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Washington Examiner: Biden Infrastructure Plan Proposes 'Cash for Clunkers'-Style Rebate Program. Would it Work?

Posted by Josh Siegel on Apr 7, 2021

Washington Examiner outlines Joe Biden and Chuck Schumer’s plans for electric vehicle rebate programs, quoting AEE’s Ryan Gallentine on the potential for expanding consumer demographics. Read excerpts below and the full story here.

President Joe Biden’s infrastructure proposal promises to give consumers point-of-sale rebates to buy American-made electric vehicles in order to help battery-powered cars become affordable for everybody.

The idea is modeled after a $392 billion plan released last year by Senate Majority Leader Chuck Schumer to provide drivers rebates to swap old gas guzzlers with zero-emission vehicles, in what would be a major expansion of the Obama administration’s $3 billion "Cash for Clunkers" program…

Biden is promising to spend $174 billion to “win the EV market” from China, the world’s leader in electric vehicle sales, by providing rebates (on top of expanded tax credits) for consumers, grants to states and localities to build 500,000 charging stations, and incentives for manufacturers to retool factories to make batteries and EVs…

The Biden administration is also planning to propose by the end of July new stricter limits on the emission of greenhouse gases from automobiles…

A rebate designed to encourage the purchase of electric vehicles could bring new buyers off the sidelines. Wealthy people who frequently buy new cars have been the primary consumers of electric vehicles. 

“What you would see is new buyers coming out rather than people who would have bought a new car anyway,” said Ryan Gallentine, director of transportation at Advanced Energy Economy…

Biden is promising a big federal government role in ensuring charging access, but a build-out of a national network is challenging given the rural character of many parts of the country. Another problem: Lower-income people who often live in multiunit dwellings might not be able to charge their car at home.

Also important, Dziczek said, is that consumers have access to a broad supply of vehicles, not just smaller models that were early entrants to the market, such as the Nissan Leaf, Chevy Bolt, and Tesla’s Model 3…

Under the Cash for Clunkers program, dealers were directed to scrap the traded-in vehicle to ensure it could not be resold (the Schumer plan, likewise, says the dealer would “properly dispose of” the vehicle, suggesting it could not be resold).

When these older gasoline vehicles are taken out of circulation, that could constrain supply and raise prices in the used car market, which is most frequented by lower-income people…

Linn also worries that policies designed to make new gasoline cars more expensive than electric vehicles could encourage people to hang on longer to their older, less fuel-efficient vehicles…

Read the full story here.

Topics: AEE In The News