Incentives running out for hybrid car buyers
Filed under: Bargains, Budgets, Tax, Transportation
The end of the year is coming fast for buyers of hybrid cars, as tax incentives run out when the new year arrives, according to the Wall Street Journal (subscription required)
The tax credit for the Honda Civic hybrid ends at the end of the year, just like it did about a year ago for Toyota Motor Corp.'s Prius, a strong-selling hybrid that gets about 46 miles per gallon. The federal government is phasing out the same incentives for Honda Motor Co.'s Civic hybrid, which gets 42 miles a gallon.
According to the Journal, hybrid tax incentives start to go away when a car maker sells its 60,000th alternative-fuel vehicle, a level Toyota reached in mid-2006 and Honda hit in the third quarter of 2007. The amount of the tax credit is first reduced by 50% before disappearing altogether over several months. Honda's $525 tax credit will be phased out by Dec. 31, according to the Internal Revenue Service. The Civic credit had been as high as $2,100 before the phase-out began in January 2008.
Sales of hybrids are about 2% of the overall market, but they've grown rapidly since the Prius made its debut in the United States in 2000. Toyota and Honda were the first to have these vehicles in dealer showrooms when fuel prices started skyrocketing in the past few years.
Hybrids get better mileage because they pair a traditional internal-combustion engine with an electric motor, which is powered by a rechargeable battery. Electric motors boost power to the regular gas engine, allowing auto makers to install smaller, more efficient motors in hybrid cars. Some hybrids run on electric power alone at low speeds, further saving fuel.
A Honda spokesman told the Journal that it has no plans to discount its Civic hybrid as the credit disappears. Next year Honda is releasing a new Insight model, expected to be priced around $19,000, though it will not be eligible for a tax credit.
Manufacturers currently offering full tax credits for their hybrids include General Motors Corp. and Ford Motor Co. GM's 2008 Chevrolet Malibu hybrid, which gets about 27 mph, offers a $1,300 credit. Ford's 2009 Escape hybrid, a small sport-utility vehicle that gets about 32 mph, has a $3,000 credit for its two-wheel drive version. The same goes for Ford's two-wheel drive Mercury Mariner hybrid.
Aaron Crowe is an unemployed journalist in the San Francisco Bay Area. Read about his job search at www.talesofanunemployeddad.blogspot.com
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Reader Comments (Page 1 of 1)
12-02-2008 @ 3:59PM
BHarrison said...
I have one question: The Toyota service rep told me that it costs more than $10,000.00 to replace the batteries in the Toyota Prius. (I also forgot to ask if the battery warranty is prorated.) Anyway, if it costs that much to replace the batteries, then basically the hybrid cars are "throw-away" vehicles once the warranty expires, right? Who is going to invest OVER $10K in a two or three year old car if the batteries go bad? What if you have an accident and do not carry comprehensive insurance?
I might be wrong, but this type of hybrid car just doesn't seem to be very practical for the :"life of the vehicle". Batteries don't "last forever" either. My V6 2000 Toyota Camry is still running just fine; and I've had darn few service problems with it. I've gotten EIGHT FULL YEARS of use out of it; and may get two or three more years . . . that is what, perhaps "three life times" of a Toyota Prius. No thanks, I will stick to my standard gasoline powered vehicle. In the long run it is certainly a lot more cost effective, even when the price of gas goes up to $4.00 or more per gal.
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12-02-2008 @ 5:12PM
marshall said...
LOL The transmission replacement is 13-15 thousand as well. I am thinking of buying as 4 wheeler to run around in on the streets as the police in most major cities can't chase you if you run as they are afraid to hurt the perps or they will crash an hurt them selves. Google New York city 4 illegal 4 wheelers, then try Baltimore, Philly and the big east coast cities.
12-02-2008 @ 6:46PM
glenda said...
Just to respond, I have a Prius that I bought new in 06 and have driven it 90K miles, the only thing I have had to do to it is oil changes, brake pads and new tires, however I know that through my dealer the batteries are about $3400 and that they are warrantied for ten years, considering that most people don't keep their cars for ten years I am in no way concerned about the batteries in my Prius (I LOVE MY PRIUS). However, the rip off crap of the government which was supposed to give me a $3200 tax rebate in 2006 when I bought the car suddenly changed the "tax rebate" to a "tax credit" which meant nothing for me. This ticked me off because I purchased the top of the line Prius figuring I would get the package for free once I got my rebate...that never happened, but I couldn't be happier with the car.
