Bush opposes cap on hybrid, diesel tax credits
WASHINGTON -- President Bush wants to remove a legal limit on the number of vehicles produced by any automaker that qualify for fuel-saving tax credits.
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The credits of as much as $3,400 per vehicle are aimed mainly at buyers of gasoline-electric hybrids and advanced diesels. They took effect at the beginning of 2006.
Once an automaker sells 60,000 eligible vehicles, the credits begin to phase out for that company's customers.
Toyota Motor Sales U.S.A. Inc. will reach the ceiling by the middle of this year. Other automakers will take much longer.
Lifting the cap is among several steps government, industry and consumers can take to deal with high fuel prices, Bush said Tuesday.
Bush spoke Tuesday to a convention of the Renewable Fuels Association, which represents producers of ethanol, an alcohol fuel that is usually made from corn. He was introduced as "the most pro-ethanol president in history." The audience gave him several standing ovations.
At the meeting, Chrysler group CEO Tom LaSorda announced plans to expand his company's offerings of ethanol-capable vehicles to 500,000 units a year by 2008.
The Chrysler group will add the Dodge Dakota, Jeep Grand Cherokee and Jeep Commander to its ethanol-capable lineup next year, La Sorda said. The company has built fewer than 200,000 ethanol-capable vehicles a year on average since 1998.
But ethanol is suddenly hot. LaSorda said that his company, Ford Motor Co. and General Motors will have 8 million vehicles on the road by 2008 that could use fuel blends containing as much as 85 percent ethanol, known as E85.
LaSorda called on energy companies to expand the fueling infrastructure for ethanol. He noted there are only six E85 pumps in the Chrysler group's home state of Michigan.
In response to a reporter's question, LaSorda said he would have to study Bush's remarks before reacting to the president's proposal to lift the cap on tax credits.
Many industry analysts called the cap an effort by domestic automakers to keep all the benefits of the tax credits from going to customers of import-brand companies, several of which were far ahead on hybrid production.
But Dennis Fitzgibbons, director of public policy for DaimlerChrysler AG's Washington office, said the cap was inserted by members of Congress who were primarily concerned about the cost of the legislation. Lifting the cap would require additional congressional action.
In his speech, Bush said he also wants:
At the same time, the president said gasoline pump prices reflect global demand for oil. Lasting relief, he said, will come only with a long-term shift to such technologies as ethanol-capable vehicles, plug-in and other types of hybrids, and cars and trucks powered by hydrogen fuel cells.
You may e-mail Harry Stoffer at hstoffer@crain.com
