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The Costs and Benefits of Alternative-Fuel Vehicles Hybrid, electric and clean-diesel models have finally taken hold of the U.S. auto market. But what does that mean for your bottom line? We examine the costs and benefits of alternative-fuel vehicles.

By Jennifer Wang

Opinions expressed by Entrepreneur contributors are their own.

Wander into the busy Tesla Motors showroom at Fashion Island mall in Newport Beach, Calif., and you'll walk out with the feeling that a whole bunch of people are about to kick the petrol habit. Half the showroom space is taken up by the crowd surrounding a single floor model of the Tesla S, the world's first premium all-electric sedan. Roving employees, à la those at the Apple Genius Bar, deliver the sales pitch with fan-boy fervor: no oil changes, 0 to 60 mph in 4.4 seconds, manufactured in California. The breathless descriptions of technical details are often followed with "Pretty cool, huh?"

Well, yes. About a month after its June debut, the Tesla S had an 11-month waiting list and the kind of buzz most automakers can only dream about. It is, without a doubt, the car of the moment. But it is also an emblem of how far and how fast alternative-fuel vehicles (AFVs)--any vehicle that doesn't run exclusively on standard gasoline--have come. According to the U.S. Energy Information Administration, the number of them on the road increased from 534,000 in 2003 to almost 940,000 in 2010, the most recent figure available. Sales of hybrid and electric cars should nearly triple by 2017, when federal mandates for higher-efficiency vehicles kick in, says John Gartner, director of Pike Research's Smart Transportation practice.

From an environmental perspective, this is a very good thing. But for business owners, the real news behind the numbers is that AFVs are finally starting to make economic sense. In a year in which analysts have predicted record-breaking gas prices, the idea of getting 50 or even 95 miles per gallon seems extremely compelling. Sexy, even. At least sexy enough to get more people into showrooms, where they discover that the price of AFVs is decreasing, while the fueling infrastructure is growing. Add in tax incentives of up to $7,500 per vehicle, and that means more business drivers can recoup the upcharge from standard models, not to mention enjoy fewer trips to the pump and access to carpool lanes in traffic-riddled parts of the country.

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