Tuesday, August 15, 2006

Incentives to Purchase Hybrid Vehicles

High gas prices and social esteem gained from driving a hybrid around Berkeley are two reasons for driving a Prius or other hybrid vehicles. But, how many additional drivers will purchase a "brown" vehicle rather than a hybrid if Federal tax discounts and easy access to HOV lanes on highways are denied to new hybrid buyers? This strikes me as an interesting test of how many consumers are at "the margin" and respond to small changes in financial incentives to purchase one type of vehicle versus another.



SF Chronicle

Time running out for hybrid perks

Federal tax incentives on some models will soon expire; carpool lane access permits also drying up
- Michael Cabanatuan, Chronicle Staff Writer
Tuesday, August 15, 2006


Bay Area drivers vacillating over whether to buy a hybrid car need to decide quickly if they hope to snag those coveted yellow stickers that give them access to carpool lanes.
And for those contemplating a hybrid Toyota -- including the popular Prius -- there's an added inducement: cash. Waiting until Oct. 1 to buy a Toyota Prius will cost you $1,575 in federal tax credits.
"We don't want panic in the streets," said Karen Caesar, spokeswoman for the state Air Resources Board, which oversees the hybrid carpool lane program. "But if you're interested in a hybrid, now might be the time to go for it."
Most experts doubt that the waning hybrid purchase incentives -- including the federal tax credit of up to $3,150 and use of California carpool lanes -- will have a deleterious effect on sales, especially if fuel prices remain high.
"The focus has always been on the gas savings," said Susan Lopez-Guerra, president of LeaseMobile/California, which sells and leases cars, including an increasing number of hybrids. "As long as gas continues to stay at these high prices or continues to go up, I don't see the demand for hybrids going down, even if the carpool lane access stickers and tax write-offs are phased out at some point."
In a matter of weeks -- perhaps as few as one or two -- it will likely be too late for Bay Area drivers to get the stickers allowing certain hybrids admission to the carpool lanes at any time. Would-be buyers on dealers' waiting lists are likely to miss out on carpool lane stickers, but can assuage their disappointment by remembering that hybrids tend to get the best mileage in stop-and-go traffic anyway.
California set a limit of 75,000 carpool lane permits after President Bush signed legislation a year ago allowing access to diamond lanes for hybrids that get better than 45 mpg. Three vehicles qualify in certain model years: Toyota Prius, 2001-06; Honda Insight, 2000-04; and Honda Civic Hybrid, 2003-06.
As of last Wednesday, the state Department of Motor Vehicles had issued 62,831 yellow carpool lane stickers to hybrid owners, and another 3,319 will be issued soon, said spokesman Steve Haskins. That leaves 8,850 still available. The DMV receives about 220 applications a day for the stickers, but about 20 percent are rejected -- usually because the applicant applied before receiving license plates.
Confused? Let someone else do the math. "We're estimating it could be another eight to 10 weeks before we hit the cap," Caesar said. "If you apply in the next few weeks, you stand a good chance of getting your stickers. But we make no guarantees."
It can take seven weeks or longer to get license plates and another two weeks to get the carpool lane stickers from the DMV. Bay Area motorists also need to get a special FasTrak electronic toll tag before they can get their hybrid stickers, and if they do it online or by mail, it could take a week or longer. Signing up in person at the FasTrak offices in San Francisco can eliminate the wait, however.
All told, if nothing goes wrong, it can take nine weeks to get a hybrid carpool lane sticker. And the clock is ticking.
Tax incentives are even more complicated. After a manufacturer sells 60,000 hybrids, the tax credit for that vehicle is cut and eventually eliminated. So far, only Toyota has hit the limit, pushed mainly by sales of the Prius. Nineteen 2006 hybrid models made the federal list for tax credits. Ten 2007 models have qualified so far.
Some new-car shoppers said they might be dissuaded from buying a hybrid if they couldn't be assured of gaining access to the diamond lanes. But others said it wouldn't shape their car-buying decision.
"It's definitely made me stop and think," said Mark Baker, a Web developer from Alameda. Carpool lane access "was one of the reasons I was looking at a hybrid. If you're going down that road, and going to spend that kind of money, you're going to do all the numbers and consider all the factors."
Baker said he's now leaning against buying a hybrid, but added that his girlfriend, who would also drive the car, wants to buy a hybrid "on principle."
Penny Mudd, a software developer who commutes from Santa Cruz County to San Mateo, still plans to buy a hybrid whether or not she can legally cruise the carpool lanes.
"The (carpool lane) permit is not the deal," she said. "I want to try it out. In theory, it's greener. In theory, I'll pay less for gas. And in the back of my head, I think that if there's ever a run on gas, I won't have to wait in line as often as everyone else."
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1 comment :

Rob Dawg said...

Hybrids cause congestion. Perversely we are through subsidy contributing to using more gas! Congestion robs fuel efficiency from all. The lower roads use revenue from hybrids delays needed infrastructure investments.

Then there is the fairness issue. Carpool lanes were promoted as metered convieniences in exchange for the inconvieniences of sharing to reduce the number of VEHICLES on the road. Hybrids pay less for their footprint already in terms of fewer excise taxes per mile already and now we reward this perverse choice?