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Phy 121 Final Project


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A brief presentation on the current incentive and credit programs offered by the federal government to encourage sales of cleaner or more fuel efficient vehicles.

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Phy 121 Final Project

  1. 1. Cleaner Vehicle Incentives By Kirra Johnson
  2. 2. <ul><li>As more fuel efficient and alternative fuel vehicles appear on the market, the U.S. Government is offering credits in the forms of cash vouchers and tax credit for consumers who purchase these vehicles. But not everyone approves of these programs. Who is really getting the benefit? </li></ul>
  3. 3. Why Offer These Incentives? <ul><li>The government wants to take less fuel efficient vehicles off the road to improve the county’s overall carbon emissions. </li></ul><ul><li>With the current economy, these credits also offer a nice boost for auto manufacturers. </li></ul><ul><li>These credits can be considered part of the stimulus program aimed at putting extra money in consumers’ hands to encourage purchases they could otherwise not afford. </li></ul>
  4. 4. Hybrid Vehicle Tax Credits <ul><li>Since the Energy Policy Act of 2005, tax credits of up to $3,400, depending on model and other factors, have been available to the original purchasers of new hybrid vehicles 1 . </li></ul><ul><li>These credits only apply to the first 60,000 hybrids sold by each manufacturer; the credits will then be phased out over the next 5 quarters 7 . </li></ul><ul><li>Now, many manufacturers have no credits left, and most are in the phase our period. </li></ul>
  5. 5. Electric Vehicles <ul><li>Like hybrids, some electric vehicles carry the added benefit of some credits at tax time. </li></ul><ul><li>Thanks to the American Recovery and Reinvestment Act and the Emergency Economic Stabilization Act, 2 and 3 wheeled electric vehicles, like scooters, are eligible for a credit worth 10% of the purchase price up to $2,500. Vehicles with 4 or more wheels, such as low speed neighborhood electric cars can qualify for between $2,500 and $15,000, depending on vehicle weight and battery capacity 7 . </li></ul><ul><li>At this point in time, however, electric vehicles are an uncommon choice due to their tremendous increase in weight over a gas-powered vehicle for the same power, as well as purchase cost and limited power before recharges are needed 2 . </li></ul>
  6. 6. Not Only for Everyday Consumers! <ul><li>Mack trucks is among companies looking for long-term government incentives to help boost development and production of hybrid heavy-duty trucks 4 . </li></ul><ul><li>Showing his devotion to getting cleaner vehicles on the road (and boosting new car sales!) President Obama recently had his administration order 14,105 fuel efficient vehicles worth $210M for the federal fleet. These vehicles from GM, Chrysler and Ford will replace older vehicles and aim to increase fuel efficiency by 10%. Some $15M more is expected to be spent by September 30 to order advanced technology buses and electric vehicles 5 . </li></ul>
  7. 7. Cash for Clunkers <ul><li>The newest incentive out of the Obama administration is the recently passed bill known as “Cash for Clunkers.” </li></ul><ul><li>Under this program, car owners who trade in a vehicle from 1984 or newer that gets 18 mpg or less can get a cash voucher worth $3,500 when they buy a new car with just 4 more mpg, or $4,500 for 10 more mpg 3 . </li></ul><ul><li>This program provides no credit for the purchase of alternative fuel vehicles 6 . </li></ul>
  8. 8. Cash for Clunkers Cont. <ul><li>While this bill passed with much bipartisan support, environmentalists are not impressed. Alternative fuel vehicles are getting no more encouragement, and the fuel efficiency of new cars qualifying under this bill is nowhere near the 35.5 mpg requirement Obama wants in place by 2016. Environmental groups suggest instead “recycling” by buying used to save a car with good life left and save a significant amount of money 6 . </li></ul>
  9. 9. Conclusions <ul><li>While the federal government is obviously making some effort to put the effects of automobile emissions on their list of priorities, it is just as clear that in this time of economic hardship, the true priority is encouraging new car sales to help the auto industry. That being said, it is still good news for anyone in the market for a new cleaner or more efficient car that some incentives are available. </li></ul>
  10. 10. Bibliography <ul><li>1. “Alternative Motor Vehicle Credit.” IRS. 10/03/2008. http://www. irs . gov /newsroom/article/0,,id=157632,00.html </li></ul><ul><li>2. Energy: Principles, Problems, Alternatives. Joseph Priest. 6 th Edition. Kendall/Hunt Publishing, 2006. </li></ul><ul><li>3. “Is ‘Cash for Clunkers’ for Chumps?” Elisabeth Leamy. ABC News. 06/22/2009. http:// abcnews </li></ul><ul><li>4. “Mack Hopes Hybrid Heavy-Duty Truck Segment Gets Leg Up From Feds.” Benson Kong. Truck Trend Magazine. 06/16/2009. http://www. trucktrend .com/features/news/2009/163_news090616_ mack _hopes_hybrid_heavy_duty_truck_segment_gets_leg_up_from_feds/index.html </li></ul><ul><li>5. “Obama Administration Orders $210M Worth of Fuel Efficient Vehicles.” GreenBiz Staff. Reuters. 06/10/2009. </li></ul><ul><li>6. “Sacrificing Environment for Economy.” Jon Anderson. Cincinnati Examiner. 06/22/2009. </li></ul><ul><li>7. “Tax Incentives Cut Costs of Green Living.” Christine Metz. LJ WorldGreen, Lawrence Journal. 06/10/2009. </li></ul>