Incentives for hybrids

Money-back to buy hybrids

As of July 31, 2005, over 100,000 hybrids have been sold in 2005, the most in one year yet. We also have the most hybrids available in one year;

• • Honda Insight
  • Toyota Prius
  • Honda Civic
  • Ford Escape
  • Honda Accord
  • Lexus RX 400h
  • Toyota Highlander
  • Mercury Mariner

Whether one buys the hybrid because they want to reduce pollution or dependence on foreign oil, or they feel that they are helping bridge the technology of today to tomorrow it is clear that the hybrid is knock-out champion in the boxing match between raising the price of gas and creating new technology. And it is evident how much Politicians love to stand in the ring with the winner. Incentives abound for the hybrids. Last week I wrote an article on hybrids in the carpool lane. Since then bloggers, journalists, and radio hosts have gotten on the carpool bandwagon to voice their objections of solo passenger hybrids in the carpool lane. On WMAL in Washington D.C., Weekend Wheels with Warren Brown and Bill OBrien talked about my article and got calls from listeners saying that they were against letting solo passenger hybrids in the carpool lane just because it was a hybrid, or because it got better emission. They thought the carpool lane was to ease congestion and allowing a solo passenger car didn’t do that.

The bloggers are saying the same thing. On autoblog.com there wasn’t one person who thought that allowing hybrids in the carpool lane was a smart idea. One blogger said;

” let me see if this makes sense;
let’s take the car that supposedly performs best in stop and go traffic (hybrids) and allows it into the HOV lanes where it’s performance suffers. Then let the non-hybrids that perform best at higher speeds sit it traffic.
Very smart. Those Japanese lobbyists must be really sucking up to the politicians these days.”

another blogger said;

“Why should we be encouraging people to buy hybrids? And why is the government subsidizing them with tax credits? If you want one, buy it. If not, don’t buy it. Why not give me a tax credit for my bike or my shoes or my motorcycle?”

People seem to know what the politicians do not; that hybrids are the least effective on the highway and that they create the least amount of emissions and use the least amount of gasoline when they are sitting idle in traffic congestion. According to Toyota spokesperson Halie Schmidt, the 2005 Toyota Prius is $21,515, including destination charges. A Prius buyer has a double income household of $94,600, certainly enough to purchase an even more expensive car.

That’s two hard-working adults making about $22 per hour per person. Imagine being able to get to work an hour earlier, without having to pick up strangers in an HOV pool, or possibly work an hour extra. Imagine a couple living in Concord, CA. One of them commutes to work in San Francisco every day, paying $3 to go over the bay bridge. They get the minimum prescribed two weeks off for holidays. Because they have a hybrid they are able to get over the bridge 1 1/2 hours earlier, allowing them to work one extra hour a day and still get home at the same time they did before they purchased their hybrid. This works out to an extra $22. At $22 per day, five days a week, 50 weeks a year, they have made/saved $5,550. We didn’t even look at the amount of gas they saved or cleaner emissions.

Part of the reason Politicians say they are for solo passengers in the carpool land is that they want to get rid of emissions. Why not put a commuter tax on the pre-1982 cars or make the cars that are over 30 years old get smog checked. How about letting the 18-wheelers have a carpool lane? The 18-wheelers get maybe 5 miles per gallon. They emit the most emissions in stop-n-go traffic and when traffic is bottlenecked 18-wheelers take the most time and space to move in and around that traffic congestion.

According to Darrin Roth, Director of Highway Operations, American Trucking Associations Georgias toll road planning commission hired Parsons, Brinckerhoff, Quade & Douglas, Inc., to do a feasibility study on the benefits of having a truck-only toll (TOT) road. The study suggests that high occupancy toll (HOT) or TOT facilities may offer greater benefit’s to the region’s passenger and freight movement than would a system of HOV lanes alone. As shown, all three scenarios show a positive benefit in terms of reduced vehicle hours traveled.

Other bloggers are saying that consumers shouldn’t get a tax break. In August 4, 2005, Wall Street Journal article a Prius owner referred to the tax break as ” found money”, the implication being that he had not purchased the hybrid because of a government subsidy. The subsidy was supposed to end next year but has been continued with President Bush passing the energy bill next week.

The new energy bill that President Bush signed on August 8, 2005, has some fine print that should have companies like Toyota and Honda shaking their heads and re-strategizing. Don’t be surprised if you see a car that looks just like a Toyota Prius badged with a Scion moniker. There is a reason the Ford Escape and the Mercury Mariner are both hybrids, both built on the same platform, yet under different Manufacturers.

The energy bill limit’s the amount of tax credit’s one manufacturer can get to 60,000 vehicles. If you’re thinking about buying a hybrid because of the tax break and the Manufacturer is going to build more than 60,000 unit’s you’ll need to get your car as soon as possible to ensure that you get the tax break, which goes up to $3,400 starting January 1st, 2006 through 2010. For the naysayers that say that Congress is providing an unfair protectionist benefit to U.S. carmakers think again; Ford and Mercury are buying batteries from the Japanese, uncrating them in the United States, and installing them in their “American” hybrids.

