The purpose of this thesis is to analyze and research diffusion of hybrid cars in Finland through years 2004 – 2012 and to highlight guidelines for future development of Finnish car industry. The study also analyzes the effect of tax reliefs on hybrid car sales. The theoretical background of the thesis consists of diffusion of innovation theory and various diffusion arti-cles that concern hybrid cars and their diffusion. Data for the analyses has been collected from the Finnish car industry and Finnish Transport Safety Agency (Trafi). Statistical data has been used to analyze the progress of hybrid car sales in Finland and also the effect of the tax relief in 2008 which decreased the price of hybrid cars significantly. Results of the thesis favor the idea that a government can speed up the sales of more eco friendly cars through tax reliefs. The diffusion of hybrid cars based on sales figures is still in the beginning of its diffusion cycle, but sales have shown steady growth. Forecasts on future sales are mixed. It is safe to assume that moderate growth will continue during the near future.