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The 10 Most Cost-Effective Plug-In Hybrids For 2021

Automakers are betting heavily that the roads of the future will be populated with full-electric powered cars, trucks, and SUVs. As for now, however, their numbers remain relatively slim, with potential buyers wary of their higher purchase prices, and limitations with regard to operating ranges and charging availability.

The prudent go-between for those who want to both save money at the pump and reduce their carbon footprints is a plug-in hybrid vehicle (PHEV). Like standard hybrids they use one or more electric motors to augment a gasoline engine, for the sake of both improved acceleration and fuel economy. But a PHEV goes a step further by including a larger battery pack that allows the vehicle to operate for an extended period solely on electric power. Once the battery is depleted, the vehicle continues to operate as a regular hybrid under a combination of gas and electricity.

While their all-electric range on a charge is far less than with full electric cars, PHEVs effectively eliminate the so-called “range anxiety” over being stranded at the side of the road with a drained battery. However, a PHEV must still be tethered to the power grid nightly to enable its initial run on full-electric power. This can be accomplished via a standard 110-volt outlet, though charging times are far quicker if you have a 220-volt line installed in your garage.

PHEVs are the most efficient when running solely on electricity, which remains a much cheaper power source than gasoline. The EPA rates this in terms of “MPGe,” which is a miles-per-gallon equivalent based on a conversion factor of 33.705 kilowatt-hours of electricity consumed equaling one gallon of gasoline. The top performer in this regard is the Toyota Prius Prime, which is rated at 133 MPGe when running on electricity over its initial 25-mile range.

As with electric vehicles, an PHEV’s battery-only capabilities vary from one model to another.  Some can run for only 17 or 18 miles on full electric operation, which affords little in the way of a cost advantage. At the other end of the curve, a few can run for over 40 miles at a time on electricity, which for many motorists could be sufficient to affordably cover their daily commutes. One downside here is that, as with electric cars, a PHEV’s battery range tends to be adversely affected by extreme temperatures and the use of accessories, especially the climate control.

A big advantage PHEVs have over standard hybrid cars is that they remain eligible for a one-time federal tax credit that runs from $4,000 to $7,500, based on the capacity of the battery used to power the vehicle. As the law now stands, these credits phase out for vehicles at the beginning of the second calendar quarter after the manufacturer has sold 200,000 eligible full electric and plug-in hybrid vehicles. So far this only affects vehicles from General Motors and Tesla, but neither currently sells a PHEV model. The Biden administration is working to expand this program, however, as part of its proposed infrastructure plan.

A few states further sweeten the deal with rebates or tax credits of their own, but they’re usually less than they are for full-electric models. For example, Massachusetts and Oregon give PHEV buyers a $1,500 incentive, while it’s a $1,000 in Pennsylvania and Maine. 

The one-time tax credit alone (provided you can claim the full amount when you file your tax return) can often make up for a PHEV’s added cost. For example, a gas-only Chrysler Pacifica Limited minivan is retail priced at $35,495, while the Plug-in Hybrid Touring model—which can run for 32 miles on battery power with a full charge—stickers at $40,295. Factoring in the Hybrid’s $7,500 federal tax credit effectively drops the PHEV’s price to $32,795, which amounts to $2,700 in up-front savings.

Also, you’ll find some PHEVs being offered with incentives from their respective automakers to spur sales. Again using the Chrysler Pacifica as an example, this month buyers are eligible for up to $5,750 cash back (versus $3,500 for the standard model) or zero percent financing. 

Beyond that, a plug-in hybrid’s cost effectiveness largely depends on its energy efficiency. According to the EPA, the cost of driving a PHEV 15,000 combined city and highway miles per year at current national average gas and electricity prices runs between $600-$1,650 using regular-grade fuel, and between $1,300 and $2,150 for plug-ins that require premium. By comparison, the EPA says the average 2021 vehicle costs $1,500 to go the same distance using regular-grade fuel, and $1,950 with premium. 

Getting back to the Chrysler Pacifica, the EPA says it will cost the average owner $1,850 per year to drive the standard V6 model 15,000 miles, while it’s estimated at $1,000 for the PHEV. That’s an additional savings of $4,250 over a five-year ownership period.

The EPA’s annual operating costs cited below are based on gas priced at the national average of $2.72 per gallon for regular grade ($3.47 for premium) and at electricity at $0.12 per kilowatt hour (kWh). Your costs will vary according to local gas prices and electricity rates. Fortunately, the EPA maintains a handy calculator at its fueleconomy.gov website that lets you estimate a PHEV’s operating cost according to your state’s average costs for gas and electricity, based on many miles you drive.

We’ve ranked the most cost-effective plug-in hybrids for 2021 based on each vehicle’s federal tax credit, it’s range per charge on battery power, and estimated average annual operating costs. 

The 10 Most Cost Effective Plug-In Hybrids for 2021

1. Honda Clarity PHEV

Vehicle Type: Midsize Car | EV Range: 47 miles | MPG-e: 110 | MPG-gas: 42 | Annual Operating Cost: $650 | Tax Credit: $7,500 | Base Price: $33,400.

2. Toyota RAV4 Prime 

Vehicle Type: Compact SUV | EV Range: 42 miles | MPG-e: 94 | MPG-gas: 38 | Annual Operating Cost: $750 | Tax Credit: $7,500 | Base Price: $38,100.

3. Ford Escape PHEV 

Vehicle type: Compact SUV | EV Range: 37 miles | MPG-e: 102 | MPG-gas: 41 | Annual Operating Cost: $750 | Tax Credit: $6,843 | Base Price: $32,650.

4. Chrysler Pacifica PHEV 

Vehicle Type: Minivan | EV Range: 37 miles | MPG-e: 82 | MPG-gas: 30 | Annual Operating Cost: $950 | Tax Credit: $7,500 | Base Price: $40,295.

5. Hyundai Ioniq PHEV

Vehicle Type: Compact Car | EV Range: 29 miles | MPG-e: 119 | MPG-gas: 52 | Annual Operating Cost: $650 | Tax Credit: $4,543 | Base Price: $26,700.

6. Toyota Prius Prime

Vehicle Type: Midsize Car | EV Range: 25 miles | MPG-e: 133 | MPG-gas: 54 | Annual Operating Cost: $600 | Tax Credit: $4,502 | Base Price: $28,220.

7. Kia Niro PHEV 

Vehicle Type: Subcompact SUV | EV Range: 26 miles | MPG-e: 105 | MPG-gas: 46 | Annual Operating Cost: $700 | Tax Credit: $4,543 | Base Price: $29,590.

8. Lincoln Corsair Reserve Grand Touring PHEV

Vehicle Type: Compact Luxury SUV | EV Range: 28 miles | MPG-e: 78 | MPG-gas: 33 | Annual Operating Cost: $900 | Tax Credit: $6,843 | Base Price: $50,230.

9. Audi A7 55 TFSI e quattro 

Vehicle Type: Midsize Luxury Car | EV Range: 34 miles | MPG-e: 68 | MPG-gas (premium): 29 | Annual Operating Cost: $1,300 | Tax Credit | $6,172 | Base Price: $74,900.

10. BMW X5 xDrive45e 

Vehicle Type: Midsize Luxury SUV | EV Range: 31 miles | MPG-e: 50 | MPG-gas (premium): 20 | Annual Operating Cost $1,700 | Tax Credit: $7,500 | Base Price: $65,400.


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