While proposals for a revamped Cars for Clunkers don’t appear to be gaining traction, a new goal by the Biden Administration that half of all new vehicle sales be electric by 2030 could give the program new life. If consumers balk at buying EVs, Cash for Clunkers is a way to boost sales of these vehicles while getting older gas-powered models off the road.
First, a little history. The real name for the original Cash for Clunkers program was the Cash Allowance Rebate System. It paid owners a $4,500 rebate to scrap their vehicles in order to spur new car sales. The net result was to put cleaner cars with better fuel economy on the road while giving beleaguered manufacturers a lift. The goal of this latest take on Cash for Clunkers essentially remains the same.
Rest assured, like any government program, there will be rules. Here’s what to expect based on the rules governing the first Cash for Clunkers program in 2009 and what may be different this time around.
The car with which you replace your clunker must be electric. The impetus behind the newest iteration of Cash for Clunkers is to help replace our fleet of fossil-fueled vehicles with ones that run on electricity. Eligible EVs may include only vehicles that have a range in excess of 200 miles. With electric vehicles, keep in mind that the greater the range, the higher the sticker price.
If you replace your clunker with a gas-powered vehicle, it may have to have better fuel economy than under the original program. The 2009 Cash for Clunker program required car buyers to get new vehicles that had an EPA combined fuel economy rating of more than 22 mpg. Light-duty trucks had to get more than 18 mpg and heavy-duty trucks more than 15 mpg. Since then, the average car fuel economy has risen from 22 mpg to about 26 mpg. So, you might have to find a new car that gets over that level to qualify for a rebate.
If Rule 2 is adopted, the clunker you turn in might need to be more efficient than the ones eligible under the original program. Since the average fuel economy has risen by 4 mpg since 2009, there could be a higher cap on the vehicles that qualify for the program. Using gains in overall fuel economy, the rule may allow vehicles rated as high as 22 mpg or less into the program.
Your vehicle must be less than 25 years old. Since the original 2009 Cash for Clunker program extended to vehicles dating back to 1984, it will be interesting to see whether a new program would extend that far or just be limited to 1996-or-newer vehicles. If there is a specific cut-off date, be sure to check the exact build date of your vehicle as opposed to its model year. It could mean the difference between getting a rebate or not.
Your car must be in running condition. The idea behind Cash for Clunkers is to remove operating vehicles from the road that aren’t fuel-efficient, clean, or safe. A non-running car isn’t the issue, rather, scrapping a car in daily use is.
Expect a payout in excess of the vehicle’s value. The previous program offered up to $4,500 per clunker. In light of today’s higher market for used vehicles, it’s likely that number could grow, especially if the government is encouraging you to make the switch to an electric vehicle. Given that the current federal tax credit for buying an EV tops out at $7,500, the new incentives could be somewhere between $4,500 and $7,500.
