As well, when cruising or in other situations where just light thrust is needed, "full" hybrids such as the Prius can use the combustion engine to generate electricity by spinning a generator (often a second electric motor) to either recharge the battery or directly feed power to an electric motor that drives the vehicle. This contrasts with all-electric cars which use batteries charged by an external source such as the grid, or a range extending trailer. Nearly all hybrids still require gasoline and diesel as their sole fuel source though other fuels such as ethanol or plant based oils have also seen occasional use.

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The term hybrid when used in relation with cars also has other uses. Prior to its modern meaning of hybrid propulsion, the word hybrid was used in the United States to mean a vehicle of mixed national origin; generally, a European car fitted with American mechanical components.

This meaning has fallen out of use. In the import scene, hybrid was often used to describe an engine swap, such as the common Honda B16 engine into a Honda Civic. Some have also referred to flexible-fuel vehicles as hybrids because they can use a mixture of different fuels — typically gasoline and ethanol alcohol fuel. There are not diesel flexible-fuel vehicles, because nowadays diesel cars can use petroleum and biodiesel at the same time.

There are many ways to create an electric-internal combustion hybrid. The variety of electric-ICE designs can be differentiated by how the electric and combustion portions of the powertrain connect, at what times each portion is in operation, and what percent of the power is provided by each hybrid component. Two major categories are series hybrids and parallel hybrids, though parallel designs are most common today

Most hybrids, no matter the specific type, use regenerative braking to recover energy when slowing down the vehicle. This simply involves running the motor backwards as a generator.

Many designs also shut off the internal combustion engine when it is not needed in order to save energy. That concept is not unique to hybrids; Subaru pioneered this feature in the early 1980s, and the Volkswagen Lupo 3L is one example of a conventional vehicle that shuts off its engine when at a stop. Some provision must be made, however, for accessories such as air conditioning which are normally driven by the engine.

Furthermore, the lubrication systems of internal combustion engines are inherently least effective immediately after the engine starts; since it is upon startup that the majority of engine wear occurs, the frequent starting and stopping such systems cause may reduce the lifespan of the engine considerably.

Also, start and stop cycles may reduce the engine's ability to operate at its optimum temperature, thus reducing the engine's efficiency.

In a series design, the internal combustion engine is not directly connected to the drivetrain at all, but powers an electrical generator instead.

This is similar to the operation of diesel-electric train locomotives, except that as of 2006, the overwhelming majority of diesel-electric locomotives do not store auxiliary power in batteries for use in propulsion. A series hybrid is similar to an electric car which is recharged by electricity from a stationary fossil fuel power plant, except that the power plant is carried on board.

Electricity from the generator is fed to the motor or motors that actually move the car, and excess energy can be used to charge batteries. When large amounts of power are required, electricity comes from both the battery pack and the engine-generator section. Because electrical motors can operate quite efficiently over a wide range of speeds, this design removes or reduces the need for a complex transmission. The internal combustion engine can also be finely tuned to operate at its most efficient speed whenever it is running, for a great gain in efficiency. Separate small electric motors installed at each wheel are featured in some prototypes and concept cars; this allows the possibility of easily controlling the power delivered to each wheel, and therefore simplifies traction control, all wheel drive, and similar features.   The advantage of this type of hybrid is the flexibility afforded by the lack of a mechanical link between the internal combustion engine and the wheels. A weakness of a series hybrid system, however, is that series hybrids require separate motor and generator portions, which can be combined in some parallel hybrid designs; the combined efficiency of the motor and generator will be lower than that of a conventional transmission, offsetting the efficiency gains that might otherwise be realized. Still, series hybrids are useful in driving cycles that incorporate many stops and starts, such as for delivery vehicles, or stop and go city driving. It is likely that some fuel cell cars will use a series-style setup, with the fuel cells replacing the engine-generator section; this would eliminate the loss of efficiency inherent in converting the mechanical output of an internal combustion engine to electrical power. Parallel systems, which are most commonly produced at present, connect both the electrical and internal combustion systems to the mechanical transmission. They can be subcategorized depending upon how balanced the different portions are at providing motive power. In some cases, the internal combustion engine is the dominant portion and is used for primary power, with the motor turning on only when a boost is needed. Others can run with just the electric system operating alone. Most designs combine a large electrical generator and a motor into one unit, often situated between the internal combustion engine and the transmission, in the location of the flywheel, replacing both the conventional starter motor and the generator or alternator. A large battery pack is required, providing a higher voltage than the normal automotive 12 volts.   Accessories such as power steering and air conditioning are powered by electric motors, so that they continue to function when the internal combustion engine is stopped; this offers the possibility of further efficiency gains, by modulating the electrical power delivered to these systems, rather than having them run directly from the engine at a speed which depends on engine speed. A full hybrid, sometimes also called a strong hybrid, is a vehicle that can run on just the engine, just the batteries, or a combination of both. The Prius and Escape Hybrids are examples of this, as both cars can be moved forward on battery power alone. A large, high-capacity battery pack is needed for battery-only operation. These vehicles have a split power path that allows more flexibility in the drivetrain by interconverting mechanical and electrical power, at some cost in complexity. To balance the forces from each portion, the vehicles use a differential-style linkage between the engine and motor connected to the head end of the transmission. The Toyota brand name for this technology is Hybrid Synergy Drive, which is being used in the Prius and the Highlander sport-utility vehicle (SUV). A computer oversees operation of the entire system, determining which half should be running, or if both should be in use, shutting off the internal combustion engine when the electric motor is sufficient to provide the power. The normal mode of operation is on electrical power alone, with the gasoline engine running only in cases where the extra power is required, or where the batteries are discharged. The hybrid drivetrain of the Prius, in combination with aerodynamics and optimizations in the engine itself to reduce drag, results in 80%–100% gains in fuel economy compared to four-door conventional cars of similar weight and size. The main principle behind this system is the more-or-less complete decoupling of the power supplied by the engine (or other primary source) from the power demanded by the driver. Thus a smaller, less flexible engine may be used, which is designed for maximum efficiency (often using variations of the conventional Otto cycle, such as the Miller or Atkinson cycle). This contributes significantly to the higher overall efficiency of the vehicle, with regenerative braking playing a much smaller role. The differing torque vs. rpm characteristics of the internal combustion and electrical motors operate synergistically; an internal combustion engine's torque is minimal at lower RPMs, since the engine must be its own air pump. Thus, the need for reasonably rapid acceleration from a standing start results in an engine which is much larger than required for steady speed cruising. On the other hand, an electrical motor exhibits maximum torque at stall; therefore this engine is well suited to complement the internal combustion engine's torque deficiency at low RPMs, allowing the use of a much smaller and therefore more fuel efficient engine. General Motors, BMW, and DaimlerChrysler are working together on a so-called Two-Mode Hybrid system which is a full hybrid plus additional efficiency improvements. The technology will be released in 2008 on the Chevrolet Tahoe Hybrid. The system was also featured on the GMC Graphite SUV concept vehicle at the 2005 North American International Auto Show in Detroit.