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Obama proposes higher tax credits for alternative-fuel vehicles

WASHINGTON (Bloomberg) — President Barack Obama proposed expanded tax credits and community research grants to make alternative-energy cars and trucks more attractive to buyers.

Electric, natural gas and hydrogen-powered vehicles would be covered by the plan, which Obama announced today in the battleground state of North Carolina.

Obama called on Congress to make two changes in tax law to coax drivers into less-polluting vehicles.

One would raise the tax credit to $10,000 from $7,500 for the purchase of a so-called advanced vehicle.

The credit would be applied instantly at the dealership.

The administration’s goal is to make electric vehicles as affordable and convenient as gasoline-powered vehicles by 2020.

But the proposal comes as some automakers struggle to sell models powered by alternative fuels. General Motors will idle a Michigan plant for 5 weeks starting this month because of growing stockpiles of the Chevrolet Volt, a gasoline-electric hybrid.

“We need to invest in the technology that will help us use less oil in our cars and our trucks, and our buildings, and our factories,” Obama said. “That’s the only solution to the challenge. Because as we start using less, that lowers the demand, prices come down. Pretty straightforward.”

The average retail price for a gallon of regular gasoline was $3.76 as of Tuesday, according to the American Automobile Association. That’s up from $3.51 a year ago.

The second tax change would target buyers of electric and natural gas powered commercial trucks, including semi-tractor trailers.

Those vehicles would qualify for a 50 percent tax credit for half the additional cost over a conventional truck, to help overcome the initial upfront cost.

The proposals came as Obama visited a Daimler Trucks North America plant, which has begun hiring hundreds of workers to meet demand for heavy-duty trucks, a sign of economic recovery.

The plant, near Charlotte in the city of Mount Holly, has an assembly line that builds alternative fuel trucks.

Daimler Trucks North America, a unit of Daimler AG, is a partner in an Energy Department program focused on increasing the fuel efficiency of long haul, 18-wheel trucks by 50 percent by 2015.

Those trucks, about 4 percent of the on-road vehicles in the U.S., account for almost 20 percent of the nation’s fuel consumption, according to the White House.

Charging stations

Obama also offered a new, $1 billion program to as many as 15 U.S. cities to finance investments in clean-vehicle infrastructure, such as charging stations, which would require congressional approval.

The president also highlighted an existing research program on how to cut the cost of electric vehicles and increase their range.

Lawmaker action isn’t required, though the administration is asking for an additional $650 million for the year that begins Oct. 1.