The Cash for Clunkers program

Got a clunker of a car you want to replace with a new one? There is a new law meant to address greenhouse emissions and energy security. The program incentivizes Americans to buy new fuel efficient vehicles to replace inefficient ones. Increasing the average fleet fuel economy in the U.S.A. stands to save consumers money, reduce greenhouse emissions from vehicles in the U.S.A., improve energy security and reduce oil dependence costs, and increase energy sustaintainability. The Car Allowance Rebate System (CARS) program was recently signed into law and is to be administered by the NTHSA.

The program provides for a $3,500 or $4,500 credit on purchases of a new car, van, SUV or pickup truck. Interestingly it does not provide credits for purchase of even higher efficiency vehicles (that don’t have four wheels) like motorcycles, scooters or bicycles. Since the incentive is for replacing 4-wheelers with 4-wheelers there is a lost opportunity to make a fundamental change in the mix of vehicles on the road.

To qualify for the program the traded-in vehicle must be less than 25 years old, have less than 18 miles/gallon efficiency, have been owned by you for over a year, and the old vehicle must be crushed or shredded. This does ensure complete removal of an inefficient car from the road, and it would be silly if the traded-in vehicle were resold and remained in use. However it also removes any future use of the sunk energy cost of that vehicle. It’s possible the sunk energy cost of the new vehicle is greater than the sunk energy cost of the one it’s replacing.

By picking at the details one can construct with arbitrary scenarios to make the program look bad. The most egregious is that while the program is clearly meant to increase overall fuel efficiency, some inefficient vehicles (18mpg) qualify as replacement vehicles (see the recommendations compiled by Consumer Reports linked below). While it creates an opportunity to improve general fuel efficiency of the American vehicle fleet, a more concrete route for improving fuel efficiency would be to raise the CAFE standards. Perhaps the real purpose isn’t, as some of the articles out there suggest, is to cause sales of cars?

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About David Herron

David Herron is a writer and software engineer living in Silicon Valley. He primarily writes about electric vehicles, clean energy systems, climate change, peak oil and related issues. When not writing he indulges in software projects and is sometimes employed as a software engineer. David has written for sites like PlugInCars and TorqueNews, and worked for companies like Sun Microsystems and Yahoo.