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2010 Tax Credits for Hybrids and Electric Vehicles

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Tesla RoadsterThis latest CNN article on the tax breaks California residents can get on plug-in hybrids surprised the heck out of me – you could get a Nissan Leaf ($32,5000) for only $17,000 after federal, state, and local tax credits. The federal government would offer a $7500 tax credit, California would offer a $5,000 rebate, and San Joaquin Valley offers $3,000 in rebates.

That made me wonder where other vehicles stood in the whole tax incentive world, to which I turned to FuelEconomy.gov. They break down the credits into five categories – diesels, hybrids, plug-in hybrids, electric vehicles, and alternative fuel vehicles. We’ve taken a look at these in the past but I thought they deserved another look.

Hybrid Vehicles

The hybrid tax credit of up to $3,400 will expire at the end of this year (December 31, 2010) and many manufacturers have already seen this credit expire, which starts after they have sold $60,000 vehicles. Ford, Mercury, Honda, Toyota, and Lexus vehicles are no longer eligible for this credit (if you purchased a Ford or Mercury vehicle before March 31st, 2010 then you get a 25% credit). All other eligible hybrids still get 100% of credit until the end of the year.

Plugin Hybrids

There’s only one plugin hybrid eligible for a federal tax credit and it’s the 2011 Chevrolet Volt, with a $7,500 full credit. Chevrolet has yet to reach the 60,000 vehicle limit so there’s no schedule for the phase out just yet.

Electrical

There are only two electrical vehicles eligible for the $7,500 credit and they are the 2010 CODA sedan and the 2008-2010 Tesla Roadster. Again, neither manufacturer has reach the 60,000 car limit so the phaseout schedule not yet started.

I’ve long believed that buying an electric or hybrid vehicle is more a passion play than a financial decision. The higher cost of the vehicle, even if offset by the tax credit, is usually much more than what you would save in fuel. That being said, I think there’s something to be said about finding ways to wean ourselves off this fossil fuel addiction.

(Photo: jurvetson)

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24 Responses to “2010 Tax Credits for Hybrids and Electric Vehicles”

  1. Ladam8518 says:

    We do need to wean ourselves off the fossil fuel addiction (by this I refer to middle east oil). I have no problem with the electric cars, except that electricity is probably the most expensive means of powering a vehicle.

    Since I work for a company that builds and designs power plants and transmission systems, I enjoy seeing the push for electric vehicles. Just keep in mind that you are trading a gallon of gas here for a pound of coal somewhere else. Being in the industry, unless people are willing to pay much more for their electricity than they do now, coal and natural gas will still remain the only feasible fuels for power generation.

  2. zapeta says:

    Wow, I think its interesting that you can get a Nissan Leaf down from 32500 to 17000 after the tax rebates. That isn’t much more than a conventional vehicle.

  3. cubiclegeoff says:

    I’d buy a Leaf if it cost $17,000. Too bad we don’t have those credits here. And although many places burn coal for electricity, there are other options (we have a program where you pay a little more and your usage is associated with power created by wind turbines at some wind farms in the region), and the other options continue to be cheaper, and are growing because of new regulations.

  4. live green says:

    It’s good that they are providing tax credits on the early models of electric cars. Many more are coming out the next few years including my favorite, Tesla’s Model S. Hopefully electric charge stations will be much more readily available so that buying an electric car makes much more financial sense than buying a traditional gas vehicle.

    • cubiclegeoff says:

      I’ve wanted a Model S ever since I saw it for the first time a couple of years ago. Too bad it’s taking so long to go into production.

  5. freeby50 says:

    Ladam8518 : “electricity is probably the most expensive means of powering a vehicle.”

    The Leaf will go 100 miles on a full charge which will cost you about $2.75 of electricity assuming 11¢ kWh. From the consumer perspective that is cheaper than any gasoline powered car by a long ways.

    • uclalien says:

      You bring up a good point. But it makes me wonder what the price per kWh would be if we had over 250 million electric cars driving around the country.

      Interesting facts:
      According to the U.S. Energy Information Administration, real (inflation adjusted) gas prices are right at the average for the past 90 years. I know…it seems surprising given the high nominal price of gas, but that’s inflation for ya.

      And here in California, federal, state, and local gas taxes account for roughly 20% of the price of gas. In other words, gas is really 20% cheaper than the 90-year average.

      Just some food for thought.

      • cubiclegeoff says:

        It really depends on how charging is handled (like charging at night when there’s little demand elsewhere). But considering it takes over a decade for cars to circulate through the system, we have a long time to figure out how to deal with charging.

  6. billsnider says:

    I understand the need to wean us off of oil. However, if this is such a good idea (electric cars), why does the government have to hand out such generous rebates?

    Bill Snider

    • cubiclegeoff says:

      The same could be said for oil, if it is such a good idea, how come it has to be heavily subsidized?

