Should electric vehicle purchase subsidies be linked with scrappage requirements?

Abstract

We build a vehicle purchase and disposal model to analyze a policy that links a new electric vehicle (EV) purchase subsidy with a used gasoline vehicle scrappage requirement. We evaluate the policy based on changes in sales, scrappage, subsidy dollars spent, and emissions reductions. We find that linking a purchase subsidy with a scrappage requirement is expected to result in fewer new EV sales and carbon dioxide emissions reductions relative to a policy without linking. Our modeling reveals that these effects are due to trade-in vehicle eligibility requirements and opportunity costs lowering additional participation in the linked policy. However, the linked policy significantly increases used vehicle scrappage and is more progressive than the unlinked policy. We find that emissions reductions due to additional scrappage are sensitive to how remaining miles of scrapped vehicles are replaced.