Jan 19, 2007

Toyota: Extend Hybrid Tax Credit

By Chris Woodyard
USA Today
January 16, 2007

DETROIT — Toyota wants an extension of a federal tax credit that has delivered savings of up to $3,150 to buyers of hybrid cars.

But some of Toyota's (TM) rivals — even those that make hybrids — aren't as enthusiastic.

Toyota, the biggest hybrid maker, is the only automaker so far to have reached the 60,000-hybrid-sales limit set by Congress in the legislation that allowed income tax breaks for buying hybrid cars as a way of encouraging fuel savings and cleaner air. The amount of the credit is based on fuel efficiency.

Even though Toyota reached the limit, buyers of its hybrids still get a credit, but it's far smaller and will disappear entirely later this year. Before hitting the limit, Toyota's Prius received the biggest tax break of $3,150. The tax incentive for buying a Prius or other Toyota hybrid fell by half last October and will be cut in half again on April 1.

"The cap should be raised for us to allow us to expand," Jim Press, president of Toyota Motor North America, said in an interview at the North American International Auto Show here. "Demand for Prius declined when there was a step down in hybrid tax credits. We need to have a certain volume to get the mainstream in for economies of scale."

Press also said support of hybrids should go beyond just the tax credits to include moves such as the purchase of hybrid cars for government fleets.

So far, Toyota appears to be largely alone in seeking reauthorization of the subsidies. The Alliance of Automobile Manufacturers, a Washington-based trade group that includes Toyota as a member, hasn't taken a stand on extending the subsidies yet. "We haven't really talked about it as an industry," says spokesman Charles Territo.

What other automakers say:

•Honda (HMC). "I'm not sure it's a good deal," John Mendel, senior vice president of Honda's U.S. division, said of extending the tax credit, because hybrids "are a bridge technology to something else."

Mendel thinks the tax breaks should go to drivers of zero-pollution hydrogen fuel-cell vehicles. Honda is beginning a program next year to put fuel-cell vehicles in the hands of more consumers. He added that "if your purpose is to push the envelope" in developing clean and fuel-saving technologies, hybrids may not be the best direction anymore. Honda sold about 40,000 hybrid versions of Civic and Accord cars last year and hasn't reached the cap yet.

•Ford Motor (F). A leading Ford environmental executive said she would be willing to go along with another tax-credit round, but she also thinks the government should be looking at other emerging technologies.

"We don't see (tax credits) as something that continues forever," said Nancy Gioia, director of sustainable mobility technology and hybrids. "It should be aimed at key technologies we think are going to be critical."

Ford makes the Escape and Mercury Mariner hybrid SUVs and plans to bring hybrid technology to some sedans, as well.

•General Motors (GM). While GM endorses incentives as a way of encouraging adoption of new technologies, they should be carefully crafted to not single out an element without looking at the issue comprehensively, said Beth Lowery, vice president in charge of environmental matters.

"To pick out one piece doesn't make a lot of sense."

GM offers hybrid versions of the Saturn Vue SUV and Chevy Silverado and GMC Sierra pickups, part of what it says will be up to 12 hybrid models.

The House could act as soon as this week on a fast-track resolution that could serve as a precursor to the kind of legislation that Toyota is seeking.

The resolution, introduced last week, would create a fund for renewable energy and conservation by cutting subsidies for oil production, part of the fast-track measures being pushed through by House Speaker Nancy Pelosi, D-Calif.

The measure represents "a shift in energy policy from the last (session of) Congress," said Kate Johnson, clean energy advocate for the U.S. Public Interest Research Group, which favors tax breaks for environmentally friendly cars available to consumers.

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