CarSeekBlog

Hybrid Cars reported earlier this month that Ford is about to become the third automaker to lose its federal tax incentives for gas-electric hybrid cars. Toyota’s tax credits for hybrids went away at the end of 2007, and Honda’s hybrid credits ended at the beginning of last year.

Those tax credits were part of a national program offering clean vehicle incentives beginning in 2005, and provided up to $3,400 each for 60,000 buyers per automaker, before a 16-month phase-out period. When Ford reached 60,000 hybrids sold sometime before April 1, 2009, that meant that as of April 1, 2010 there are no tax credits left for any Ford Hybrids. Other automakers – specifically BMW, General Motors, Mercedes, and Volkswagen, still have credits left for the purchase of hybrids and clean diesel vehicles, but most of those brands sell only low volumes of hybrids, with the possible exception of Volkwagen’s Jetta TDI.

Currently, hybrids account for less than 3% of the new car market, which means analysts and advocates of the green car market are left wondering if hybrid tax credits have been phased out too early in the process. As the folks at HybridCars point out:

After a decade in the market, hybrids have become more commonplace and therefore, with tax credits and other incentives, could reach a much larger part of the mainstream market. Incentives could encourage automakers and consumers to put millions of high-mpg low-emission hybrids on the road—the original goal of the tax credits.

Instead of doing more work to encourage the purchase of very viable hybrid vehicles, however, most legislators have jumped on the newest tech bandwagon: electric cars, and plug-in hybrids. There now exists a combination of local and national credits including up to $7,500 federal dollars plus a $2,000 for the installation of charging equipment, in addition to state-based incentives, which are available to private buyers of green electric-drive vehicles.

So, what’s the problem? First, these vehicles are not yet available to the general public, and when they do come on the market later this year, even with tax credits they will be very expensive, and not very numerous. While some see this as a good reason for generous tax credits, others point out that the first wave of consumers to buy these cars are those who would likely do so without any tax credits, because they believe in the cause, and the viability of plug-in cars. Meanwhile, mainstream buyers who might consider a hybrid purchase with a bit of a nudge, won’t receive one.

What does this mean for the future? Some analysts believe that we could be looking at a several year gap in the right incentives for the right buyers of greener cars and trucks.

Filed under: Ford, GM, Going Green, Honda, Mercedes-Benz, Toyota, VW by Mel