Owning a hybrid vehicle could pay off

David Shepardson / Detroit News Washington Bureau

WASHINGTON -- Congress today will examine ways to entice more people to buy and use hybrid vehicles as the list of government-issued perks to gas-electric hybrid owners grows longer.

States and cities around the nation have been offering everything from free parking to the use of car pool lanes for solo drivers as long as they're behind the wheel of a hybrid. They're also offering tax breaks, discounts and other financial incentives.

The goal is to push drivers toward hybrids, which cost as much as $5,000 more than gasoline-only versions of the same models. It could take years to recoup the additional costs through reduced gasoline costs alone. However, hybrid vehicle sales continue to grow as gas prices climb above $3 a gallon.

Gasoline-electric hybrids are typically more fuel efficient and emit less pollution than their gas-only counterparts. They run on electric power at slower speeds and gasoline at higher speeds. The battery packs that power the electric components are recharged through capturing the braking power.

Typically, hybrid vehicles offer significantly better gas mileage during city driving, which requires a lot of starting and stopping. They are less efficient on open highways.

Automakers say the tax breaks may drive people to the showroom to look at a hybrid, but rarely do those alone close the deal.

"It definitely has an influence, but it isn't the deciding factor," said Monte Doran, a Ford Motor Co. spokesman, who noted the company set up a hotline for dealers to learn about state and federal tax incentives. Ford is reducing the price difference between a Ford Escape hybrid and a similarly equipped Escape to just $2,200 for 2007 model vehicles, Doran added.

Despite the hype, hybrids represent just 1.2 percent of all cars sold in 2005. By the end of the year, about 700,000 hybrids will be on America's roads -- a drop in the gas can compared with the nation's 230 million vehicles.

Thursday's hearing, before the House subcommittee on energy and resources, will explore why the U.S. auto industry has lagged its Japanese rivals in developing hybrid cars. It also will examine what more federal and state governments can do to encourage consumers to purchase hybrid vehicles.

Incentives offered

The House committee said 23 states and the District of Columbia offer incentives to drive a hybrid, and other states are considering tax breaks.

The Michigan Legislature is considering several bills that would reward the use of alternative vehicles, including hybrids and vehicles that run on E85, a fuel made up of 85 percent ethanol.

President Bush asked Congress earlier this year to lift the cap on the federal tax credits for hybrid owners. The credit applies to the first 60,000 vehicles per manufacturer. Toyota, which sells five hybrid models and will offer a sixth one next year, is expected to exceed sales of 60,000 hybrids this year.

"Hybrids are the technology of the future and will play a starring role in the automotive industry in the 21st century," Toyota North America President Jim Press said this week in a speech.

Gloria Bergquist, vice president at the Alliance of Automotive Manufacturers -- which represents nine major manufacturers including General Motors Corp., Ford, DaimlerChrysler AG and Toyota -- said the group supports the use of incentives to get more people to drive vehicles that use less oil. "Anything that can get more of these fuel-efficient vehicles on the roads we support, but we don't believe policymakers should pick winners and losers."

Besides hybrids, she said, flex-fuel vehicles, which can run on biodiesel or ethanol, and clean diesel vehicles will all play a role in reducing the nation's dependence on foreign oil. A handful of the states that offer tax breaks to hybrids extend them to alternative vehicles like the 6 million vehicles capable of running on E85 produced by GM, Ford and Chrysler.

Tax breaks questioned

Some economists question whether tax breaks make sense, especially since some newer hybrids such as the Honda Accord and Lexus GS 450h don't get as big a bump in fuel savings.

Lester Lave, professor of economics and of engineering and public policy at Carnegie Mellon University in Pittsburgh, said much of the hybrid power has gone into increasing acceleration, rather than improving fuel economy -- especially in SUV or luxury hybrids.

"There's no reason we should be giving tax breaks when there is no public purpose. In some newer hybrids, there's very little increase in fuel economy."

You can reach David Shepardson at (202) 662 - 8735 or dshepardson@detnews.com.