Energy bill offers rich rewards for hybrids

Scott,

I feel your pain!!!!!! I just purchased a 2005 Prius last week. :cussing: :cussing: :cussing: :cussing: :cussing: :cussing:

 

Here's the catch, though, other than not paying any attention to the problems with the items the energy bill ignores:

...but it could cease a lot sooner for some models. That's because of a provision that allows the tax breaks for just 60,000 vehicles from each automaker.

So, if you are planning on buying a new Prius, buy it quickly. This year Toyota is planning to hit 100,000 sales, and their planned trend is to double sales of the Prius each year.

-m.

 

Sadly, that's very poor reporting of the details of a rather complex tax credit provision which will lead to more confusion.

The 60,000 number per manufacturer is a trigger point only for a phase out over several calendar quarters. Car number 60,001 will be fully eligible!

The 60,000 number simply sets a clock in motion. The full tax credit will be available for the balance of the calendar quarter that number is hit AND the entire next quarter.

 

This upcoming hybrid credit seems to make sense now, despite the odd approach. But how exactly will each automaker convey to each buyer what credit they are eligible for? Dealer's certainly don't exactly have a trustworthy reputation. I bet there will be a number of new hybrid owners that get screwed come tax time as a result, discovering they don't actually get the amount they were originally promised.

The phaseout method will require a matrix, where you look up the hybrid model in the quarter you purchased it to find out what you get. We (Prius enthusiasts) will find that fairly simple and will know shortly after the 60,000 threshold is exceeded to identify when the phaseout begins. In fact, we'll likely setup webpages to make it easier for the less-informed. But that won't help those that don't research online. The reality that reporters still publish hybrid articles with errors is an ugly one too, which will inevitably cause confusion.

Things will definitely get interesting. Today, I saw my highest gas price ever here: $2.35 per gallon. And oil closed at an all-time high of $61.89 per barrel. Hybrids are clearly going to capture more interest as the ever-increasing demand continues to make the situation worse. Will this credit actually help those automakers that have been in denial about the need for improved efficiency?

 

I think that scaling the tax credit to the fuel economy makes much more sense than just a flat $X just because you bought a "hybrid." The more efficient the car, the greater the incentive, and that's what it should be all about.

This will drive even greater demand for the Toyota and Honda products in the short-term while giving Detroit (whether they deserve it or not) more than ample opportunity to play catch up if they do it right, and then exclusively reap the rewards from the tax credit-driven demand for their new hybrid products after Toyota's and Honda's tax credits have fully expired. If they're smart, they will just license Toyota's technology and fast track some new efficient models into production to coincide with the phase out of Toyota product's eligibility. If not, their design cycle may take too long to hit their golden window of opportunity for 2008 and 2009 model years. One way or the other, Toyota will come out as the big winner.

 

OK, I am REALLY confused. The bill relates the tax credit to the percentage improvement over the 2002 CAFE CITY standard. But I can't find the CITY standard, only the combined 27.5. The Prius combined is about 200% of that so does that mean the tax credit is at least $1500 ? Could it be the 200% but less than 225% value of $2000? Are they using the EPA AVG for a 2006 compared to the CITY 2002 EPA? Could it even squeak as high as the > 225% value of $2500?

 

See page 1394 for the 2002MY city EPA classifications:
http://energy.senate.gov/public/_files/Con...enceReport0.pdf

 

Sigh....I just hope that TurboTax will have this installed when I file next year.............;-/

 

It would seem to me that the 60k limit on number of tax breaks per manufacturer is the "protectionist clause" to give the sluggish US auto makers a boost in the hybrid market. They can't seem to do it with innovation (Ford is using Toyota's HSD), perhaps they can compete in the low emissions market through legislation and lobbying...

JR (About to order a 2006 Prius when my dealer gets the price list)
Columbia, SC

 

60K is not a limit as erroneously reported. It is a trigger point which sets a clock in motion for a phase out of the tax credit for a given manufacturer. Considering Toyota's current and projected production of hybrids, easily 150,000 hybrid units could be sold eligible for the full tax credit. Then several hundred thousand would be eligible for the 50% and 25% tax credits over the 12 phase out period.

 

Thanks David. Not an easy find! Thus, given the 2890 pound weight, if they l round up to 3000 pounds, our 60 MPG city number is 227% of the 26.4 MPG 2002 city EPA value and the tax credit SHOULD be $2500. If they strictly interpolate the weight and city MPG values, it would be about 218% so a $2000 credit. Even if they round down to the 2750 weight value in the table, it is over 200% so the $2000 credit SEEMS like the minimum.
I guess we'll see starting in Jan!

I haven't put it in my spreadsheet yet, but I hit a new high for me when I filled up Sat night before driving the kids to camp Sunday morning: 56.5 MPG . About 2 MPG higher than my previous best.

 

You're welcome. But then, in addition to that calculation for the "Fuel Efficiency", you get to add a "Conservation Credit" which is certainly going to be $750 for the Prius.

 

What irks me is that they somehow managed to leave in the $100,000 Hummer clause! :cussing: You can write off a 3 ton, $60,000 vehicle that burns fuel as fast as money pumping into an Exxon bank account, and we get a $2,000 credit. Where's the 100% tax break for us?

 

im glad that they are giving the tax credit for the Prius starting Jan 1. although i dont see why. its not like we need more reasons to buy a Prius. cant build them fast enough as it is.

what i would rather have seen was a much larger gas tax with the money put aside encourage and develop better mass transit options. after all, the reason gas wont go down anytime soon is because its way under valued.

 

This reward is only available for a prius purchased AFTER jan 1st 2006 right? How about if it is purchased before jan 1, but delivered after jan 1st?

 

The terminology used in the Energy Act (did it get signed today as scheduled) is for when a vehicle is "put into service." That clearly indicates when you take delivery, not when you order it.

 

Hi I'm new to the site but I would like you know that there is a $2000 rebate for vehicles purchased in 2005 based on an old energy bill.