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Tax credits / incentives for hybrids?
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http://www.germancarfans.com/news.cfm/newsid/2050502.003
Thanks in advance.
http://energycommerce.house.gov/108/0205_Energy/conference/EnergyConf_report.pdf
Having read the clauses, it looks like the Prius would qualify for a $1600 credit. The HCH would qualify for $1200. It's hard to say on the Prius because the calculation is based on vehicle weight, and the Prius weight is in between two values. The HCH is almost exactly on a value.
However,there are strict limits on how many vehicles can have the credit applied. The first 60,000 vehicles get the full credit. The full credit then goes on for one calendar quarter. Then for the next two quarters, the credit is 50%, for the next two quarters after that, the credit is 25%. After that - no more tax credit.
Since Toyota sells other Hybrids, I think it would be "first come, first served". But it looks like there is a chance that Toyota could have the incentive at least throughout 2006, if they take 3 quarters to sell 60,000 vehicles. Then the incentives would go down in 2007, and be non-existant (for Toyota) after that.
Note that this means that Ford and Honda will have the incentives for quite a while, due to their lower volume. GM may be having the incentives until 2009, when they end (not that they are worth as much, since their hybrid truck isn't that much better in fuel economy).
So, get 'em while you can. Only Congress could have come up with something as lame-brained as this...
what is the definition of "Vehicle Inertia Weight Class?" It gives a reference to the clean air act and EPA but I cant find anything about this. My hunch is the number is NOT the curb weight. (I did come accross an epa document that showed a 'small' pickup truck had a class of 4500 lbs, while the 'standard' truck was between 4500-8500 lbs. If a small pickup is 4500 lbs, I got to think a highlander has got to be greater than that.
How is lifetime fuel savings calculated? I suppose everyone can say their hybrid has the potential to save over 3000 gallons over a conventional car given enough time. Is lifetime defined by a specific set of parameters?
Does the HH fall under the "passenger automobile" "light truck" or other?
I think the DC/GM joint hybrid venture is planned to roll out in the fall of 2006. The Tahoe is slated for that hybrid system. If they can squeeze a high EPA rating that is much better than the 2002 rating it would be a good tax credit. Just in time to give GM and Chrysler a big year end boost.
$875 million in tax credits will be made available to those who buy hybrid gas-electric vehicles before 2010. A person buying a Toyota Prius, for instance, will receive a tax credit of at least $2,500, according to Toyota Motor Corp. spokeswoman Martha Voss.
The hybrid vehicle tax credit has its limits, however. Each manufacturer can apply the tax credit to just 60,000 vehicles and Toyota sells roughly 150,000 hybrids per year.
"If we had our way, there would have been a cap of 200,000," Voss said. "But for hybrids just to be in the bill, we're thrilled."
http://www.newsday.com/news/politics/wire/sns-ap-renewable-energy,0,1325044.story?coll=sns- -ap-politics-headlines
These analysis is based on purchasing 2005 vehicles (for which we have data) in 2006 (when the tax credits begin).
Three tables come from this energy bill text, starting on page 1391.
1) 2002 Model Year Fuel Economy by Inertia Weight Class (pg. 1395)
Passenger Cars
lbs. mpg
1,500 45.2
1,750 45.2
2,000 39.6
2,250 35.2
2,500 31.7
2,750 28.8
3,000 26.4
3,500 22.6
4,000 19.8
4,500 17.6
2) Credit Amount for Fuel Economy Ratio (fuel economy of hybrid divided by 2002 vehicle in same inertia weight class) (pg. 1398)
fuel economy ratio: credit
125%-150%: $ 400
150%-175%: $ 800
175%-200%: $1,200
200%-225%: $1,600
225%-250%: $2,000
3) Credit Amount for Lifetime Fuel Savings (pg. 1400)
Lifetime fuel savings is A minus B, where A is 120,000 miles divided by hybrid's inertia weight class's city fuel economy in 2002 and B is 120,000 miles divided by hybrid's city fuel economy.
Lifetime fuel savings (gals): credit
1,200-1,800: $ 250
1,800-2,400: $ 500
2,400-3,000: $ 750
3,000- : $1,000
Now, as a post above suggested, I did a google on "inertia weight class" and found some suggestions that for the Honda Civic Hybrid and the Toyota Prius are in the 3,000 IWC. The facts that I read said: (1) round down IW to determine IWC, (2) IW is approximated by adding 300 lbs. to stated (curb) weight, and (3) the HCH weighs 2,732 lbs., and the TP weighs 2,890 lbs. Using these 3 facts imply a 3,000 IWC for the HCH and the TP.
