Will Tax Credits Help Clean Diesel?

The first “clean diesel” vehicles are making their nationwide debut in late September and early October. The diesel vehicles from Volkswagen and Mercedes will start showing up in dealerships in California and other states that had previously not allowed diesels because of strict emissions guidelines. Two new factors could boost sales of these vehicles: a recent drop in diesel fuel prices, and new federal tax incentives for clean diesel vehicles.

Mercedes-Benz recently won the first consumer tax credits for diesel vehicles when the Internal Revenue Service awarded purchasers of the Mercedes GL 320 Bluetec a $1,800 tax credit, and buyers of the Mercedes R320 Bluetec and ML 320 Bluetec Diesel SUVS tax credits of $1,550 and $900 respectively.

In addition, Volkswagen announced today that buyers of the Jetta TDI sedan and SportWagen are eligible for a $1,300 Federal Income Tax Credit. The “Qualified Alternative Motor Vehicle Credit,” passed by Congress in 2005, was previously granted only to hybrid gas-electric, compressed natural gas, and propane-fueled vehicles.

Meanwhile, the drop in fuel prices in recent months has reduced the average gap between regular gasoline and diesel to less than 20 cents. As recently as mid-August, that gap was approximately 50 cents—which was virtually erasing the traditional fuel cost savings offered by diesels. (The larger gap between gas and diesel remains in some parts of the country.) The Jetta diesels offer combined city and highway fuel efficiency in the mid-30 mpg range, with the powerful luxury Mercedes vehicles providing mileage in the mid- to low-20s.

J.D. Power and Associates, an auto market research firm, forecasts that diesels will account for as much as 14 percent of the US auto market in 2017—up from 3 percent today. That growth will depend on diesel vehicles passing California’s emissions standards and thereby reaching markets in all 50 states.

The most important economic factor—especially during the current recession—could be purchase price: the MSRP for the Mercedes GL 320 is $57,625, while the R320 and ML320 are both in the high $40,000 range. The Volkswagen Jetta TDI and SportWagen TDI are priced more competitively at $21,990 and $23,590 respectively.

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  • Collin Burnell

    How does one ‘Replenish the Urea?’

    Is there a tinkle tank?

    Sorry, I had to do it!


  • Samie

    Interesting experience RKRB, always thought the durability of those engines reduced maintenance issues, guess not.

    In the Federal Income Tax Credit there should be a calculation that incentives fuel efficiency, the higher the more the rebate.
    Sorry for not looking at the “cleanliness of engines” but seems we should be giving the Jetta TDI more of a rebate. This could encourage others (Ford) to use diesel as a competing alternative to efficient 4cylinder and V6’s in the U.S. market.

    Lately, I seem to be pissing off some so here I go again along side this program should be some type of program that encourages those who look at (non hybrid) V8 SUV’s and Trucks to switch to diesel vehicles. Phasing out many V8-V10 options might not be so bad. If you want to power your diesel with swicthgrass or fry grease whatever I don’t care but if we responsibly and respectfully create new bio diesel fuels along side encouraging production and purchasing of these vehicles that could help in the short term a tiny bit with some of the problems. Lowering tax on diesel would not hurt either. So here is the statement that pisses people off biofuels for diesels but efficency with current tech for 4cyl and V6’s until EV and Plugins become a viable option. To a particular someone to say I’m part of the problem, will your just a silly willy 🙂

    By the way love the Volkswagen Jetta TDI, wonder if it could be turned into a diesel hybrid. What mpgs would that get?

  • Last Gas Car

    Americans have always been hesitant to embrace diesel technology. The stigma of the exhaust pouring out of diesel vehicles still exists even when people think of clean diesel. Probably why Ford won’t release its ultra efficient ECOnetic model here.

  • simon@aus

    Badly maintained diesels are a curse. This is why i don’t like them (um, this site is ‘hybridcars’…) the other day I heard a diesel peugot – not a truck, by any means – yet it sounded like one: what would that be like to be stuck behind, going up a hill?

    What about when this present fleet is 10 years old? – we will be beholden to the willingness of the owners to maintain their cars. Not good.

  • Anonymous

    Diesels are a good option at this point mainly because there is a lack of choice in the hybrid market. People who want something bigger than a prius but smaller than a ford escape (good luck finding either of them) really have no option other than the sportwagon. Since I live out in the middle of nowhere, highway mileage is the only thing that matters. I don’t need start stop, I don’t need a huge expensive battery, I just need a fuel efficient car that is slightly more versatile than the average sedan/hatchback.

