Should Electric Vehicle Purchase Subsidies Be Linked with Scrappage Requirements?
This working paper examines the opportunity costs for pairing an electric vehicle purchase subsidy with a scrappage requirement for gasoline vehicles.
We build a vehicle purchase and disposal model that accounts for trade-in opportunity costs to analyze a program that links an electric vehicle (EV) purchase subsidy with a gasoline vehicle scrappage requirement. We evaluate the program based on changes in sales and scrappage, subsidy dollars spent, and the degree of additionality, or the extent to which households make decisions beyond business-as-usual behavior. We measure two distinct forms of additionality—one involving the vehicle purchase decision, denoted as "purchase additionality," and one for the scrap decision, denoted as "scrappage additionality." We find that linking a purchase subsidy with a scrappage requirement is expected to result in fewer EV sales and less spending relative to a program without linking. While linking lowers purchase additionality relative to a program without a scrappage requirement, it leads to a high degree of scrappage additionality. Our results highlight the importance of accounting for opportunity costs when evaluating subsidy policies.
On the Issues — Jan 20, 2023
On the Issues: Big Decisions in 2023, Benefits of Electric Vehicles, and More
A biweekly newsletter connecting global current events, pressing climate and energy policy news, and economics research from RFF scholars. This week: big decisions in 2023, benefits of electric vehicles, and more.
Testimony and Public Comments — Jan 18, 2023
Comments to EPA on the IRA’s Transportation Programs
To the Environmental Protection Agency on the Request for Information related to the Inflation Reduction Act's Transportation Programs.
Workshops — Jan 20, 2023
2023 Transportation Economics, Engineering, and Policy Workshop
An RFF workshop highlighting new research to address pressing policy questions related to electric vehicles, traffic congestion, and e-mobility.
Common Resources — Jan 3, 2023
What Are the Benefits of Electric Vehicles for Climate, Air Pollution, and Health?
Resources for the Future scholars Joshua Linn and Daniel Shawhan review some of the findings from their new study, which investigates the benefits and costs of plug-in electric vehicles for climate, air pollution, and health.