12-02-2008 @ 7:11PM
tim said...
I have a Prius, and have had it for four years now with no problems whatsoever... save for the fact that the people at the gas station miss me and I have a pocket full of cash that others are spending on gas.
The lifetime of the battery, when I bought mine several years ago, was estimated at over ten years. I'm positive that the number has increased since then, but regardless - if you're holding on to your cars for longer than ten years... you're right... perhaps the Prius isn't best suited for you. Wait another year for the all-electric Volt. ;)
12-05-2008 @ 1:21PM
Woody Smith said...
I own two hybrids, a 2000 Honda Insight and a 2005 Toyota Prius. Both vehicles' battery packs are warrantied for 150,000 miles or ten years.
It is correct that they are expensive to replace, about $4,000 in the Honda and a little more in the Prius. It is something of a stretch, however, to claim that any expense that one might incur after 150,000 miles renders a car a "throwaway." However, there is no record of even a single failure due to normal usage of a Toyota Prius battery pack to date -- the only ones that have been replaced were damaged in accidents.
I have 75,000 miles on my Prius now. I have yet to incur my first dollar in repair expense. Literally NOTHING on that car has ever broken, and my only expenses except for gasoline so far have been for factory scheduled maintenance, tires, and wiper blades. Not even a single cent has been spent on items like, brake linings or light bulbs!
12-02-2008 @ 6:16PM
goldbond said...
did you know it will cost over 300.00 $$ to change the oil.
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12-02-2008 @ 6:52PM
Bill said...
Hybrids require 1000 gallons more fuel for their manufacture than do gas cars. Hybrids save only 90 gallons per year of normal driving. So it takes 11 years for your hybrid to save the first gallon of gas. Hybrids are bogus gas savers.
Wake up America.
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12-02-2008 @ 7:12PM
tim said...
Again... COMPLETELY untrue - I would LOVE for you to cite the source of your information that states that a Prius takes 1100 gallons more fuel than a traditional fuel-based car?!? This is just propaganda spewed out by people trying to keep an industry from its proper evolution and change, which is so desperately needed.
12-02-2008 @ 7:37PM
lextrex said...
Bill your numbers are all wrong. I have been driving a Prius hybrid for two years. I am averaging 51 mpg over the 40,000+ miles I have driven so far. My last car averaged 25 mpg, pretty good by most standards but half what the Prius gets. At 20,000 miles per year at a rounded down 50mpg I use 400 gallons of gas per year, my old car used 800 gallons to go the same distance. At the US average of 12,500 miles per year a Prius will use 250 gallons and the car getting 25mpg will use 500. Even in this example you save 1000 gallons in only 4 years. And if your car gets 16mpg you use app. 780 gallons and make back the difference in less than 2 years. Also where did that 1000 gallon production difference come from? That seems awfully high.
12-02-2008 @ 6:53PM
tt-rexxx said...
you know that it's impossible to have sex in my girlfriends prius when she's yelling "NOT ON THE SEATS,NOT ON THE SEATS" like that's going to reduce gas milage LOL
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12-02-2008 @ 7:30PM
SFB said...
So sorry for you---NOT!
12-02-2008 @ 7:31PM
Dave said...
What about the SMART car. It's not a hybrid but does it qualify for any rebates?
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12-02-2008 @ 8:26PM
lextrex said...
Sorry, no rebates. 3 cylinders, 35 mpg, not high enough for rebates
2-24-2009 @ 1:15AM
Jermaine U said...
Many people use hybrid cars in this era. Its functions and advantages are very reliable and earth- friendly thus most people advocate and patronize its usage. In the current economic climate, many people are trying to save money so they don't have to get payday loans. Even though it has been dropping over the last few months, the cost of gasoline is expected to rise again over the next year or two. More and more people are going to think about saving money on gas by buying electric or hybrid cars. What you probably don't know is that a hybrid may not save you that much. If you drive a hybrid, the savings from gasoline amounts to a few hundred dollars a year at most – about the same as most payday loans. If you are saving less than, say, $500 a year on gas with a hybrid, and you paid an extra $4,000 for the car itself, then you will have to own the car for over eight years before it has paid for itself. The average American has a car for five years or less. To see how this works, steer yourself to the Personal Money Store payday loans money blog.
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