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Oracle of Delphi

Senate OKs Volt-friendly plug-in tax credit

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Harry Stoffer

Automotive News

September 23, 2008 - 6:35 pm ET

WASHINGTON -- General Motors' hopes for a $7,500 federal tax credit to help it sell plug-in hybrid Chevrolet Volts may soon be realized.

The Senate this evening passed a complex and wide-ranging tax bill, covering everything from extension of credits for wind energy producers to expanded exemptions from the alternative minimum tax.

Riding along is a small provision creating a new tax credit for buyers of plug-in electric vehicles – none of which is on the market yet. The credit would start at $2,500 and rise to as much as $7,500 for a light-duty vehicle, depending on battery capacity.

A buyer of the Volt would appear eligible for the maximum.

After many months of wrangling over parts of the legislation, the Senate vote was an overwhelming 93-2. The House of Representatives must still act on the bill, but there is strong sentiment in Congress to get a tax bill done this week before lawmakers break for elections. The White House dropped objections to some provisions unrelated to the plug-in hybrid tax credit.

"We've expressed our support" for the Senate bill, GM spokesman Greg Martin said before Tuesday night's vote.

Still unclear is whether Congress has responded to objections from Toyota Motor North America Inc. The company complained, without naming the Volt, that a previous version of the bill would benefit only one plug-in hybrid design.

Comment was not immediately available from Toyota.

The Volt, due in late 2010, is to run 40 miles on all-battery power. Then a small internal combustion engine would start, extending the range, if needed. GM has warned prices could approach $40,000.

Toyota is working on a plug-in version of the Prius that would rely more on blending battery and gasoline power.

The Senate-passed measure would begin to phase out tax credits for plug-in electrics after 250,000 have been sold.

That's a contrast to the 2005 law that established tax credits for "alternative" vehicles, mainly gasoline-electric hybrids. Those credits phase out for the customers of any company that sells 60,000 qualifying vehicles.

Link: http://www.autonews.com/apps/pbcs.dll/arti...p;rssfeed=RSS31

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$40,000 becomes $32,500 which makes it somewhat more palatable, since GM will be getting sticker on them (selling them at less of a loss than cutting the price) while the consumer can actually cross shop a Prius with a Volt without taking the $10k price difference into account.

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$40,000 becomes $32,500 which makes it somewhat more palatable, since GM will be getting sticker on them (selling them at less of a loss than cutting the price) while the consumer can actually cross shop a Prius with a Volt without taking the $10k price difference into account.

Or does $48,000 become $40,500?

Why wouldn't they take the $10,000 price difference into account?

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Or does $48,000 become $40,500?

Why wouldn't they take the $10,000 price difference into account?

They will. They $7500 doesn't come off the sticker price. The customer still has to pony up $40k to buy the vehicle. They get to apply a $7500 tax credit to their federal tax return. That means the customer will get +$7500 added to any possible return or -$7500 added to any taxes they may owe. You still have to be able to handle the monthly payment on the vehicle. The tax credit doesn't help people afford the new technology, but it gives people that can extra incentive to buy it. By leaving the transaction price high in this way, also makes the new technology more exclusive and helps drive demand. Everybody wants what they can't have.

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They will. They $7500 doesn't come off the sticker price. The customer still has to pony up $40k to buy the vehicle. They get to apply a $7500 tax credit to their federal tax return. That means the customer will get +$7500 added to any possible return or -$7500 added to any taxes they may owe. You still have to be able to handle the monthly payment on the vehicle. The tax credit doesn't help people afford the new technology, but it gives people that can extra incentive to buy it. By leaving the transaction price high in this way, also makes the new technology more exclusive and helps drive demand. Everybody wants what they can't have.

The Legislators in DC are painting a picture so foul and bleak, that unless the usual partisan rancor and bickering can be set-aside, having the credit to be able to qualify for anything would be a status symbol. Just ask those three hapless dorks from "FreeCreditReport.com"..."rollin' phat", my 'phat' ass. :mind-blowing:

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