  • RKRB

    -Good information!
    -FWIW, we had a 1987 Mercedes 190TD diesel for 10+ years and put many miles on it. Mileage went below the 30’s only when an injector went bad, and the car felt solid even when we sold it.
    -Nevertheless … if you plan to buy diesel as a long-term hybrid alternative to save money, also consider expected repair costs and reliability. Mercedes and VW are solid vehicles, but haven’t traditionally enjoyed the best repair records according to Consumer Reports, and are not inexpensive to fix or maintain. We found we spent far more to fix and maintain the Benz over its lifetime than we did for our Explorer, and near the end, we were spending nearly as much to fix it as we would have spent in payments on a newer car (we also informed the new buyer of this, and he didn’t care because the price was right). Yes, the engine was as durable as an anvil, but worn power seat motors, electronics components, heater elements, etc. etc. were fiendishly expensive compared with a US (or presumably Japanese) car.
    -Again, please keep in mind: if your objective is to save money, consider the reliability of the entire car, and not just the fuel mileage. BTW we have owned at least one European car every year since we have been driving, but their cachet comes with the need to befriend a good mechanic (and don’t lose the number for the warranty).
    -Hope this helps.

  • steved28

    Samie, relax, you’re not pissing anyone off. We’re just talking here. The issue I have with some of your posts is that you seem to have lots of issues with CNG, but now you don’t have the same issues with diesel? I’m confused.

    Bottom line is we need them all, at least in the interim. You cited all these issues with where CNG is coming from, how it is extracted, and that it takes away from potential electric and battery (PHEV) market, or that we will need to import more. You could certainly make even stronger arguments against diesel, as it is dirtier, and derived directly from oil (largely imported). You promote bio diesel, but view ethanol as a disaster. (I agree ethanol from corn is not the right way to go, but that technology has lead to cellulosic ethanol)

    Diesel power, hybrid, plug-in hybrid, all fall under the category of using oil, but using much less. I am all for that at this point. (heck, I own a hybrid)

    CNG, BEV , and possibly Hydrogen, take this a step further and can potentially use no oil, depending upon how the electricity is generated. Of these choices, CNG is the fastest, easiest, and cheapest to implement.

    This is not the time to “pick one” over another. Throw everything in the pool and see what floats.

  • Dom

    Hey simon@aus,

    A badly maintained engine regardless of fuel is awful. It’s not just diesel. And there are many many more old smoky gasoline engines on the road then there are old diesels (mostly because the US buys mostly gasoline cars).

    The VW TDI is a awesome powertrain, powerful AND fuel efficient, and I’m happy the the IRS isn’t excluding them from this tax credit. VW has been selling diesels for years, it’s about time they get some recognition.

  • Samie

    Ok sorry, but I don’t agree with throwing everything into the mix. I agree plugin and EV’s are by no means the last steps that need to be taken. We need to take the most viable approaches develop them so they can sustain their own market share. Some say that hybrids need to be at 30% before this happens. You seem skeptical about future growth in the hybrid, plugin, and EV markets. In the next few years we will see huge changes in this market. Will it be at 30% in ten years? Focusing on this market is very important and goes will beyond cars. Improvements in battery technology and advancements in storage, energy regeneration, and lowered costs will be very important to our economy.

    CNG basically is another fuel, which is scary in that again we take one fuel and replace it with another. I’m sure price would go up if demand goes up and who knows who would really own these entities if more money is to be made in this sector. If price goes up too much we may see acceleration of cheaper imported natural gas into the U.S. market. There is less control over markets for natural gas then say utility companies or to make the energy yourself to power your own EV car. More violitility happens when you replace fuels with fuels and look at what is happening to the SE where gas shortages have been going on for almost 3 weeks. Only if we had a mass market for EV’s or plugins to help with problems like this or say fuel shortages from natural disasters.

    I am even skeptical of cellulose ethanol. If we only use plant waste and other waste products to make it that’s OK but if we grow stock only for production of cellulose ethanol what good does that do us? I’m sure you get the point but again issues with land resources and millions more would suffer from malnutrition due to higher food prices.

