Industry and government join forces to promote green vehicles

Consumers may soon receive tax credits for buying vehicles that are more environmentally friendly.

In an attempt to promote cleaner vehicles and reduced fuel consumption, Ford Motor Co., Toyota Motor Corp. and Honda Motor Co., along with the Union of Concerned Scientists and Natural Resources Defense Council environmental groups are supporting legislation offering credits to people who buy cleaner motor vehicles.

The credits range from $1,000 for hybrid passenger vehicles that use electricity to supplement a gas engine, to $40,000 for a heavy-duty truck that runs on electricity or fuel cells with no harmful emissions.

The bill also provides credits for people to buy alternative fuels such as natural gas and hydrogen and for companies to install alternative fueling stations.

The legislation "leaves it up to the consumer to choose from among the lowest-emitting and most fuel-efficient vehicles available," says Sen. Orrin Hatch, R-Utah, who was joined at a news conference Tuesday by Sens. Jay Rockefeller, D-W.Va., and Jim Jeffords, R-Vt.

Supporters estimate the cost at $8 billion to $10 billion over 10 years.

Ford President Jacques Nasser says the bill "will help accelerate demand for cleaner, more fuel-efficient vehicles in the marketplace and put them on the road earlier and in higher volumes."

Officials from General Motors Corp. and DaimlerChrysler AG say they support tax incentives, but disagree with the way the bill calculates fuel improvements.

For instance, DaimlerChrysler plans to begin selling a hybrid version of its Durango sport utility vehicle in 2003, which will use an electric motor tied to a battery pack to increase mileage 20 percent from 15.5 miles per gallon to about 18.6.

The hybrid technology costs about $3,000 more than a regular engine. Under the plan, the hybrid Durango would qualify for the $1,000 base tax credit, but none of the additional $3,000 performance-based credit.

Only two hybrid passenger vehicles are sold in the United States -- Toyota's Prius, which gets 61 mpg in the city, and Honda's Insight, which gets 52 mpg. Ford plans to sell a hybrid version of its Escape in 2003.

Environmentalists signed onto the plan because a vehicle that gets more miles per gallon would get a bigger tax credit.

Some environmental groups, however, believe the Hatch legislation does not go far enough. Instead of tax credits, the Sierra Club would rather see higher requirements for gas mileage implemented.

Sierra Club spokesman Dan Becker argues the Hatch bill would not force automakers to improve the overall gas mileage of their fleets because sales of the high-mileage vehicles would allow them to continue making low-mileage vehicles such as SUVs.

In the midst of the oil crisis of the 1970s, federal standards were set at 27.5 miles per gallon on new passenger cars and 20.7 mpg for light trucks, including pickups, minivans and sport utility vehicles. The automakers do not have to meet the standard for each vehicle but their entire fleet must average the standard.

"At the end of the day and several billion dollars of taxpayer investment, we'll have no more improvement to the environment and no less dependence on oil, but more hybrids on the road," says Mr. Becker.

Look for Senior Editor Tim Keenan’s story on Green Dealers in the May issue of Ward’s Dealer Business.