Hybrid Car Review

GM wants a $7,000 tax credit for plug-in vehicles like the Chevy Volt.

According toe GM vice-president for global program management Jon Lauckner, "What we favor is actually a sliding scale depending on how much battery you have on board. When I talk about $6,000 to $7,000, we're talking about a battery that's at least two times the size of a typical conversion plug-in or even a plug-in hybrid that we would offer."

That would be quite different from the current federal tax credit for hybrids. The current system is set up so that the first 60,000+ customers who bought a hybrid vehicles sold by a car maker (be it Toyota, Ford, GM, Nissan, etc...) would be eligible for the tax credit. The amount of the credit varies based on fuel economy, not battery size.

The top credit was set at $3,400. But plug-in hybrids are expected to be more expensive and therefore less appealing to a wide range of buyers. There will be some who will queue up for the new Volt. But to appeal to a wider group, the federal government will need to establish a federal tax credit. Either that or the car makers will need to sell for a loss, or customers will have to pay a lot more.

If there is no tax credit in place, and fewer people buy, the whole plug-in industry may never get off the ground. It's only with bulk sales that manufacturers can drop prices. Toyota took years to get to the point where they can sell hybrids at a profit. Ford is only getting to that point this year.