Author’s Summary. Many governments are interested in promoting hybrid electric vehicles (HEVs) and other alternatives to conventional internal combustion engines because of concerns about energy security, oil dependence, air pollution, and global climate change. HEVs achieve greater fuel efficiency than conventional vehicles, although the extent of improvement in efficiency depends greatly on the specific configuration of the HEV system. The development of HEVs in three major markets - Japan, the United States, and China - was characterized by similar drivers of innovation. However, policy mechanisms and incentives for deployment diverged significantly. In all three countries, governments originally pushed harder for alternative automotive technologies other than hybrids, such as pure electric vehicles or hydrogen fuel cell vehicles. In some cases, private firms made research and development (R&D) choices that do not appear to have been strongly influenced by public policy but rather followed a commercial logic in exploring fuel-efficient technologies. In other cases, government policies appear to actually have turned firms away from HEVs. Once HEVs emerged in the marketplace, however, the government response was completely different in each of the three countries, especially in terms of the extent to which each government was prepared to support HEVs‘ transition through the early deployment phase to facilitate widespread market diffusion.