Also, I found a table that listed the HCH and the TP as 3,000 IWC. Incidentally, the Honda Insight was listed at 2,000 or 2,250 IWC in the same table, depending on the transmission.
It is not clear to me for table 2 what number to use for the fuel economy of the hybrid. However, since table 3 uses the current city fuel economy, I will use that when calculating ratios used in table 2.
Finally, here are the calculations:
the 2002 city fuel economy for the 3,000 IWC: 26.4 mpg
for the 2005 HCH CVT: 48 mpg
for the 2005 TP: 60 mpg
Thus, from table 2:
HCH CVT: 48/26.4 = 182% --> $1,200 credit
TP: 60/26.4 = 227% --> $2,000 credit
Note that the TP barely makes it into the $2,000 category.
And, from table 3:
HCH CVT: 120,000/26.4 - 120,000/48 = 2,045 gal saved --> $500
TP: 120,000/26.4 - 120,000/60 = 2,545 gal saved --> $750 credit
Note that the TP barely makes it into the $750 category.
Thus, the total credits are:
HCH CVT: $1,700
TP: $2,750
However, the TP numbers may be too optimistic. A spokesperson for Toyota in a
USA Today article on the new energy bill said the Prius may qualify for about $2,400.
I welcome critical evaluation of this analysis.
HCH CVT: 47 mpg (48 city/47 hwy)
TP: 54 mpg (60 city/51 hwy)
The credits from lifetime fuel savings remained unchanged:
The HCH CVT receives a $500 credit; the TP receives a $750 credit.
The credits for fuel economy improvement change for the TP:
Then, from table 2:
TP: 54/26.4 = 201% --> $1,600 credit
HCH CVT's total credit remains:
HCH CVT: $1,700
And the amended TP total credit is:
TP: $2,350
Ok so this "vehicle inertia weight class" is a big deal b/c this is what the hybrid mileage is compared to. So I actually looked up 42 usc 7521. NOT ONCE does it ever mention "inertia." So ok, I check out 42 usc 7550 which is titled "Definitions." But guess what, no "inertia" mentioned at all. I'm thinking someone meant to write "Gross Vehicle Weight Rating" instead of "inertia weight class" If you look at the bill, p 1402, line 4-6, "blah blah passenger automobile or light truck and which has a GVWR of not more than 8500 lbs ..." and the table listing the 2002 city mileages which you're suppose to reference, goes up to 8500 lbs. hmmmm, I gotta wonder if I can use GVWR for my calculations.
IF that's the case, then a HH AWD should be eligible for $1600 + $1000 credit using a GVWR of 5500. What's interesting is the HH FWD- using the same assumptions, it actually qualifies for the $2000 fuel economy credit IF it uses the "Passenger Automobile" table instead of the "Light Truck" table. I'm also just using City MPG since that's whats labeled in the table headers.
You don't have to be one of the first 60,000 hybrids- you just have to buy it within 3-5 months after the 60,000th hybrid is sold to get the FULL credit.
http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2005/08/18/BUG9EE9ANG1.DTL
I predict a slooooowwwww Nov and Dec for Prius sales, lol.
What's the definition of "placed in service"? If the vehicle is registered as non-operating, is that considered "in service"?
Just out of curiosity, why would you buy a new Prius and register it as non-operating?
Will the list of eleigible cars for this years existing deduction law be updated once the new 2006 Civic Hybrid (and for that matter the 2006 Prius) are out?
Also, does anyone know if these dedutions offer a break for leasing such cars? I don't think so, because what I've read uses the word "buy" or "purchase".
Thanks,
RKE :confuse:
RKE
I have to ask you though, unless you have already paid a substantial amount of money as a deposit, why you'd consider a Sept. '05 purchase. You answered your own question with the "effective date". You'd get the current tax deduction if you bought it in Sept. Unless you are car-less, wait until Jan. '06
I also don't think an order counts as a purchase. If you need a contract and deposit with your order, I'd insist that part of the deal, is that the dealer would rip up the deposit contract, and rewrite the contract in Jan. just as if you just walked in and initiated the deal.
A purchase in Sep 2005 would net the current tax deduction, I think $1500, which is much less valuable than a tax credit.
Last reported totals, Toyota has more than 400,000 hybrids on the road in the world, Honda has more than 100,000.
We are on pace to sell 185,000 in the USA alone this year.
USA market share ALONE BY ITSELF has no relationship in and of itself to environmental impact. What I mean by that is regardless if we sell 50 million non-hybrids, selling 185,000 hybrids is a GOOD thing for the environment,
Because:
Every single hybrid on the road means cleaner air, less greenhouse gases emitted, and usually means a reduced fuel demand for THAT owner, which is in turn good for all of us.
