- The Washington Times - Friday, November 21, 2008

We’re all tired of hearing about that $700-billion “bailout bill” for the financial sector that President Bush signed into law in October. And I’m just as annoyed as everyone else about Wall Street welfare.

But there was something for you — yes you — buried in the fine print and heaping dollar signs of that bill: a pretty tasty tax credit if you want to wait another year or so to buy one of the ultra-efficient “plug-in” hybrid-electric vehicles that will be hitting the market in the coming years from big makers such as Toyota and GM. Plug-in hybrids will have larger batteries than the hybrids on the road today, and as such will be more expensive to buy.

The plug-ins on the horizon: a version of the popular Toyota Prius, around this time next year, and GM’s heavily hyped Chevrolet Volt. The Volt is being broadly treated as a plug-in hybrid, but GM likes to call it an “extended-range” electric vehicle because the Volt is designed to run as far as 40 miles strictly on battery power. It’s slated to hit showrooms in November 2010.

GM also is going to launch a plug-in version of its Saturn Vue crossover in 2010, while Nissan says it’s likely to begin selling an all-electric vehicle around the same time. What they all have in common is batteries that are recharged by plugging into the electric grid, just like you charge any other device with a rechargeable battery.

The bailout bill provides for as much as a $7,500 tax credit for purchasers of vehicles with batteries that can be recharged in this fashion.

The hybrids currently on the road cannot charge their batteries this way.

The gasoline engine and special brakes recharge their battery packs, which also are smaller and cannot store nearly as much energy as plug-in batteries will be able to hold.

The tax credit is based on kilowatt-hours of battery capacity. A 4-kWh battery would earn the minimum credit of $2,500, and the amount would increase in proportion to the vehicle’s installed battery capacity up to the $7,500 tax-credit maximum.

Can’t or don’t want to wait until 2009 or 2010 to buy a plug-in vehicle?

There are some fine options right now, too:

• Several “conventional hybrid-electric vehicles currently for sale still qualify for the tax credit originally designed to increase the attractiveness of these efficient models. You can get as much as $3,000 for a Ford Escape Hybrid, and there are several other models that offer a tax break, though not as large. You can get the entire rundown from this link on the EPA’s well-designed fuel-economy website:

http://www.fueleconomy.gov/feg/tax_hybrid.shtml

• Coming next spring Ford will offer hybrid versions of its Fusion and Mercury Milan; these, too, will be eligible.

But because the tax break phases out once manufacturers sell a certain number of hybrids, the most popular models — Toyota’s Prius and Honda’s Civic Hybrid — no longer net buyers a tax credit. (I think “penalizing” these makers and customers who come late to the party runs counter to the idea of encouraging more-efficient vehicle choices).

• A new generation of powerful and extremely frugal diesel engines also entitles buyers to a tax credit. This is a big deal, because for a long time, regulators did not want to acknowledge diesels — still often perceived as “dirty” engines — can be an environmentally responsible choice.

Volkswagen and Mercedes-Benz currently have diesel-powered models for sale nationwide; previously, sales in some states were prohibited. In just a month or so, BMW will add to the selection with two models.

We’ve driven many of these diesel-engine vehicles and they’re all immensely enjoyable, and are worlds away from the old, chugging diesels many remember, and are extremely efficient.

Tax incentives for diesels currently range from $1,800 at the high end to $1,300. This takes the sting out of the fact diesel fuel remains markedly more expensive than gasoline, but experts expect diesel prices to settle in at around the same cost as premium gasoline.

Details about diesel-vehicle tax incentives can be found at the EPA’s website using this link:

http://www.fueleconomy.gov/feg/taxLeanBurn.shtml

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