Sales of hybrid cars have unquestionably been successful (especially for Toyota), but that success could create an obstacle that could stand in the way of some future sales. One of the selling points for people who are considering a hybrid purchase is the tax incentives involved in buying them. The tax credit for buying a new 2006 Prius, for example, is $3,150. The problem is that the federal government has set a threshold of 60,000 vehicles sold by a company before that tax credit decreases and Toyota has past that level already this year. That means that the tax credit will fall to 50% of the current level for two quarters, decrease to 25% for the next two quarters and then disappear completely. That means that the credits will disappear entirely for Toyota buyers on October 1, 2007.
There’s some respite for buyers, though, because the credit reduction doesn’t happen until the quarter after the threshold is met, so you can buy at full benefit until September 30.