WASHINGTON (CNN) - They take up just as much space in rush-hour traffic, but FedEx Express hopes its new hybrid delivery trucks will eventually cut costs as well as air pollution.

The new delivery trucks, by outward appearances, are just like the old trucks that have been in use for years. But, the new "Optifleet E700" electric hybrid vehicle combines an electric motor with a small diesel engine, and a trap to catch the soot associated with diesel tailpipe emissions.

The result, officials from FedEx (FDX: Research, Estimates) and Eaton Corp. (ETN: Research, Estimates) say, is a 90 percent reduction in particulate emissions, a 75 percent drop in smog emissions, and a 50 percent boost in fuel economy.

FedEx has agreed to buy 20 of the hybrid vehicles and will begin to roll them out later this year and next. If the project works out has planned, the company will buy more, possibly replacing the entire fleet the next 10 years.

"We've calculated in our financial estimates that over the life of the whole truck, we think that its about a break even point for us," said FedEx President David Bronczek. "Obviously, we'd like to do better than that. The more fleets that we can encourage to join this hybrid electric/diesel technology, the better it would be."

FedEx will likely get some public relations mileage in using trucks that are more environmentally friendly than many of its competitors.

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However, rival United Parcel Service (UPS: Research, Estimates) announced Tuesday that it will soon begin using fuel cell vehicles from Germany's DaimlerChrysler, to begin letter delivery service by the end of the summer. Fuel cells, also considered low emissions and energy-efficient, generate electricity as a function of a thermal-chemical reaction.

UPS eventually plans to use fuel cell "sprinter" vans to deliver some larger packages. The program is billed as the first time fuel cell vehicles are being used in a commercial fleet.

The Environmental Defense Fund encouraged FedEx three years ago to take on the project and worked with the company to whittle down the proposals of some 20 firms.

Tax credits featured in legislation sponsored by Sen. Orrin Hatch (R-Utah) "would lower the price gap between these cleaner and more efficient vehicles and conventionally fueled vehicles of the same type." Tax credits of up to $2,000 are already available for hybrid cars.