Tax credits for advanced vehicles seem to be a staple of U.S. energy policy. Established by last year's energy bill, the credits mainly promote hybrid- and diesel-powered personal vehicles, but they also cover advanced commercial vehicles.
Eligibility is capped at 60,000 vehicles annually per company. High gasoline prices are keeping politicians under pressure to address the energy situation, and the president and some lawmakers are proposing more expansive credits.
Whether by lifting the cap or adding coverage for even more advanced (and more expensive) options such as plug-in hybrids, politicians have latched onto technology tax credits as a tool of choice for reducing the security and environmental risks of oil use.
Hybrid drive is indeed a wonderful technology. However, market realities suggest that technology tax credits make little sense for cars and light trucks. They do make sense for advanced, fuel-efficient commercial vehicles, such as delivery vans or other heavy trucks.
Understanding why requires a look at differences between the commercial and personal vehicle markets, as well as a wariness of having politicians second-guess the market on car design.
Freight trucks are part of running a business and cost is paramount, trumping the style or image in the choice of a vehicle. That's why a brand-new delivery van is a no-frills affair compared with the latest SUVs or crossovers, which often have more horsepower even though they rarely haul more than a few hundred pounds of people, pets and groceries.