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(NC)-When it comes to going green, hybrid cars provide one way to use energy efficiently and reduce your carbon footprint. Are there financial advantages too? You bet.
Better Fuel Consumption
"The main financial advantage is fuel savings," says Chartered Accountant David Roux, Associate, BDO Dunwoody LLP in Toronto.
"In slow traffic a hybrid produces the best fuel consumption. While hybrid vehicles (which combine gas and electricity) cost more to purchase, you can recover those costs from your fuel savings. Be patient though: one U.S. study showed that recovering these costs took a number of years. Remember too that your maintenance fees will be lower."
"Some hybrids are not that efficient, so do your homework," adds Chartered Accountant Neil Mackenzie, Partner, Millard Rouse & Rosebrugh LLP in Simcoe.
"You may not be saving what you think. To find the most fuel-efficient vehicle, check Consumer Reports as well as Transport Canada website at www.tc.gc.ca/programs/environment/fuelpgm/guidsub.htm. Its annual Fuel Consumption Guide provides data on the various makes and models of both gas and hybrid vehicles."
Rebates and Levies
The March 2007 federal budget announced the Vehicle Efficiency Incentive, which offers a rebate on the purchase of a fuel-efficient car.
According to Mackenzie, you can receive up to $2,000 back if the mileage is 6.5 litres/100 kilometres or less. For an SUV or light truck, the rebate applies if the mileage is 8.3 litres/100 kilometres or less.
An excise tax on fuel inefficient cars (green levy) of $1,000 - $4,000 also applies for any vehicle using more than 13 litres/100 kilometres.
"Considering these advantages, gasoline cars become more expensive because they do not qualify for these savings and they are subject to gas-guzzling fees."
More Savings?
Roux offers examples of other green vehicles such as the hydrogen fuel-cell car, now in the prototype stage. "You'd need a home hydrogen refuelling station, however, which would be an extra cost."
The plug-in hybrid is not yet available from manufacturers but will be in the near future. The savings could be significant, especially if you plug it in at night when electricity is cheapest. There is also a trend in the U.S. to use recycled cooking oil from fast food outlets in diesel cars.
The Cost Equation
Going green and buying the right hybrid is still a complex issue, says Mackenzie. "We are never 100 per cent energy efficient, and we must be careful that the cost in environmental terms of producing alternative energy sources such as hydrogen or electricity does not exceed the cost of conventional fuels."
Need More Information?
"You can make an informed choice by checking available information," Roux advises.
These four websites will help get you started.
www.greenercars.org
www.greencars.com
www.greenontario.org/strategy/ autos/html
www.cra-arc.gc.ca/agency/ budget/2007/excise-e.html
For further information, contact a Chartered Accountant.