Plug-In Hybrid Tax Credit Update: Economic Recovery Law Boosts Numbers Eligible

We promised to come back with any necessary updates to its green car provisions once the final version of the $787-billion economic stimulus bill became available.

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Recovery plan contains more than $2 billion in tax credits to promote sales of plug-in hybrid vehicles such as this prototype Ford Escape.

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It has, and we found one significant change in the segment on tax credits for plug-in hybrids that needs to be reported (plus a typo in our earlier report that could cause some confusion). 

We added a correction in the plug-in tax credit segment of Monday's posting on the bill's benefits, but here's a fleshed-out version:

The version of the stimulus plan initially approved by the House would have started phasing out tax credits for purchasers of plug-in hybrids after the 250,000th model was sold.

The Senate version doubled the cap to 500,000 plug-ins.  But after after an intensive lobbying effort by the advocacy group Plug In America - which sent more than 55,000 letters of support for its plan to the Senate - the measure was amended again to tie the credits to individual manufacturers' s sales.

The final version, signed into law today by President Obama, says that the credits for plug-in hybrids will extend to the first 200,000 models sold by each automaker.

Depending on how many car companies start making plug-ins, that could push the total number of models eligible for the tax credits to well in excess of  500,000.

"This bill, which invests more than $2 billion in plug-in technology, will put vastly more numbers and kinds of plug-in electric vehicles on the road," said Plug In America legislative director Jay Friedland. "It will help create jobs and spur spending by incentivizing consumers to purchase the cleanest-running vehicles made today and those just around the corner."

As a refresher: The credits start at $2,500 and ratchet up by $417 for every kilowatt-hour of battery capacity on board the vehicle in excess of 4 kWh; they top out, for most passenger vehicles, at $7,500.

For  heavier plug-in hybrid vehicles - those, mostly commercial trucks, that would tip the scales at 10,001 pounds and up - the credits start at $10,000 and rise to a maximum of $15,000.

There also are provisions that give qualified aftermarket conversions that turn conventional hybrids such as the Toyota Prius into plug-ins with additional all-electric range a credit of 10 percent of the cost up to $4,000 (or a $40,000 conversion cost), and for credits of up to $2,500 for purchasers of low speed or neighborhood electric vehicles (limited in most states to top speeds of 25 mph), and electric motorcycles including three-wheeled vehicles.

Posted by

John O'Dell February 17, 2009, 3:28 PM

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Legislation, Plug-ins and Electric, Tax Incentives

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Economic Recovery, Hybrid Tax Credits, Plug In Hybrids, Stimulus Bill