.jpg)
Will interest in hybrids disappear when the tax credits do?
Hybrids are a victim of their own success. The more of them we buy -- to save gas and save the environment -- the less Washington thanks us by giving us a tax credit. If you want a $3,400 tax credit on a hybrid, you have to buy a hybrid on or before Tuesday, March 31, 2009.
In a perverse, backwards and just plain dumb law from the very same Congressmen who posture about reducing oil imports and reducing global warming, the federal tax credit applies only to the first 60,000 hybrids a manufacturer sells. So forget about getting money back -- except at the gas pump -- for buying a Toyota Prius, or any of the other hybrids from Toyota or its sibling Lexus. Ditto no tax credit for buying a Honda hybrid, including the brand new Honda Insight. That's because both Toyota and Honda have sold more than 60,000 hybrids in the US.
And now, the #3 hybrid manufacturer is nudging the limit, too. That's Ford. Yes, Ford, which makes the Ford Escape Hybrid and its twin SUV, Mercury Mariner Hybrid, the Ford Fusion Hybrid mid-size sedan and its twin the Mercury Milan Hybrid. More than 80% of hybrids Ford manufacures are Escapes.
So, if you want to claim thefull $3,400 tax credit, do it by March 31. After that, the hybrid tax credit is cut in half -- to $1,700 -- through the end of September. Then, it gets cut again, to just $850, until March 31, 2010, when the tax credit disappears entirely. Of course, you have more time to buy a General Motors hybrid -- sales of the Chevrolet Malibu hybrid and Cadillac Escalade hybrid are nowhere near 60,000 yet.
.jpg)
Hybrids are hot, of course, because of their fuel economy. The EPA rating for the hybrid Escape and Mariner is a very respectable 34 mpg city and 31 mpg highway. More than respectable -- they get the best gas mileage of any SUV in their class. And, the Fusion and Milan are top-rated in their mid-size segment, at 41 mpg city and 36 mpg highway. That's better than either the Toyota Camry Hybrid or Honda Accord -- a fact that Ford is advertising heavily.
Maybe this 60,000 law was written to give Detroit some breathing room to catch up with Tokyo. Maybe not. But whatever the reason, as I said before, it is just plain backwards, dumb and other words my editors won't allow me to include here, for lawmakers to encourage us to buy more hybrids, and then take-away the very tax credits that bring down the cost. Remember, hybrids cost more than comparable models which aren't hybrids.
Photo 2009 Ford Escape Hybrid courtesy Ford Motor Company, photo 2010 Honda Insight courtesy Honda.
Comments
Evelyn, I assume you have a good reason for your opinion, but you have not explained why you think the credit is perverse, backwards, or dumb. It was written to incentivize the establishment of a technology, and the market for it, not to subsidize your car purchases forever. It doesn't "give Detroit breathing room"; the 60000 hybrid limit applies equally to all manufacturers.
So let's hear it: What are the reasons for your opinion? Or are you just rabble-rousing?
The only hybrids on the market when this rule was written were from Tokyo, not from Detroit. That's why I believe this tax credit was put into effect both to encourage the purchase of hybrids and to encourage the development and purchase of hybrids whose names are not limited to Toyota or Honda. Getting a $3,400 tax credit for buying a Ford or GM hybrid is a pretty good incentive. And, yes, I do believe that this give-back should incentivize and subsidize hybrid purchases -- maybe not forever, but at least for the reasonably forseeable further.
The payback for the premium purchase price of a hybrid takes a lot longer now that gas prices are back at $2 rates than last year when they were at $4. So, your Green Car Examiner firmly supports giving both the environment -- and the buyer -- a break. Hope that clarifies.
Cheers, Evelyn
Evelyn, thanks for responding! It seems your main concern is simply that the credit program should last longer. I don't think you should fret: The program has worked! There is now a huge selection of hybrids available, from a tiny car to a large truck and nearly every body style in between (still excluding the classic "minivan", unfortunately). The OEMs are not going to discontinue these models just because the credits are running out, and now that everything is tooled up and important new parts are becoming less capacity-constrained, the street price of these cars will be determined by competition and the value to the consumer. The credit never reduced the cost to the buyer significantly; it simply allowed the OEM to sell for a higher price and recover investment more quickly.
Now, Toyota, Honda, and Ford will have to price their hybrids as needed to compete with models from OEMs still eligible, like GM, Nissan, Chrysler, Mercedes, Volkswagen, Mitsubishi, Subaru, Fiskar, etc... The credits will be skewing street prices for all hybrids downwards for a long time to come, so the consumer and the environment both win.
In the longer term, the Government has guaranteed the OEMs will have to price their least-consuming vehicles attractively in order to move enough units to meet the CAFE limits.
Note that car buyers who really want to reduce oil consumption and CO2 production don't require a "payback". Factor in the smoother, quieter performance of hybrids and their reduced driveline and brake maintenance costs, and the vehicles are easily worth paying a premium even if it is not fully paid back by the fuel savings.
Also note that the OEMs, WITHOUT benefit of a credit program, but simply due to competition and CAFE, are implementing a multitude of other less-visible technologies which will have much greater oil/CO2 reduction impact than electric hybrids, simply because the costs of these other technologies are lower, allowing them to be deployed in far greater numbers, without requiring any tough decisions by the consumer. Examples are direct injection, cylinder deactivation, variable valve duration, far more efficient automatic transmissions with more ratios over a wider range, and very mild electrification (engine idle stop, and mild regenerative braking).
Bottom line: Don't worry, be happy! Or rather, if you want to complain, the Government has done many things far more dumb, perverse, and backwards than phasing out the tax credit for hybrid vehicles. I recommend you choose a more productive battle.
All the best, Keith.
Got something to say?
Examiner.com is looking for writers, photographers, and videographers to join the fastest growing group of local insiders. If you are interested in growing your online rep apply to be an Examiner today!