Abstract: To quantify the environmental benefits of hybrid electric vehicles and comprehensive cost in total life cycle, the structure of total life cycle costs of hybrid vehicles is put forward from two aspects, the external environmental cost and the direct economic cost of hybrid vehicles. Base on this, an external environmental cost estimation model and a direct economic cost model of hybrid vehicles are established respectively, in which a superimposed step by step calculation method is presented from two dimensions of vehicle type and time. In the end, the environmental and economic benefits between hybrid vehicles and conventional cars are compared by an example, and the sensitivity on energy price and carbon price is analyzed. The results show that the life cycle cost of the hybrid vehicles in specific conditions is lower than that of conventional cars, and the development of hybrid electric vehicles meet the economy and sustainability requirements.