Carmakers Pencil in Incentives
Carmakers Pencil in Incentives
Buyer incentives for hybrids, plug-ins, and alt-fuel vehicles are usually taken into consideration by experts forecasting the future of their sales volumes. Hybrids are an obvious example – if they're $7,000 to $10,000 more in sticker prices than comparable non-hybrids, there needs to be some benefits for buying beyond their environmental contributions. Gas prices will need to be well above $4 a gallon to add lifecycle cost advantages, and until then, incentives and rebates offered by governments and manufacturers will be of special interest to buyers.
Buyer incentives are available to fleet and retail buyers, and shape the way automakers describe their pricing structures. Tesla Motors markets the Roadster to a select audience of wealthy buyers who aren't concerned about paying $105,000 for the car. The upcoming Model S sedan will be closer to $50,000, and buyer incentives are mentioned more often by the company as it plans the car's introduction.
The Chevy Volt may be retailing for about $40,000, but GM expects the car to cost consumers $32,000 after tax breaks. GM hasn't yet revealed its MSRP, but it's probably accurate that it's about $40K, and the federal tax incentive could make it close to $32K. The Volt is coming out in November and only in a few markets at first. Incentives should help the new product gain momentum.
Federal Tax Credits
Cash for Clunkers certainly produced buyer incentives for fuel efficient vehicles last year, but other federal incentives were put into place a few years before that happened. Incentives vary state by state and tend to be minimal outside of Capital Hill, so federal tax credits come into play for manufacturers setting up retail pricing structures. Under the federal Alternative Motor Vehicle Credit, hybrid, fuel cell, alternative fuel, or advanced vehicles may qualify for tax credits up to $7,500 yet many of the vehicle credits don't reach that level. Credit applies to vehicles bought new, on or before Dec 31, 2010. Used vehicles don't qualify, and some phase-outs apply. Some plug-in vehicles are being added to the tax credit lineup this year. Read more in New York Times coverage.