(Dang we are SO off topic - anyone have suggestions as to where we could continue this before we get whacked?)
I'm sorry, I have to disagree. Of course individual sales are good - for all higher MPG cars, not just hybrids. But selling millions of cars annually (I seem to remember 14 million as the number in the US) that get an average of 21 MPG (if that) has a far greater (detrimental) environmental impact than selling 100K or even 150K hybrids.
As many people have noted, the greatest problem is getting people out of those large, gas guzzling SUVs. That means - less market share for them...
Your 400K hybrids on the road are contrasted to around 50+ million sold in the same period, many of them gas guzzlers, which have been one of the US segments largest sellers.
And now back to our regularly scheduled forum, which is about MSRP and hybrids...
Also...how many of you current/pending hybrid owners would have bought (or, consider buying) one if the hybrid tax deduction/credit wasn't offered? Take away the tax deduction/credit and the difference in savings between owning/operate a hybrid vs. a non-hybrid won't be as attractive...
Aha, I answer:
It's not intended to reduce congestion. It's intended as an incentive to encourage people to buy more hybrid cars, which thus reduces air pollution. Allowing single person hybrids to use the HOV lanes is not the greatest idea in the world, but it's original GOAL is unquestionably good and correct.
quote tdoh-"Also...how many of you current/pending hybrid owners would have bought (or, consider buying) one if the hybrid tax deduction/credit wasn't offered?"-end quote
Again a sparkling answer:
That number would be "100% of the hybrid owners who bought a USED hybrid" in the last three years. That group includes myself. I bought a hybrid with 4823 miles on it, and since it was not purchased by me "for it's original new use" I do not receive a tax credit. Nor do any other of the tens of thousands of people who have purchased "pre-owned" hybrids. The tax credit is only for "purchased new" hybrids.
Hybrids are not perfect. If you compare them to the cleanliness of a strictly CNG car, they suffer environmentally. But they are FAR better than the other alternative, dirty stinky diesel, and they are a stepping stone to the next great breakthrough, whether that be Hydrogen fuel cells or whatever.
This is exactly why many people are questioning the wisdom of offering tax incentives for a vehicle class (hybrids) that already is selling well.
We need MANY MANY thousands more hybrids to sell. The more incentives, the more likely people will learn about, know about, seek out, and buy Hybrid vehicles.
The sooner we get to 500,000 hybrids sold a year in the US the better we all are, environmentally and technologically. More hybrids mean more R&D money to the carmakers and that means better, more efficient hybrids down the line.
I respectfully disagree. Hybrids are selling fine without incentives. Let the hybrids sell themselves, along with advertising from the manufacturors. That is what other cars do. In fact, by limiting the incentives to 60,000 units, the government is in effect penalizing Toyota for making as many hybrids as it can sell - the sooner that 60K mark is reached, the sooner the incentives begin to fade. Not real good in the "long term" incentives department. Now, if Toyota was making 1 million of these type of cars per year and not selling, that would be a different story; but that is not the current reality.
Or is there some reason you think that hybrids would need extra incentives to sell? You realize, I trust, that this implies something wrong with the hybrids such that they don't sell when compared to ICE cars on a "level" playing field?
We need MANY MANY thousands more hybrids to sell. The more incentives, the more likely people will learn about, know about, seek out, and buy Hybrid vehicles.
The sooner we get to 500,000 hybrids sold a year in the US the better we all are, environmentally and technologically. More hybrids mean more R&D money to the carmakers and that means better, more efficient hybrids down the line.
And the reasons hybrid cars do not sell like hotcakes at a lumberjack convention already are:
1. Lack of public education about the awesomeness of the technology.
2. Premium price to make up for the additional hardware turns cheapskates off.
3. People are generally "complacent" about Global Warming and the environment.
4. The failed EV1 program which confused the public into thinking that Hybrids still need to be "plugged in" every night.
5. The well-deserved reputation of the 1999-2002 hybrids being "too small, too ugly, and too underpowered."
6. The Hybrid supply shortage of 2003-2004.
ALL of these problems can be solved with MORE MORE MORE hybrids being sold, better advertising, and the government giving people tax breaks. Let the government help !!
Sometimes even hungry people have to be led to the dinner table......:D
What little I have gleaned from this energy bill the Prius gets a very nice credit. Yet the HCH seems to not be getting as much. In reality the HCH is getting closer to the EPA mileage ratings than the Prius. I think they need to look at that incentive a little closer. I think they may have added the 60k limit to get other automakers involved. The more the merrier. I would like to see more vehicles getting 50 MPG plus.
Maybe they will re-evaluate the new HCH. I thought I saw a much smaller credit for the HCH than the Prius. They should be close to the same.