Toyota is pushing for an extension of the Hybrid Tax Credit, which subsidizes the purchase of new hybrid vehicles by up to $3,150. The credit, which went into effect in January of 2005, sets a tiered quota for hybrids eligible for the credit starting at 60,000 vehicles for the full tax credit. When a manufacturer reaches the limit, its vehicles are then only eligible for one-half of the credit.
Thus far, Toyota is the only manufacturer to reach this goal. Its Prius is the most popular hybrid in the United States and has the best fuel economy currently available, which is the reason it is the only hybrid to qualify for the highest credit value of $3,150.
While Toyota argues further assistance is needed to allow hybrid technology to reach an economy of scale to be viable, its competitors are less enthusiastic. Honda, which is the second largest manufacturer of hybrids with 40,000 sold in 2006, is against the extension which would give Toyota an edge in the hybrid market. With the full tax credit, a Toyota Camry would cost $1,700 less than its all-gasoline counterpart.