What the 2009 Stimulus Bill means for Plug-In Hybrid Buyers

The American Recovery and Reinvestment Act of 2009 (aka the Stimulus/Spending Bill) will reach President Obama's desk this week and within the $787 billion bill are many provisions for new, energy-focused initiatives including major increases in tax credits for EVs and PHEVs. Green Car Congress put together a nice summary and review of where we are today, what the House and Senate respectively fought for and where the final provisions ended up in the bill.

Under current law, a credit is available for each new qualified fuel cell vehicle, hybrid vehicle, advanced lean burn technology vehicle, and alternative fuel vehicle placed in service by a taxpayer during the taxable year. In general, the credit amount varies based on technology, weight, fuel efficiency, and other factors. The credit generally is available for vehicles purchased after 2005. The credit terminates after 2009, 2010, or 2014, depending on the type of vehicle. The alternative motor vehicle credit is not allowed against the alternative minimum tax. A credit is also available for each qualified plug-in electric drive motor vehicle placed in service—qualified being a four-wheel, on-road vehicle equipped with a grid-chargeable battery pack of at least 4 kWh capacity. The base amount of the plug-in electric drive motor vehicle credit is $2,500, plus another $417 for each kWh of battery capacity in excess of four kilowatt-hours. The maximum credit for qualified vehicles weighing 10,000 pounds or less is $7,500. This maximum amount increases to $10,000 for vehicles weighing more than 10,000 pounds but not more than 14,000 pounds, to $12,500 for vehicles weighing more than 14,000 pounds but not more than 26,000 pounds, and to $15,000 for vehicle weighing more than 26,000 pounds. Once a total of 250,000 credit-eligible vehicles have been sold for use in the United States, the credit phases out over four calendar quarters. The House bill made no provisions modifying the current credit. The Senate version made substantial changes, expanding the type of vehicles qualifying for a credit, adding a credit for PHEV conversions, and doubling the 250,000 vehicle limitation to 500,000. The conference agreement follows the Senate version with substantial modifications. Provisions include:

• A maximum credit of $2,500 is available for electric drive low-speed vehicles, motorcycles and three-wheeled vehicles.
• A 10% credit, up to a maximum of $4,000, for the cost of converting any motor vehicle into a qualified PHEV. Minimum capacity of a qualified battery is 4 kWh. Plug-in conversions made after 31 December 2011 are not eligible.
• The conference agreement limits the maximum credit to $7,500 regardless of vehicle weight. The conference agreement also eliminates the credit for low-speed plug-in vehicles and for plug-in vehicles weighing 14,000 or more.
• The conference agreement replaces the 250,000 total plug-in vehicle limitation with a 200,000 plug-in vehicle per manufacturer limitation.
• Changes to the plug-in credit are effective for vehicles acquired after 31 Dec 2009.

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Thanks to Green Car Congress.