Gas vs. diesel vs. hybrid: Which car engine is best for you and the environment?

Gas, diesel, hybrid, or electric? Everyone wants their next car to have better fuel economy and wouldn’t mind if it’s better for the environment. But which engine is the right choice? Ultimately, it depends on the kind of driving you do and how much distance you’ll travel before turning the car over to the next owner. This auto tech backgrounder will help you decide which engine is best, given your circumstances.

Here’s the broad answer: Go with gasoline if you’re a low-mileage driver, hybrid for city driving, and diesel for high-mileage (mostly highway) driving.

The mainstream gasoline engine is best if you drive less than 7500 miles a year because the savings on fuel won’t match the premium you’re likely to pay for a hybrid or diesel car. Hybrid is the winner if you cover a lot of miles in stop and go city driving or on clogged expressways, where braking recharges the battery that powers the electric motor. It helps if you’re easy on the throttle and brake early and smoothly in a hybrid.

If you drive a lot of highway miles, diesel cars — like the 2014 Chevy Cruze diesel — are right choice for cost per mile driven, and most diesel vehicles have higher trade-in values than gasoline-powered cars. The case for diesel is clearer in the premium/sporty segment where the gasoline engine uses premium fuel, so the diesel price disadvantage per gallon of fuel is less than 10%.

To draw the conclusions above, you need to think about a half-dozen factors and how your driving fits in. Higher miles-per-gallon is just part of the picture. The more miles you drive, the sooner you get payback. The residual value of your ride may tip the scales.

Diesel or hybrid price premium

Start your gas-hybrid-diesel calculations with the price premium for a hybrid or diesel car over the most similar gasoline car. It ranges from nothing on Lincoln hybrids to $5000 on pickup trucks with heavy duty diesels. A $2000 diesel or hybrid premium is a good starting point for your comparison. If a diesel car has 200,000 miles of life in it (that kind of lifespan is easy for a diesel), that’s a penny a mile you have to recapture.

You have to decide whether the proper comparison is the gasoline car with the closest 0-60 mph acceleration or best fuel economy, which will probably be the entry-level gasoline car with the smallest engine and lower price; or the car with the same level of amenities. Finding an apples to apples comparison is tricky. For example, a hybrid more often comes standard with navigation worth $500-$1500 on the sticker price because the automaker wants to provide a center stack color LCD display to show of all the efficiency-monitoring graphics, and the cost puts you halfway toward that of a navigation system.

The price premium for an electric vehicle is significant. The best is the Chevrolet Spark EV at about $5000 more than the comparably equipped than the gasoline Spark.

Residual value may be better with diesels, hybrids.

A diesel vehicle will be worth more than the average vehicle at trade-in time. A hybrid should at least match the residual value of the gas engine car. For EVs, which sell in smaller numbers, the residual value may depend on each model’s reputation and on the length of the battery warranty; the battery is often half the value of the vehicle.

The average vehicle retains 38.2% of its value after five years (37.2% cars, 39.8% light trucks), according to kbb.com, measured as a percentage of the list (sticker) price.  The 2013 Ford Fusion does the best job retaining value among hybrids at 45% after five years, but that’s still outside the top 10 gas engine vehicles. Fifteen years of hybrid sales in the US shows little evidence the $2,500 batteries wear out but rapid improvements in hybrid technology mean a used hybrid feels more geriatric that a gasoline car. The best EV for residual value, kbb.com says, is the Chevrolet Volt (really more of an extended-range hybrid), retaining 30.0% of its value at five years.

For many hybrid cars where the model has a gasoline counterpart (Ford Fusion, Honda Civic, Hyundai Sonata, Nissan Altima), the residual value of the two cars are often the same or within 1-2 percentage points of each other.

Nine of 10 diesel cars and trucks studied by the University of Michigan had better five-year residual value than their gas-engine counterparts and half were at least 10 percentage points better, led by the Mercedes-Benz GL with a 39% residual value advantage over the gas GL. It is also our favorite full-size SUV. What’s more, with the GL, the diesel version is the cheapest GL model.

If you lease rather than buy, you should get a lower lease payment with diesel than gas. A car lease is a loan of 24 to 60 months on the difference between the price new and the value used (that and the “acquisition fees” auto dealers love). A lease on a high-residual-value diesel lets you buy more car for the same monthly payment, give or take the diesel premium. But if you buy, you’re financing, say, a $32,000 vehicle rather than $30,000 (the average new car cost). You’ll get most of it back a couple years down the road.