Clean Diesel Vehicles Now Eligible for Same Tax Credits as Hybrid Vehicles

New Energy Law Will Provide up to $3,400 in Tax Incentives for Diesel Cars, Trucks and SUVs

WASHINGTON, July 29 -- American drivers who purchase newer, cleaner-burning diesel cars, trucks and SUVs will soon be eligible for the same kind of tax incentives as purchasers of gasoline-hybrid electric vehicles under a new national energy plan expected to be signed into law soon by President George W. Bush. Along with hybrids, clean diesel vehicles offer a fuel sipping alternative that is 20 to 40 percent more efficient than gasoline alternatives, according to the Diesel Technology Forum (DTF).

"Congress and the president recognize the important role clean diesel technology will play in meeting America's future energy and environmental goals," said Allen Schaeffer, executive director of DTF. The U.S. Department of Energy reports that if diesel vehicles reached a 30 percent market share by 2020, it would reduce U.S. consumption of oil by 350,000 barrels a day.(1)

Beginning January 1, 2006, the new law allows consumers who purchase some new diesel-powered cars, light trucks and SUVs to be eligible for up to $3,400 in tax credits based on the weight, fuel efficiency rating and emissions level of the vehicle, as determined by the U.S. Environmental Protection Agency. The credit is available through December 31, 2010.

"These incentives are an important step in expanding the market for energy efficient vehicles," said Schaeffer. When Congress first enacted tax incentives for hybrid vehicles in 2001 there were just two hybrid models on the market. Thanks in part to those incentives, there will be nearly 10 hybrid models for sale in the U.S. by the end of the year. "Now that diesel vehicles will be eligible for the same advanced-vehicle credits as hybrids, we -- along with a growing chorus of industry analysts -- expect similar growth in the clean diesel market," added Schaeffer.

Last month J.D. Power and Associates reported that diesel and hybrid vehicles are expected to garner 11 percent of U.S. auto sales by 2012 -- with the diesel market increasing from 3 percent market share in 2004 to 7.5 percent by that date. According to R.L. Polk data compiled by DTF, diesels have already seen 56 percent market growth over the past five years with the introduction of four new models in 2004 alone (Jeep Liberty CRD, Mercedes E- 320 CDI, and Volkswagen Touareg and Passat). This is in addition to the continuing popularity of diesel engine options in medium- and heavy-duty pickups.

The Diesel Technology Forum represents manufacturers of engines, fuel and emissions control system. For more information about the Forum, visit our web site at htttp://www.dieselforum.org.

(1) "The Impacts of Increased Diesel Penetration in the Transportation Sector," Office of Integrated Analysis and Forecasting, Energy Information Administration, U.S. Department of Energy (Aug. 1998); "Diesel Technology and the American Economy," Charles River Assoc. (Oct. 2000)