Want to save $3,150 in taxes? Buy a hybrid car.
Buying a hybrid car to save gas and the environment may be its own reward. But for curmudgeons who need extra incentives, help is on the way.Skip to next paragraph
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Across America, states, cities, and corporations are leaping on the hybrid-incentives bandwagon. On top of state tax credits, some hybrid drivers now enjoy exemptions from emissions-testing and excise tax. Others even get unlimited use of HOV commuter lanes.
And the mother of all hybrid perks will soon be unveiled: Beginning in January, the federal government will offer a tax credit of as much as $3,150 per car, based on its emissions profile.
"The federal incentives, higher gas prices, and all these other small but attractive perks are tipping the balance," says Bradley Berman, editor and owner of hybridcars.com. "Hybrid culture is definitely shifting into the mainstream. It's moved from environmentalists and early adopters to energy security and people that just want to save on gas."
But like bleacher bums who envy those in box seats, drivers of regular vehicles are honking their horns in protest at the sweet perks.
"I worry that special privileges for certain types of vehicles may create some hostility," says Walter McManus, director of the Office for the Study of Automotive Transportation at the University of Michigan Transportation Research Institute in Ann Arbor, Mich.
Such concerns haven't slowed the hybrid push. At least 20 states in the past five years have offered incentives to hybrid buyers, according to hybridcars.com. California and Virginia are among those permitting lone drivers of hybrids to use High Occupancy Vehicle (HOV) commuter lanes normally restricted to those who carpool. But that list will probably grow in 2006, since the federal highway transportation bill passed by Congress in August specifically permits states to expand HOV access to hybrids.
Cleaner city air is one idea behind such perks. Another is that if there were more hybrids on the road, the nation could fill up fewer tankers in the Persian Gulf.
But because they cost more to manufacture, the "hybrid premium" has made their return on investment hard to justify unless gas is more than $3 a gallon. So the incentives just keep on coming.
In Boston, where monthly parking can cost as much as a small apartment, the city council last week began debating an ordinance to allow hybrid owners to park free at meters. If approved, Beantown would join New Haven, Conn., San Jose, Calif., Albuquerque, N.M., and Los Angeles.
The federal tax credit may be the biggest draw yet.Just ask Daniel Blackman of Montclair, N.J. With his aging Volvo starting to give him fits, the federal tax credit is looking good.
"I'm seriously considering buying a hybrid, and it's mainly because of all the incentives being offered," he says.
If he buys a Prius after Jan. 1, he explains, the federal government will give him a dollar-for-dollar tax credit of $3,150. His employer, Google, will give him up to $5,000 more. All told, he would save $8,000 off the cost of a new Prius. And the deal would be even sweeter if he lived in Colorado - which offers an additional $3,400 tax credit.
Meanwhile, some critics, like auto writer David Booth of Canada's National Post, refer to hybrid lovers as "enviro- weenies." Sally Pipes, president of the Pacific Research Institute, a free-market think tank based in San Francisco, has said that hybrid cars are a "ruse for environmentalists" aimed at imposing more restrictions on others. Feeding into that view are press accounts citing the ire of Virginia motorists toward hybrid owners now permitted to drive solo in HOV lanes - while they stew in traffic.
Even environmentalists who generally support hybrid technology are circumspect about the avalanche of incentives.
"With that generous federal incentive in place, I would question whether states ought to make it a priority to tack onto that other perks, especially given limited state budgets," says Kevin Mills, director of the Clean Car Campaign at Environmental Defense, in New York.
In the short run, the federal tax credit seems likely to boost significantly hybrid sales. Domestic carmakers like Ford and General Motors, who lag behind Toyota and Honda, could be the biggest beneficiaries, analysts say.
Dr. McManus, who has crunched the numbers, says annual sales of hybrids will reach about 1.2 million a year - nearly double previous forecasts, thanks to the energy bill's massive federal tax credit.
Still, it will be years before hybrids make a big dent in gas demand or greenhouse-gas emissions, he notes. And it would be unfortunate, he says, if the energy-saving technology developed a bad reputation because it was so favored.
"People have burned SUVs," McManus says. "Nobody's done that to a hybrid - yet. But if they keep giving special privileges to one type of vehicle, there could be a backlash."