Matt's post on the new, highly-publicized study proving that hybrids aren't actually cheaper overstates the case a bit:
A lot of people I know seem to feel that car buyers irrationally underestimate the financial impact of fuel economy when making their purchasing decisions, and that this gives us reason to fear that market mechanisms alone won't make everything balance out in the long run. The fact that people are, in fact, buying hybrids even though they aren't worth the additional money seems to indicate the reverse -- consumers either irrationally overestimate the financial benefits of fuel efficiency, or else have non-monetary preferences (about, e.g., the environment or national security) that factor in favor of buying fuel-efficient cars.
The Edmunds study does not, in fact, say that hybrids are more expensive than other cars, just that they're more expensive than their non-hybrid models. So a Hybrid Civic is more expensive than a normal Civic, and a Hybrid Escape is more expensive than a normal Escape. But Matt's conclusion, that hybrids are thus more expensive, assumes too much. Car buyers probably aren't deciding between the Corolla and the Prius, they may well be deciding between the RAV4 and the Prius, or the Avalon and the Prius. Indeed, there's really no proof that hybrid buyers would otherwise be purchasing economy cars.
