31 July, 2005

"This deal is getting worse all the time!"

Via CT, this NY Times piece, which sadly points out that the apparent tax credit for hybrid vehicles actually caps out at 60,000 vehicles per manufacturer.
The energy bill sets up a complex formula that begins restricting eligibility for the tax credit once an automaker sells 60,000 gas-electric hybrids or cleaner burning diesels, known as advanced lean-burn vehicles.

Once an auto company hits the 60,000 mark, it has the remainder of that fiscal quarter plus one additional quarter in which buyers of its vehicles can receive the full credit. The credit ranges from $250 to $3,400 depending on the fuel efficiency of the vehicle.

During the two quarters immediately after the cars and trucks of the automakers become ineligible for the full credit, buyers would receive 50 percent of the credit. The next two quarters after that, the credit is 25 percent. The credit is phased out entirely at the end of the fifth full quarter after the automaker sells 60,000 hybrids or advanced diesels.
Note that Toyota plans to sell 140,000 hybrids this year, meaning it will probably hit the cap in the second quarter. Implication?
By capping the credit, Congress has limited the incentives available to companies that have been at the forefront of hybrid technology.

"Ironic isn't it?" said Ed Cohen, Honda's vice president for government and industry relations. "It really does create market mismatch."
Meaning, when DaimlerChrysler and GM finally get in the game in a few years, they're going to have an advantage.

Might be time to start reading the bill text to see what other goodies are buried in there.

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