There are questions on blog sites about Toyota Manufacturing getting a grant incentive to produce hybrids in the United States. Toyota got a tax incentive of 25 percent of the investment, plus recouping the cost of training. JOBS for environmental stewardship project with a minimum investment of at least $5 million. The credits will cover 100 percent of eligible equipment costs. Ford – the first hybrid made in the USA – didn’t get a tax incentive. Ford was told that since there were no sheet metal changes and very few tooling changes – other than opening a box that contains a battery received from Japan – that the wouldn’t get a tax incentive.

With the passage of the Federal Transportation bill on August 10, 2005, and Assembly Bill 2628 (AB 2628) on September 23, 2004, qualified single-occupancy hybrid vehicles are now permitted to use High-Occupancy Vehicle (HOV)/carpool lanes in the Bay Area during designated carpool hours, if these vehicles are displaying a distinctive decal or other identifier issued by the Department of Motor Vehicles (DMV). Howe’ver, unlike HOVs or super-clean alternative fuel and electric-powered vehicles, which are allowed to drive toll-free across the toll bridges during designated carpool hours, single-occupancy hybrid vehicles must still pay tolls (using FasTrak) when driving across the Bay Area toll bridges in an HOV/carpool lane.

” The Federal Highway Administration encourages creativity and innovation by states, including HOV lanes, to keep traffic moving. Gas-electric hybrid vehicles offer numerous environmental and energy benefits, and some states encourage their use by allowing them with solo drivers on HOV lanes. FHWAs goal is to ensure that HOV lanes continue offering congestion relief to commuters.”

Californias bill will limit the amount of solo hybrid drivers in the carpool lane to 75,000 vehicles and only those that can get 45 miles per gallon. Those vehicles that currently meet that requirement by EPA standards are the Toyota Prius, Honda Civic, and the 2000-2004 Honda insight(not 2005). If California used Consumer Reports real-world test of hybrids with highway and city mpg combined even the Prius wouldn’t meet that requirement.

The way the EPA calculates miles per gallon on a hybrid is flawed and the EPA knows it. They are soliciting comments from the public in an effort to get the government to give them funds to change the way they test hybrids. California acknowledges the flaw by not making hybrids get smog checked. Hybrids don’t emit emissions when they are sitting idle because they are using their battery, not gasoline. MPG is calculated by the EPA based on-road test and the number of emissions emitted. No emissions equal better MPG to the EPA. California won’t do anything till it gets the blessings of the U.S. EPA.

The highway bill that passed last week says that California can keep it’s federal highway money if they only allow ” low-emission and energy-efficient vehicles” into carpool lanes, no mention of hybrids.

According to DMV’s website, the reason these hybrids do not meet the requirements are;

Ford 2005-2006 ESCAPE HYBRID – not qualified due to fuel economy less than 45MPG.

Honda 2005 ACCORD HYBRID – not qualified due to lack of compliance with AT-PZEV emission standard and fuel economy less than 45MPG
Honda 2005 INSIGHT HYBRID – not qualified due to lack of compliance with AT-PZEV emission standard.

Lexus 2006Rx400h HYBRID – not qualified due to fuel economy less than 45MPG and lack of compliance with AT-PZEV emission standard.

MERCURY 2006 MARINER HYBRID – not qualified due to fuel economy less than 45MPG.

TOYOTA 2006 HIGHLANDER HYBRID – not qualified due to fuel economy less than 45MPG and lack of compliance with AT-PZEV emission standard.

Kelly Blue Book did a study on 428 of its internet visitors. Their study showed that consumers were willing to pay $2,278 more to own a hybrid. Half of the shoppers (49%) are interested in hybrids, though very few are ” definitely” interested in them and willing to pay whatever it takes to get one. Half of the shoppers need more information or are not interested and the younger shoppers are more interested in hybrids; pickup truck intenders are less interested.

6 percent of the respondents said they would buy the hybrid regardless, and three out of four (74%) say that fuel economy is the most beneficial aspect of hybrid vehicles between that, the environment and enhanced performance. The most prevalent concern about hybrid vehicles is that they have a complicated technology that is difficult or expensive to fix; battery pack life and savings justifying their premium cost are also mentioned by more than half of shoppers. Pickup truck intenders are more concerned about hybrid vehicle performance compared to those considering other vehicle types.

61 percent of respondents were concerned that hybrids have a complicated technology that is difficult/expensive to fix, while 55 percent were concerned that the hybrid has a limited battery pack life. 51 percent were afraid that hybrids do not pay for themselves to justify the premium cost. 49 percent must have heard of Toyotas stalling problems because they are concerned that hybrids have technical problems like stalling or sputtering. The issues that are usually the highest concerns in an internal combustion engine show up last in the hybrids; 40 percent worry that they do not offer driving performance needed, 35 percent say hybrids do not get the level of gas mileage promised and only 31 percent are concerned about the resale value.

With all the concerns in place, Seven out of ten shoppers (70%) believe that hybrid vehicles will offer higher fuel economy with driving performance similar to or better than traditional gas-powered engines in five to ten years. By that time we should know the future of hydrogen.