Hybrid Car Review

As President Bush tours two hybrid car factories today, I thought I would take a moment and review recent developments in the interaction between hybrid cars, other alternatively fueled cars and the US government.

President Bush and Congress are proposing a giant leap in CAFE standards. At 4% a year, the goal is to require fleet wide fuel economy levels of 34 miles per gallon by 2017. Just a few days ago, CEOs of the major automakers were called in by the Congress to testify on the impact such mandates would cause.

Domestic automakers would rather see incentives to improve the use of alternative fuels, such as ethanol or biofuels. President Bush backs this method, while pushing for an increase of CAFE at the same time. Bush proposed legislation that would require autos use 35 billion gallons of alternative fuels by 2017. Too bad the Energy Information Administration is only predicting 11.5 billion gallons of ethanol a year by 2017.

Toyota would rather see Congress focus back on hybrids. What they want Congress to do is take out the 60,000 car limit on the federal tax credit enacted in 2005. Since they are the only company being phased out of the tax credits so far, Toyota is losing the battle to influence even other car makers to back them.

The UAW would rather see a "Marshall Plan" to stimulate new investment in the U.S. auto industry, which would include a tax credit to any manufacturer who builds advanced technology vehicles and their key components in the United States. They are concerned that key components of hybrid systems are being manufactured outside the US, even though assembly for some are being done right here in the US.

They want the US to stop funding technology development outside of the US. "Our tax policy is actually subsidizing overseas production," said Jim Wells, director of UAW Region 5. "We think it makes more sense to provide incentives to build advanced technology vehicles and their key components right here at home."