Honda Motor Co. is about to introduce a low-cost hybrid car, a version of its Fit subcompact that is popular in Japan. Honda is expected to begin selling the Fit hybrid as early as next year for under $12,000, less than $1,500 more than the gasoline-only Fit. This would make the Fit the first hybrid to cost less than $12,000 and thus the first hybrid priced to go mainstream.
Honda's Chief Executive Takeo Fukui recently noted that the price premium for a hybrid needs to fall below $1,680 before hybrid will go mainstream. The proposed Fit hybrid meets Fukui's criteria. Fukui noted Honda has not yet made the strategic decision to produce hybrids in large quantities like Toyota Motor Corp. and Ford Motor Co., but automotive industry experts believe Honda will make a major commitment to hybrids with the Fit.
Even with the differential between hybrids and gas-only cars coming below $1,500, consumers will not earn back their investment in gas savings, so the market for hybrids is still dependent on those consumers who place environmental concerns higher than price concerns. Even the gas-only Fit is environmentally fit, with its 1.3-L engine reaching 56 mpg.