
Easy come, easy go. Some of the perks that came with being early to the hybrid party, rebates and access to high occupancy vehicle lanes in some states, are on the wane. That's because a number of the benefits have ceilings that have been reachedor will be, this summer.
The biggest impact is on buyers of Toyota and Lexus hybrids, whose tax credits will decrease this fall. Once an automaker reaches 60,000 hybrid sales within a year, the credit is reduced in two stages and disappears a year later. When the sales mark is reached, as happened with Toyota/Lexus in June, there's a one-quarter respite (July to September), at which point the credit drops to 50 percent of the previous credit. It stays that way for two quarters (October 2006 through March 2007), falls to 25 percent for two quarters (April through September 2007), and then goes away entirely as of Oct. 1, 2007.
The 60,000 sales-per-maker cap affects divisions under the automaker's umbrella, so Lexus sales count, in the case of Toyota. Together, they have five hybrid models: the Toyota Prius, Toyota Camry, Toyota Highlander; Lexus RX400h, and Lexus GS 450h.
Honda and Ford Unaffected
Honda and Ford have fewer hybrid models and fewer sales than Toyota/Lexus, so they're unaffected for now, assuming the federal legislation remains unchanged. The point of the tax credits was to get as many automakers as possible to get into the hybrid business. But by sometime in 2007, Toyota dealers might cry "foul" when the Prius rebate of $3,150 has been reduced to $1,575, then $788, then $0, making the Prius potentially less competitive, in terms of sales, with the fixed $2,100 rebate of a Honda Civic Hybrid. Notwithstanding, the Prius is a currently a sellout with a waiting list of customers.
The current tax credits according to the Internal Revenue Service (2006 models unless noted) are: the Ford Escape 2 wheel drive, $2,600 (4WD, $1,950 ); Mercury Mariner 4WD, $1,950; Honda Insight CVT (continuously variable transmission), $1,450; Honda 2005 Accord, $650; Honda 2006 Accord (with updated control calibration), $650 and (without updated control calibration) $1,300; Honda 2005 Civic SULEV (super low emissions vehicle), MT (manual transmission), & CVT, $1,700; Honda 2006 Civic CVT, $2,100; Lexus RX400h 2WD, $2,200 (4WD, $2,200); Lexus GS 450h , $1,550; Toyota Prius, $3,150; Toyota Highlander 2WD, $2,600 (4WD, $2,600); and 2007 Toyota Camry, $2,600.
The rebate level derives both from the vehicle's economy and the improvement relative to others in its class, which is why a Lexus SUV carries a higher rebate than the small Honda Civic. The maximum credit possible is $3,400; the Prius comes closest, at $3,150. Roughly speaking, the hybrid price premium at purchase time is about $3,o00, compared with a similar non-hybrid vehicle. And the time it takes to earn back the extra costs in fuel savings is about 6 years, but this varies greatly depending on how much you drive, how much you drive in the city (where the savings are greater), and the cost of fuel.
HOV Freebies Going Away
In addition, two states allowing some hybrid cars to use high-occupancy vehicle (HOV) lanes are backing off. California will likely stop issuing HOV permits this year. The state now has a cap of 75,000 permits; it has sent out 65,000 applications through mid-June, and issued 57,000 permits. Unless the legislation changes, that's it for additional hybrid HOV cars. Existing HOV hybrids will be grandfathered in.
In Virginia, an outcry over hybrids clogging HOV lanes has the state backpedaling. Some reports say hybrids constitute 25 percent of HOV lane traffic despite being less than 1 percent of all 2005 new vehicle sales, and a drop in the bucket compared to the 200 million vehicles on U.S. highways. It's pretty clear Virginia motorists either had HOV access in mind when they bought hybrids or they're exceptionally earth-friendly: The Old Dominion State is the twelfth-largest in population but fifth in hybrid registrations. Hybrids bought after June 30 will no longer be allowed into the HOV lanes with single occupants.
To differentiate between old and new hybrid cars, Virginia is issuing color-differentiated "clean fuel" license plates to hybrid owners and charging $10 extra; after the first 1,000 plates, the price climbed to $25, to pay for a Virginia HOV enforcement fund. It's not obvious why that was needed, since the state already soaks HOV cheats when they're caught.
Corporate Rebates
What remains in place are the handful of corporate sponsored rebates , mostly offered by California companies. Bank of America has a rebate of up to $3,000 to 21,000 workers in three areas: Los Angeles County, Boston, and Charlotte, N.C. The company may extend this perk to all 175,000 employees around the globe. Google and Hyperion Solutions Corp. offer $5,000, and Integrated Archive Systems offers $10,000.
Drivers thinking of buying a hybrid, especially in California or Virginia, should check carefully before assuming they'll qualify for HOV perks or rebates. Most tax credits appear to be based on date of purchase, while in Virginia the HOV freebie that expires July 1 is based on when the car is actually registered, not when it's purchased.