Bush's credits for hybrids hailed, details wanted
Date: 18-May-01
Country: USA
Author: Justin Hyde
But there was some wariness on both sides, which want more details about the size and scope of any credits for cars and trucks powered by fuel cells and gas-electric hybrid engines. Automakers want the credits to apply to the widest variety of designs, while some environmentalists want credits tied directly to fuel economy improvements.
The credits "get to what (the federal fuel economy standard) doesn't get at, namely the demand side." said Tim McCarthy, president of the Association of International Automobile Manufacturers, a trade group of foreign automakers. "It's one thing if you provide the supply, but it's another thing if people won't buy them."
President Bush's plan provides $4 billion for consumer tax credits between 2002 and 2007. Some bills in Congress would set up similar incentives.
Two automakers, Honda Motor Co. Ltd. and Toyota Motor Corp., already offer hybrid cars, which combine a gas engine with an electric motor and a battery pack to increase fuel efficiency. The two-seat Honda Insight gets 70 miles per gallon at highway speeds - the highest fuel efficiency of any car sold in the United States.
While hybrids have been held out as one of the most promising ways to improve fuel economy, current hybrid cars carry a severe price penalty, and sales have been held to about 17,000 a year. The Toyota Prius hybrid is based on the Toyota Echo compact, but costs about $5,400 more with similar options. Even at $2 a gallon for gas, a driver who puts 15,000 miles on the Prius a year would have to own the Prius 22 years to make up the difference.
General Motors Corp. , Ford Motor Co. and the Chrysler side of DaimlerChrysler AG have all committed to offering hybrids in 2003, but have said production will be limited due to the high cost and uncertainty about their popularity. Their first vehicles will be either trucks or sport utility vehicles, which offer greater potential fuel savings over small cars.
Environmentalists said the credits would help drive demand, but said improving the fuel economy of all vehicles was still the top priority.
"Tax incentives are in no way a substitute," said Therese Langer, transportation program director for the American Council for an Energy Efficient Economy. "They are a promotional measure which would help meet a stricter (fuel economy) standard."