off the engine when not needed, GM's eAssist system offers fuel efficiency 25% greater than cars without it. This improved technology also provides a 3x improvement over the company's "mild" hybrid tech models of just a few years ago. These innovations will allow installed models to deliver 37 mpg on the highway, and make the 2012 Buick LaCrosse the most fuel-efficient full-size sedan on the market. Best of all, GM promises to include these new improvements standard on certain models.

In so doing, GM hedges its bets on the hybrid revolution. Heads, customers bite and it can sell them a Volt. Tails, they're intrigued by hybrid-electric cars, but scared of the price tag, and can opt for a "free," "mild" improvement in fuel efficiency. Either way, I think GM comes away a winner.

So ... when is a hybrid not a hybrid? When it doesn't cost an arm and a leg. When it gives GM a leg up on the competition.

Fool contributor Rich Smith does not own shares of, nor is he short, any company named above. The Motley Fool has a disclosure policy. Berkshire Hathaway and General Motors are Motley Fool Inside Value picks. Berkshire Hathaway and Ford Motor are Motley Fool Stock Advisor recommendations. The Fool owns shares of Berkshire Hathaway.

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Read/Post Comments (4) | Recommend This Article (11)

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  • Report this Comment On January 26, 2011, at 9:24 AM, SMOKEN42 wrote:

    GIVE ME A BREAK.....................THESE SYSTEMS WILL BE AVAILABLE............. TO ALL AUTOMOBILE COMPANIES............... THAT ARE FURTHER AHEAD OF THE GAME THAN G.M. !!!!!!!!!!!!!!!!!!

  • Report this Comment On January 26, 2011, at 10:21 AM, BioBat wrote:

    37 MPG (highway) is nice but it's not "HOLY CRAP, THIS IS SO MUCH BETTER THAN ANY OTHER CAR!" that it's going to make consumers opt for a Lacrosse if they're looking for a hybrid.

  • Report this Comment On January 26, 2011, at 4:18 PM, lagunagreg wrote:

    Just wait til gas tops $4.50/gallon. Again. You'll see people HIGHLY motivated to purchase the most efficient car they can get.

  • Report this Comment On January 28, 2011, at 5:52 PM, minnjim1 wrote:

    "...the risk of being stranded when you cannot find a charger away from home."

    Um, one of the advantage of a gas/electric HYBRID is its ability to run on gasoline. That's why it's called a HYBRID.

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