Would a Cash for Clunkers program speed up electric vehicle adoption?

Industry

A Cash for Clunkers program would see EV buyers retire their gas cars for a cash incentive rather than a trade-in. Would it be more effective? New research from the MIT Sloan School of Management and the Penn State Smeal College of Business found that it would be.

MIT Sloan professor John Sterman, a co-author of the study, said:

Gasoline-powered cars, SUVs, and pickup trucks generate nearly 17% of US greenhouse gas emissions, and once purchased, stay on the road for decades.

To meet 2050 climate goals, it’s not enough to promote the purchase of new EVs. We must also accelerate the retirement of existing fossil-powered vehicles.

But even with EV sales on the rise in the United States, the study found that it will take decades for the existing US fleet to electrify without additional policies.

Sergey Naumov, an assistant professor at Penn State Smeal and an alumnus of MIT Sloan, who co-authored the study, added:  

In the meantime, hundreds of millions of fossil-fuel-powered vehicles will remain in use, polluting our communities, emitting greenhouse gases and worsening climate change.

Incentivizing the early retirement of gasoline vehicles and replacing them with new electric vehicles can achieve greater emissions reduction at reasonable cost.

The researchers looked at the impacts of different ways to design a C4C program using a model of consumer behavior, light-duty vehicle fleet turnover, and EV market development in the United States.

The authors simulated fleet evolution and emissions through 2050 for a scenario without C4C and compared it to policies with different C4C incentive levels up to $12,000 per eligible vehicle. That’s about the same as the incentives for EV purchases proposed by the Biden Administration

The researchers also considered whether C4C should apply only to those buying a new EV or also include those buying a new, efficient gas car. Unsurprisingly, broader eligibility leads more people to opt for C4C. But focusing a C4C program solely on people buying new EVs led to larger and more cost-effective emissions reductions.

They found that the more EVs purchased, the faster the EV industry grows. EV costs are driven down through scale economies and learning; the variety of EV makes and models available are expanded; charging infrastructure deployment is sped up; and consumer familiarity with and willingness to buy EVs is boosted. This all in turn boosts EV sales.

The researchers also found that complementary policies such as pricing carbon pollution and speeding decarbonization of the electric grid would further enhance the benefits of a Cash for Clunkers program. The revenue generated by the carbon price could offset program costs or be rebated to the public.

Read more: Here’s every electric vehicle that currently qualifies for the US federal tax credit

Photo: “Old cars in HDR” by minds-eye is marked with CC BY-NC-ND 2.0.


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