Hybrid cars and diesel cars compete

According to auto industry executives, hybrid cars and diesel cars will jockey for market position as long as gas prices remain under $3. While gas prices hung around $3, interest towards hybrid and diesel cars grew because consumers had concerns about the costs of filling the tanks of conventional cars. Now that gas prices have dropped, the concern for stretching every gallon of gas has also fallen. Consumers are not as drawn to hybrid vehicles and diesel cars because they have no reason to spend anywhere from a $3,000 to $10,000 premium on an alternative fuel car. If gasoline falls significantly below $3 a gallon and stays down below $3 a gallon, you undercut the economic viability of all these alternatives," Mike Jackson, chief executive officer of top U.S. car retailer AutoNation Inc., said at the Reuters Autos Summit in Detroit.

For much of the next decade, gasoline-powered hybrids, diesel engines and cars that can run on blends of gasoline and ethanol will jockey for market position, executives said.

About hybrid cars and diesel cars:

Hybrids save fuel by using an electric motor at times rather than the gasoline engine. But the cost of the extra motor, an additional battery and other needed technology have made hybrids more expensive than their traditional gas-only counterparts.

Diesel fuel can cost more than gasoline but gets 20 percent to 40 percent better fuel efficiency, meaning you go farther on a gallon. Strict emissions laws have kept many automakers from pursuing the diesel market.

For more information on alternative fuel vehicles see our alternative fuel vehicle report.