DOT's LaHood defends tax credit for plug-in vehicles

U.S. Department of Transportation Secretary Ray LaHood said tax incentives for plug-in electric vehicles have been an effective way of boosting consumer interest in cars like the Chevrolet Volt extended-range plug-in and the Nissan Leaf battery-electric vehicle, even though the two models had weaker sales than expected, Reuters reported.

The $7,500 federal tax credit, which critics say has been used mostly by people wealthy enough to afford such vehicles without an incentive, "is real money and people have utilized it," the wire service said, citing LaHood's statements to reporters at the North American International Auto Show in Detroit. President Barack Obama has predicted that, all told, a million electric vehicles will be sold in the U.S. by 2015. Last year, Pike Research said Americans will buy about 300,000 BEVs and PHEVs in 2015, up from about 50,000 in 2011, while Michigan's Center for Automotive Research projected in early 2011 that U.S. electric-drive vehicle sales will increase to about 140,000 units in 2014 from about 30,000 last year.

Critics of the tax credit have questioned its effectiveness largely because of relatively low sales of electric vehicles in the U.S. so far. While Nissan sold almost 10,000 units during the model's first full year in the U.S., General Motors sold just 7,671 of the plug-ins last year. And more than half of the buyers of those cars had an annual income of at least $150,000, Reuters said, citing

Additionally, a Volt fire at the National Highway Traffic Safety Administration's (NHTSA) facilities over the summer and a battery recall of the Fisker Karma extended-range plug-in have caused some to question plug-in vehicles' safety.

Recently, green-technology research firm Pike Research reported that the percentage of Americans showing interest in buying an electric-drive vehicle has fallen during the past two years, as car buyers say the continued premium charged for electric vehicles and plug-in hybrid electric vehicles doesn't offset the effect of lower refueling costs. Forty percent said they were either "extremely" or "very" interested in purchasing a plug-in vehicle, down from 44 percent a year earlier and 48 percent in 2009.

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