Plug-Ins Next Tax Credit Target

March 1, 2007: MIT Technology Review—Tax Credits for Plug-in Hybrids?

It’s not just the Prius that gets modified these days. This FIAT Panda is one example of a plug-in hybrid that you won’t see on American freeways any time soon.

Summary: Although tax credits for hybrids haven’t pleased all buyers—mostly those taxpayers of few deductions who owe taxes and are not subject to the Alternative Minimum Tax—they may have had a hand in increasing sales of the highly efficient vehicles. Now, a bill making its way through the Senate would offer a $4200 credit for hybrid owners seeking to convert to plug-in power.

Last week, several alternative-powertrain vehicles appeared at a photo op on the White House lawn.

"At the White House event, David Vieau, CEO of A123 Systems, a startup based in Watertown, MA, whose batteries are used in the plug-in hybrid, proposed to President Bush that the government offer $2 to $3 billion in tax incentives over the next seven years and provide $300 to $400 million in research dollars over the next few years. Such incentives, Vieau said, could help plug-in hybrid conversions grow from a few hundred now to thousands later, starting in as soon as 12 months.

"President Bush called the plug-in hybrid and an all-electric-powered pickup ‘living proof’ that his ambitious goal of reducing gasoline consumption by 20 percent in 10 years is possible. He also renewed his request for research money for alternative energies. The administration’s proposed fiscal-year 2008 budget, which was released February 5, includes $41.8 million for battery- and energy-storage research and development."

Although the administration request for research money is dwarfed by industry’s suggestion, it’s clear that the president was impressed by the display—at least enough to credit the inanimate objects with life.

Will thrift-minded hybrid owners be so quick to embrace the new technology? More to the point, will banks and others be willing to finance an expensive conversion at a decent rate?


> Read Full Story

> More Hybrid Cars News

More Hybrid News...

  • Bre Campfield

    I think that Americans should have a tax break when using the plug in hybrid because it will envolve many more people. Having plug in hybrid cars will help with our enivironment that is slowly slipping away. We need to do as much help as we can in order to have a future for our children.

  • PflHybrid

    Call me a pessimist, but if this so called tax break is anything like the joke of a hybrid tax break we current have, it won’t be anywhere near worth it. We only saw a fraction of what we were supposed to get with our Prius, and apparently most people aren’t getting anything from the current hybrid tax break.

  • Wesley From Oklahoma

    “Having plug in hybrid cars will help with our enivironment that is slowly slipping away”

    Our environment is not slowing slipping away, it is slipping away at a very fast pace. People need to start making better decisions. Starting buying recycled toilet paper (seventh generation, etc) vegatable based laundry soap (seventh generation), etc. Goto to find a guide to living greener. Dont blame the government for our environmental problems…look in the mirror and ask yourself if you are doing EVERYTHING you can…if you can honestly say they you are…then blame the government.

    Buy Compact Florenece Light Bulbs now!!!

  • Don Jackson

    I think giving a tax credit for cars or trucks that get a 40mpg highway is better way than giving tax credit for plug in hybrids. The toyota yair gets better mpg than lexus gs450 hybrid. the bottom line should be mpg not if it is a hybrid or non hybrid.

  • joe540ci

    Just a bunch of talk so far.I have wanted a PHEV for two years where are they???

  • jeff

    Battery technology is far ahead of anything that is currently being discussed. I got into model airplane flight 2 years ago and LIPO batteries were already the norm. There is an even better cell chemistry just hitting the market for rechargeable drills.

    What drives this innovation? Folks like me voting with their wallets. All this talk about the cost to the auto industry of meeting mpg standards is BS. The cost will be born by the consumer not the corporations. So let’s start voting now. Buy the highest mileage vehicle you can afford when you look for a new car. Convert when you can afford to. Squeeze your wallet and vote. I hate paying for everything but there is no excuse to own a vehicle that gets less than 30 mpg if all you are doing is commuting. I hate Bush but anything the government does to encourage cleaner energy I am behind.

  • joe540ci

    Imagine how many people would buy lower cost high milage cars if there was a $4200. tax credit for anything that got over 40 mpg!!(hybrid or not)

  • PflHybrid

    Just want to clarify. I think the “marketing” of the hybrid tax break by the Bush Administration and/or Republican controlled congress turned out to be a complete farce.

