2011 Hyundai Sonata Hybrid at 2010 New York Auto Show

2011 Hyundai Sonata Hybrid at 2010 New York Auto Show

If you're shopping for a hybrid vehicle, time is drawing to a close to take advantage of the Federal government's hybrid tax credits. But before those credits expire at the end of 2010, there's one new hybrid you'll want to add to your shopping list: the upcoming 2011 Hyundai Sonata Hybrid.

It's expected to go on sale sometime in October or November, and Hyundai hopes to sell about 14,000 copies of its Sonata Hybrid annually, but the financial incentives to be an early adopter will be strong. In all, they could bring the price of the Sonata Hybrid down to about $21,000, which would make it significantly less expensive than a base 2010 Toyota Prius.

The dealmaker? A federal tax credit in place since 2006, which gives hybrid buyers a federal income tax credit of up to $3,400. The credits are applied to hybrid vehicle sales by manufacturer, until the manufacturer has sold 60,000 hybrid vehicles.

While companies like Toyota, Honda and Ford have used up their hybrid credits, Hyundai hasn't used a single one.

Hyundai confirmed last week that the Sonata Hybrid could carry a base price as low as $25,000, when it goes on sale later this year. The IRS hasn't confirmed its final tax credit since the EPA hasn't confirmed the final fuel economy numbers. For comparison, until its credits began to expire this year, the Ford Fusion Hybrid qualified for the full $3,400 credit.

Hyundai expects the Sonata Hybrid to check in at 36/40 mpg; the Fusion Hybrid is rated at 41/36 mpg.

There are also state incentives to add to the equation, though they're not as lucrative as in the past. Most involve reduced or exempt sales taxes, but in South Carolina, for example, buyers would get a credit of 20 percent of the federal credit, plus a $300 rebate against sales tax.

Between the federal and some state incentives, the Sonata Hybrid could carry a net purchase price, taxes not included, as low as $21,000. The base price for the standard non-Hybrid Sonata is $19,195 before destination charges. The price could be so low, Hyundai executives say some buyers might choose the Hybrid just for its distinctive looks--the newly revamped front end and squared-off rear bumpers are significantly different from those on the non-hybrid version, though there are no changes to the sheetmetal.

The catch to this hybrid deal? The federal hybrid tax credit is set to expire on December 31, 2010, which means the Sonata Hybrid will benefit from the tax break only for a couple of months at most, if it's not renewed.

There are other options, of course, if you're looking for an tax-advantaged hybrid car. The 2011 BMW ActiveHybrid 7-Series qualifies for a $900 credit--against its base price of $102,300.