Hybrid vehicle rebates are money down the drain

Posted by Emma Woollacott

Vancouver, Canada - Hybrid vehicle rebates are a waste of the tax-payer's money, a new UBC study says, serving mainly to prop up the auto industry.

The study found that hybrid sales have come largely at the expense of small, relatively fuel-efficient, conventional cars, rather than large SUVs, trucks and vans, which produce substantially greater carbon emissions.

"If the intention of rebate programs is to replace gas guzzlers with hybrids, they are failing," said Ambarish Chandra, a professor at UBC's Sauder School of Business and study co-author. He said large vehicle sales have risen steadily since the introduction of hybrid rebates.

Hybrid rebate programs are currently offered by the governments of the US and 13 states, including Washington, Oregon, Illinois and Colorado, and five Canadian provinces, including BC, Ontario, Quebec, PEI and Manitoba. The Canadian government offered hybrid rebates during 2007-2008.

Researchers used Canadian vehicle sales data over a 17-year period from 1989 to 2006. They reckon the results extend to the US market, given the similarity in vehicle buying patterns, pricing structures and car models.

The study found that the majority of consumers who purchase hybrids were not motivated to do so by government rebates, said Chandra. "Our estimates indicate that two-thirds of people who buy hybrids were going to buy them anyway," he said.

The study finds that rebates are also a particularly inefficient way of reducing carbon. Canadian provinces that offer rebates have spent an average of $195 per tonne of carbon saved - carbon offsets are currently priced between $3 and $40 per tonne.

While hybrid rebates help governments to appear environmentally progressive, Chandra suggests that some programs may serve as de facto 'bailouts' for the North American auto industry.

"The criteria for Ontario's recent rebate increase seem designed to benefit domestic manufacturers, especially General Motors," Chandra said. "The biggest rebates will be given to purchasers of the Chevy Volt, rather than other hybrids like the Toyota Prius."