I must apologize for posting on this subject yet again, but an article was recently brought to my attention that reflects my viewpoints so exactly that I feel compelled to tell you about it, so I can bask in the warm glow of smug self-righteousness. From Technology Review (an MIT enterprise):

Because the advanced lithium-ion batteries put a lot of power into a small, light package, a much smaller battery is needed to power the car, which could reduce hybrid prices. As a result, a variety of cars in a fleet could come with a hybrid option that costs about as much as the option for an automatic transmission…

In the short term, however, [this] seemingly logical assumption about lower-cost hybrid cars might not be right. …a major reason consumers buy hybrids today is to have a “badge of honor” that shows their commitment to the environment or to curbing gasoline use. … Part of this distinction… comes from having to pay a price premium for the vehicle. Hence, in the short term… it might actually be wise for carmakers to leave hybrid prices higher.

It’s true. The main reason most people don’t run out and buy small cars with great gas mileage is that those cars have low status. Nothing advertises your status more than the car you drive. The answer is to make plug-in packages an option on all cars. Less affluent consumers will opt for it on their economy cars for the gas savings, as well as to enhance the status of their car; well-off consumers will opt for it on their luxury cars purely for the bragging rights. If Toyota does that first, it will be the kiss of death for American cars makers. Are you reading this, Ford?

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Of course, there are critics of plug-in hybrids, just as there are critics of all of our energy options — tradeoffs exist. Biofuel enthusiasts should have no qualms about plug-ins because they will be able to burn biofuels just like any other car. The fact that they will burn a lot less biofuel (and therefore consume a lot less of the planet) is what I like about them. Admittedly, if I owned a gas station and had devoted some of my pumps and storage tanks to ethanol and biodiesel, I would not be pleased to see my biofuel customers showing up every other month instead of every week.

As with all of our other energy options, the picture is much more complicated than you suspect. For example, if you live in Seattle, your car (when driven in all-electric mode) will be entirely carbon neutral — the electricity to charge your batteries comes from hydropower, which has its own environmental drawbacks, as we are all aware.

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If you live in California, where they have a mix of electrical power generation, you will be just as carbon neutral as a car using soy-based biodiesel (without having to plow one carbon sink or usurp 11.5 acres of the planet annually). If you live in the Sun Belt and have solar panels, you may be able to charge your car during the day between trips.

If you live in Ohio, where they get 80% of their electricity from coal, your electric mode is no better than a gasoline car, from a health pollutant perspective — although probably better than a soy-based biodiesel car. From a CO2 perspective, your car will be no better than a gasoline car and worse than a soy-based biodiesel car. One advantage that would remain in Ohio is that the plug-in will still use a lot less liquid fuel and cost a lot less to run, because you will still be getting about a hundred miles to the gallon equivalent mileage (purchase price will be main factor in break-even miles).

Cleaning up electricity generation is the key to our CO2 concerns. (Thanks again to DRx)