Wednesday, February 09, 2011

A $7,500 Electric Car Discount Scares Dealers

The Obama administration has proposed a plan to give $7,500 to electric car buyers without having to jump through any tax hoops, as part of their effort to put 1 million of the vehicles on the road by 2015. Advocates of plug-in cars like the concept, but auto dealers and finance companies are not so sure.

CNN Money reports:

    A tax credit for plug-in vehicles already exists but, as it stands now, car buyers have to wait until tax time to get any money back. Consumers buying qualifying plug-in vehicles are eligible for a tax credit of between $2,500 and $7,500 depending on the size of the vehicle's battery pack.

    The administration hopes in-dealership discounts will encourage more car buyers to choose electric vehicles. Details are still being worked out, but car dealers, who remember all the problems associated with the "Cash for Clunkers" program, are worried that this system could cause them more headaches.

    One thing dealers are concerned about, according to the National Automobile Dealers Association, is that if they give a discount up-front, it could be difficult for them to recoup their money from the government later on, should a problem arise.

    But the plug-in tax credit is much simpler than either Cash for Clunkers or the non-plug-in hybrid tax credit said Genevieve Cullen, vice president of the Electric Drive Transportation Association.

    The plug-in tax credit allows for the full amount to be taken by anyone, rich, poor or in-between, she said, as long as the vehicle being purchased is on a list of qualifying cars.

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