      • uclalien says:

        So we all agree. Down with subsidies! Let consumers decide what they want to buy, rather than the government forcing taxpayers to foot the bill for their pet projects.

        • cubiclegeoff says:

          If the true cost of oil and all fuel and energy sources came into play, that would be great, but it’s very unlikely since there are so many hidden costs.

      • billsnider says:

        Agreed.

        I also feel this way about solar power. A friend got rebates totaling 85% for huis solar panels. My problem is that i am paying for his reduced electricity costs. ditto when i see the prices on these cars.

        Bill snider

  7. I think for the electric vehicles there has to be a significant incentive to get people to move away from a gas powered vehicle. A nice tax credit is a good start but I think we are going to need more than that.

    • billsnider says:

      What next would you suggest and at what point would you stop this never ending process?

      bill Snider

  8. Tim says:

    this is the worst use of taxpayer money. we are incentiving an inefficient power method (capacitance power). the last thing bankrupt california needs to do is to forgive revenue it cannot afford to relinquish. it also incentivizes taxing an already taxed power grid system (e.g. california’s. did everyone forget that our powergrids has not been updated in years, or that our powergrids are powered by power sources that haven’t been updaded or increased in capacity in years). the worst part of it is that it gives the false notion that electric cars are somehow green, by tricking people into believing that just because emissions aren’t coming out of the tailpipe, that it is green. where do people think electricity from the power grid comes from? last, it gives no incentive to the automakers to actually make an efficient, green car and reduce the price if the govt(s) are paying for over half of the car.

    • Martha says:

      But Tim, you can make electricity in a non-polluting way. To extract oil, refine it, and then burn it in our cars always produces pollution. The reason that the government provides an incentive is so that the auto manufacturers can sell enough cars to start making a profit from “green cars” and then invest more money in improving them such that they are mainstream.

      JMHO

      • cubiclegeoff says:

        Plus, pushing up demand lowers overall prices. It takes a good push for consumers in this country to move on some things that are new, and this is probably the easiest way to do it.

  9. Tim says:

    JMHO, that’s a myth…if the govt keeps subsidizing, there is no incentive for companies to become more efficient and lower costs. They become efficient and lower costs when the market demands it.
    JMHO, and how do you make electricity in non-polluting ways? nuclear? that has nuclear waste. solar? let’s see how much solar you can get and how clean the manufacturing process is to produce so much, and let me see how you are going to power those factories. the same goes to wind turbines. are you going to extract more bauxite for aluminum, steel, iron? or perhaps create much more composites which creates some interesting chemicals. what the myth here is, that the govt and the car companies at the govt’s behest is focusing on the back end, rather than on the front end.

    I would also argue that no one is asking the environmental impact questions about solar or wind power. if we are going to replace with wind power, what impact do all those wind turbines have on natural air flow, or will it somehow change it, or something stupid like heat absorption or reflection from the turbines and the towers. scientists just found out that white turbines are now bad, because they attract bugs, birds, and bats. what about solar power and what affect will all that reflection have if suddenly we have huge farms of these things, etc. what about if we have huge farms of these things and where does the wild life go? the same thing for offshore wind fields, what impact will that have on wildlife and ocean currents?

    these are some questions i haven’t heard anyone talking about. i mean if you want to go hugely over to existing clean energy capturing methods, you should at least do impact studies which no one is doing.

    but the biggest problem is ignoring the front end impact in favor of focusing on the back end to sell idiotic products like plug in vehicles. california can’t even generate enough power to in a high load situation, so we want to suddenly have folks go towards plug ins and take the system more at 240v?

    i’d rather the govt start investing in next generation power research rather than wasting so much money incentivizing inefficient capacitance based power. the kewl thing about combustion is that you get much more power for the bang, whereas capacitance you are constantly depleting power.

    • cubiclegeoff says:

      Without subsidies though, a lot of new technologies will not move forward. It’s cheaper to keep the old, polluting technology than to try and find a new, less polluting one.

  10. Tim says:

    oops, i mean Martha not JMHO…hehe

  11. fancy says:

    The thing we need to realize is that oil supplies will run out. Perhaps not soon, but eventually. We need to plan now and not wait for the inevitable. I drive a Prius, mostly around town, not on the freeway, and I average about 55 mpg. Occasionally, my mpg goes into the high 60′s. With not paying sales tax (Connecticut does not tax hybrids), spending about half what I would for gas over the life of the car (I usually keep a car for about 150,000 miles) and a collection of other perks, this car will ultimately cost me about $12,000. But money aside, I have spent time in places with terribly dirty air (Beijing) and I don’t want to breathe air I can clearly see. Whether hybrid or total electric, this is a win for the pocketbook and also the planet.

    • billsnider says:

      You forget one point mentioned in this blog.

      Generators burn coal to produce the electricity for your car. Coal is a pollutant. So the dirty air moves from the car to the electric company. It is not a one-to-one situation. The point is that it does not come without its own set of problems.

      Bill snider


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