What happens when the Prius loses its tax deduction?

Since the new Clean Vehicle Tax Credit was approved last year, I've complained that the credit was biased against Toyota. By capping the tax credits by manufacturer at just 60,000 hybrids, it's obvious that Toyota will quickly run out of deductions because of demand for the Toyota Prius.

In recent days Secretary Snow has essentially admitted that the credits were partially written to help out domestic automakers, and maybe - in hindsight - that wasn't such a bad idea.

Thus, the story of 2006, when it comes to hybrid cars, will continue to be the Toyota Prius hybrid. Because not every Toyota hybrid sold is going to qualify for a tax deduction, will this have an affect on the Prius and Toyota hybrid sales?

Will this simply even the playing field between Toyota and other automakers for the hybrid market? Will Toyota counter with some kind of discount? Will sales on the Honda Civic hybrid and Ford Escape hybrid explode? Will hybrid sales, overall, decline?

While the Clean Vehicle Tax Credit might offer a deduction of $3400.00 to buyers, how much will that affect most people's taxes? Sure, the tax credit could be worth several hundred dollars for the average buyer, but is that really the clinching factor for most Prius buyers?

I guess we'll see.

Of course, if gasoline prices continue to rise, the lack of tax credits for the Prius might not even matter. I think next year the U.S. will see sustained gasoline prices near $3.00, minimally. In California, $4.00 per gallon gasoline is going to be fairly common, and it won't just be a spike, such as after Katrina.

Speaking of hurricanes, if another Katrina hits next year, the predictions above will be blown away.

Anyway, that's hybrid story for 2006.