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US tax credit to help Japanese hybrid vehicles

US tax credit to help Japanese hybrid vehicles
DETROIT - The U.S. Internal Revenue Service said yesterday it would extend a tax credit of up to $2,000 to buyers of gasoline-electric hybrid vehicles, but only Japanese automakers are likely to benefit in the near future.
Automakers have said hybrids offered the most promise for quick improvements in the fuel economy of cars and trucks, but have also warned that the high cost would limit their appeal to consumers. The IRS said the credit would apply to original owners of vehicles certified by the government as hybrids, which tether a regular gasoline engine to an electric motor and battery pack. To qualify, manufacturers have to pledge that the hybrid systems cost at least $2,000 to build. But the IRS also said the credit, which would be deducted from the buyer\'s gross income on a tax statement, would apply in full only to hybrids bought by the end of 2003. In 2004, it would begin to be phased out, with no credit after 2006. The only vehicles that would likely qualify today are all Japanese models - Honda Motor Co. Ltd.\'s Insight and Civic hybrids, and Toyota Motor Corp.\'s Prius. All three are sold in limited numbers, and the automakers have kept production low in part because of high costs. General Motors Corp., Ford Motor Co. and the Chrysler arm of DaimlerChrysler AG have all pledged to begin building hybrids in 2004, but have also said volumes would be small in the first years of production. Energy bills that passed the U.S. House and Senate this year include provisions for a variety of credits on hybrid vehicles, based on a vehicle\'s size, emissions and its fuel efficiency. President George W. Bush has proposed spending $3 billion on credits for hybrids and alternative-fuel vehicles. REUTERS NEWS SERVICE
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