Up until now, Honda has spurned the idea of producing a plug-in hybrid because of its belief that battery technology has not yet advanced enough to make such a car viable, and that hydrogen fuel cells hold more promise.

That may change in the near future however, as a number of new US Government incentives have forced the Japanese automaker to consider plug-in powertrains.

Buyers of plug-in hybrids in the ‘States are eligible for a Government rebate of US$7500, and the US Energy Department is also preparing up to US$25 billion in Federal loans for manufacturers of ‘advanced technology vehicles’ - a category into which plug-in hybrids fall.

“We started working with [joint venture partner] GS Yuasa with just the hybrid application in mind,” Honda CEO Takeo Fukui said last week.

“We are thinking about extending that application to plug-in hybrids,” he said.

“We understand the situation, in terms of government and incentives. Naturally, we’re going to have to accommodate that too.”

Honda is currently the only manufacturer to offer a series production hydrogen car, the FCX Clarity (above), which is currently available to small numbers of motorists in Japan and the USA. Hydrogen technology received substantial support from the Bush government, but under President Barack Obama funding for the alternative fuel has dropped and incentives for battery-electric vehicles has risen.

With plug-in hybrids and battery-electrics soon to be released by Toyota, Chevrolet, Ford, Hyundai, Mitsubishi and Fisker, Honda will need to quickly adapt to the new electron-favouring regime if it is to remain in the race.

How long we’ll need to wait until a plug-in Insight arrives in showrooms remains to be seen, but the writing is on the wall: in the US at least, it seems Honda would be foolish not to bring out a charge-it-yourself model. Watch this space.

[Bloomberg]