    Hybrids really at this point can not replace the functions of a diesel engine. You could argue that CNG could be used more for buses and other large vehicles. Oil products will be around for years we can’t just stop using oil tomorrow but we can continue to develop ways to get away from using fuels by focusing government and industry tools into r&d and encouraging markets to grow. More options create scattered interests, less investments and capital into things that are already trying to develop. Not in all cases but I believe in this case we need to narrow the options to focus on longer term solutions.

  • SoloSoldier

    Someone explain to me why diesel is an option?? I mean tfor the same price as a honda civic hybrid or Civic CNG you could which emit less pollutants than a diesel vehicle, even the newly touted Jetta TDI. Hybridization is more than just about mileage, its about “greening” the environment. Diesels don’t do that… even though the can pass Cali’s strict emission standards.

  • Dom


    Why don’t you do some research before just writing of a technology you don’t understand.

    Diesel is a good option because
    – Diesel engines are inherently more efficient than gasoline engines
    – Have their maximum torque in their most efficient operating range (~1800rpm) – much better for for towing than gasoline engines
    – Can match current hybrids at fuel economy without batteries, especially in highway cruising.
    – Can run on biodiesel, or other non-dino alternatives.

    As far as hybrids being about “greening” the environment, you’re just fooling yourself. It probably isn’t any greener to build and operative a Prius than a Jetta TDI all things considered. And you could probably take a small TDI drivetrain and put it into the Prius and get the same fuel economy (at least on the highway) due to the low drag of the Prius’ body design.

  • kurtdaniel

    no matter how they say that its clean its still a diesel and has its contaminants!!!!

  • wxman

    If diesel exhaust is so “dirty” and “toxic”, why did an Oak Ridge National Laboratory study show cell growth of human lung cells when exposed to exhaust of a modern diesel engine (with DPF), but cell necrosis (death) when exposed to the exhaust of a modern gasoline engine (at the same dilution ratio)?

  • RKRB

    wxman: you may want to look into the concept of “hormesis” which suggests that low levels of certain toxins may actually be “good for you,” because they stimulate healthy immune response functions (and don’t laugh — exercise and alcohol are examples of stressors which boost health at lower levels, and which can kill you if overdone).
    So…low levels of diesel can stimulate cell growth, but higher levels of diesel particulates have been shown to be harmful (and the difference between low and high levels may not differ very much, just as the difference between helpful and toxic doses of a drug may not be very great). SOme chemicals are toxic at any dose, but MAY have a lower toxicity at higher doses relative to hormetic chemicals. Cell cultures are not 100% predictable, because a lot depends on the types of cells, the relative dose levels, the time given for the cells to adjust, etc.
    Hope this helps.

  • wxman

    RKRB – yes, that does help. Thanks for your comment.

    I’m an atmospheric scientist, not an epidemiologist, so I confess that I don’t fully understand biological responses at the cellular level.

    A slide presentation of the ORNL study I referenced is available at http://www1.eere.energy.gov/vehiclesandfuels/pdfs/deer_2003/session9/2003_deer_storey.pdf .

    I don’t doubt that diesel exhaust is toxic at sufficient concentrations, but I’m certainly not convinced that exhaust from ANY combustion process isn’t toxic at sufficient concentrations.

    DPF has been shown by multiple studies (including the ORNL study I referenced) to be very effective – so much so that PM levels are typically lower than gasoline levels both on a particle number and particle mass basis per unit of fuel burned.

  • Bill Kuntz

    When the government gave the maximum IRS rebate for the Toyota hybrid all that happened was the greedy dealers charged you that amount above the sticker price so they got the rebate not you.
    When I went in just for fun to see how I would be treated you know the cars are so in demand there was every option on the car the manufacture could put on it and the dealer had an additional 1,100 dollars worth of extras. I understand now I’m not going to own a Toyota hybrid. I wonder when I go to get a price on a Volkswagen if there will be an extra 8 to 9 thousand dollars of options added that I don’t need or will they just want my IRS rebate
    right up front.
    I guess I’ll Just drive my electric car until the battery pack gives up the ghost. Hypermiling the van on longer trips will have to do if greed is the barrier they want to keep. I notice the SUV’s are sure taking up a lot of parking space that hybrids should be filling.

  • x431

    The happiest of people don’t necessarily have the best of everything they just make the most of everything that comes along their way.