    It was time to buy a new family vehicle in last year and the only vehicles we entertained were hybrids. I liked the HiHy so much, I turned it my company provided “company car” and bought a Prius. (I drive 30000 miles/year and felt guilty). We recycle everything – even though the majority of it isn’t picked up at our curbside. We compost nearly everything we don’t recycle. We end up putting trash out once every three weeks or so (they pick it up twice weekly in our little town). Years ago we installed 2500 watts of solar panels and two small wind generators when electricity was about $0.08/kWh. Finally, we buy recycled and organic products when we can, and prefer to buy things in recyclable containers. This is a roundabout way I’m trying to explain that I agree that we need to think globally and act locally. Regardless of what the government is doing.

    But just understand, if you have a mortgage and kids, forget the hybrid rebate.

  • Miracleman89

    I think this would be a great thing. I know that i will be taking advantage of it in 2008/2009 when they launch the Venture One! Check out

  • Ry-Bread

    At this point- whatever it takes to get people purchasing and driving hybrids is key. These first years (and I mean first decade) of alternative fuel/hybrid vehicles will be key in getting other consumers that are less interested or aware of the benefits of this technology involved. Folks should get tax incentives now not because they bought fuel efficient cars but because they are pioneers that are more likely to influence public and political will. I JUST bought a hybrid and my wife and I visited the in-laws this weekend. My father-in-law- an engineer & DIY guy had no concept of how these vehicles really work and what makes them more fuel efficient much less HOW fuel efficient they CAN BE depending on driving style (it is all biofeedback). He took a 30 minute spin and started thinking about trading-in his F-150.

  • Bucktrust

    As PflHybrid said above in “It will need to be real”…

    The current “Tax Credit” is a joke. We didn’t get ANYTHING in the end. I qualified for a full $3150.00 credit, but once the numbers were added up on our 1040, we got zilch!

    It has to do with the credits you are already claiming (2 kids and childcare for us) on your 1040. We’re not rich, by any means. Just a working family trying to get by. The promised tax credit was a big reason for us to purchase a Prius in the first place. My tax advisor said the credit would be great… if you were a single guy.

    I love my Prius, but feel ripped off. My advice: check the “fine print” with the IRS if a tax credit is a big reason you are considering a hybrid purchase. “Don’t believe the hype!”

    The link below is the form and info for this years “credit”. 🙁

  • Bill C

    Why not give the owners of vehicles, that meet a certain mpg and emissions level, a tax break every year for as long as you own the vehicle ? You can deduct the maintenance on your vehicle if you itemize and claim employee related business expenses so why not have a deduction for the people that are really helping to reduce greenhouse gases ? Change the deduction so that every one who owns a vehicle, that meets the requirements, (whether HEV, BEV, PHEV) would reduce their total gross income. (like a child tax credit). Change the Prius tax credit to $ 1000 per year for as long as you own the vehicle. For a PHEV – $ 1500 and for a BEV it should be $ 2500. (this nets out to a percentage of your net income tax so you would see a reduced tax burden).

    And conversely have an additional tax for any vehicle owned that falls below a certain mpg and emission standard (mpg of 20 or less [combined] or is a heavy polluter and include pickup trucks and SUVs).

  • Sok Juice

    “Why not give the owners of vehicles, that meet a certain mpg and emissions level, a tax break every year for as long as you own the vehicle ?”

    The reason we won’t is because the government is more interested in helping out automakers than helping the environment. Automakers are spending money coming up with new technology and it’s only worth it if they can recoup that investment. So Bush, more concerned with the well-being of his corporate supporters that supported his campaigne, has basically passed farce legislation to help sell more cars, that just happen to be hybrids. That’s why there is no yearly tax credit. In fact, if you don’t buy the hybrid new right off the lot, you won’t get the credit either.

  • Al K

    How about making cars last longer? I read a few years ago, that the energy expended in making a car is many times the energy you use to drive it. If that indeed is the case, then cars that last 30 years should reduce energy use and reduce pollution (greenhouse gasses, spent nuclear fuel, etc.). Maybe a German car that gets 25 mpg and lasts 30 years impacts the environment less than a car that gets 40 mpg and rusts through in 10? Has anyone looked into this?

  • tom

    I agree that we should be rewarding mpg, not specific technology. Right now, we have perverse incentives to buy low mpg vehicles like the Highlander when their are non hybrid alternatives that get better gas mileage.

    I still don’t understand how people got cheated on their tax credit, however. I thought the credit came directly off your tax bill. Why and how was it reduced?