Government Grants for Hybrid Cars

Updated February 21, 2017

Hybrid vehicle sales haven't met market expectations so far, but experts are bullish about the future of this emerging industry. While just 2 per cent of U.S. auto sales were hybrids in 2008, automotive analyst R.L. Polk & Co. expects the number of hybrids on the road to double by 2012, to 5 per cent of the overall market. Governments worldwide are increasing their investment in hybrids. In 2009, President Obama announced £1.6 billion in federal grants to companies developing hybrid technology.


The most fuel-efficient gasoline-powered cars available can run at close to 50mpg, but a hybrid passenger car modified by the National Renewable Energy Laboratory (NREL), a plug-in Toyota Prius, achieved 100mpg for each battery charge. A study by NREL found that a plug-in hybrid electric vehicle could save an owner £292 in annual fuel costs and cut carbon emissions in half. However, Toyota executives have acknowledged that battery-powered cars won't reach a mass-market profitability until 2020 due to the costs.

Grants to Stimulate U.S. Hybrid Market

Obama set a national goal of 1 million hybrids on the roads by 2015. The federal grant funds are intended to help spur competition between automakers for more affordable fuel efficient cars. General Motors received £68 million for a battery back assembly plant and £68 million for facilities to manufacture electric drive components. Johnson Controls Inc. received £194 million to make lithium ion batteries for hybrids.

Public Transit Grants

The U.S. Department of Transportation offers grant opportunities to state and municipal governments to purchase public transportation buses that run on clean-fuels, including batteries, hybrid electric systems and fuel cells.

Consumer Incentives

Consumers who purchase certain hybrid vehicles are eligible for a £2,210 New Energy Tax Credit (limited to 60,000 vehicles per manufacturer) from the federal government. A purchase of a plug-in hybrid electric vehicle is eligible for a tax credit of between £1,625 and £4,875.

Educational Grants

The University of Michigan received a £1.6 million federal grant for education and workforce training on advanced hybrid vehicles and batteries. Kettering University in Flint, MI, received £1.6 million to create a new hybrid vehicle power electronics laboratory.

Global Financing for Hybrids

The European Union in 2009 approved a plan that allowed France to pump €6 million into the research and development of a green vehicle research program. Germany plans to spend £455 million on electric vehicles by 2011. China has set a goal of 5 per cent of all passenger vehicles to be hybrids and battery-powered by 2011 and is providing grant funding for research and subsidies to bus companies. Japan in 2009 began offering tax breaks to consumers who purchased hybrid and electric vehicles.

Cite this Article A tool to create a citation to reference this article Cite this Article

About the Author

Erik Arvidson has 12 years of professional writing experience, including six years as a senior reporter at the Massachusetts Statehouse for several suburban dailies, and most recently as PR Manager of a telecommunications company near Boston. He received a Bachelor of Arts degree in English/communications from North Adams State College.