[Update June 10: There are two personal benefits from Cash for Clunkers. One is the voucher. That one's clear. But the other benefit is the dollar value of the gas savings that result from a trade in. That one is less obvious because gas savings are a not a one-to-one function of MPG increases.
In many cases--especially for very inefficient cars--the savings in gas costs will be larger than the rebate. In that sense, the gas savings can be thought of as a kind of "matching" program for the voucher. It doubles the value of the voucher.]
The table below shows how different levels of Miles per Gallon (MPG) translate to Gallons per Hundred Miles (GPHM).You can easily calculate the gas savings from a trade in by subtracting the new GPHM from the old one.For example, trading in a 17 MPG car for a 28 MPG car saves 5.9 minus 3.6 = 2.3 gallons per hundred miles.That saves more than 200 gallons of gas (and $500) over 10,000 miles of driving. It also saves 2 tons of CO2 emissions over that distance. The gas cost calculations below assume that gas costs $2.50 per gallon.
To see the gas savings from a Cash for Clunkers trade in use the table from this May 29 post or go to the gallons per mile calculator at http://www.gpmcalculator.com to explore savings over different distances and gas prices.
The Obama administration has proposed raising CAFE standards from an average of 25 MPG in 2009 to 35.5 MPG in 2016. We applaud this improvement because it accelerates gains that were planned for 2020. Detroit has signed on. However, we note that MPG has again caused confusion. Many prominent sources have interpreted the improvement from 25 to 35.5 as "40% cleaner" and as cutting "tailpipe emissions by almost 40 percent."
Before exploring the percentages, it is important to note that CAFE math is hard to interpret in general because it describes the average new vehicle sold in the fleet that year, and does not adjust either for an increase in total vehicles sold or for increases in the miles driven, both of which will diminish actual CO2 benefits. With that caveat, here's the right way to think about the increase of the average car's MPG from 25 to 35.5.
It is true that there is a 40% improvement, which can be seen by taking the difference between 35.5 and 25 (10.5), and dividing it by 25. However, this number does not tell you how much cleaner the average car is in terms of CO2 emissions. Instead, it tells you how much further you can now drive in a new vehicle on the same gallon of gas. One gallon will now take you 40% farther than it did before.
To see the percentage reduction in CO2 emissions, you need to calculate the percentage decrease in GPM. In this case, it is (1/25 - 1/35.5)/(1/25), which is 30%. Thus, for an average car driven a mile in 2009 and 2016, there will be a 30% reduction in gas consumption and CO2 emissions. (Many sources do get this right.)
More generally, you can calculate the percentage changes for MPG and GPM as follows, where MPGhigh is the MPG for the new, more efficient car and MPGlow is the MPG for the old, less efficient car:
Percentage improvement in MPG = (MPGhigh/MPGlow) - 1 Percentage reduction in GPM = 1 - (MPGlow/MPGhigh)
And you can calculate the relationship between percentage reduction in GPM and percentage increase in MPG as:
GPM% = MPG%/(1+MPG%)
For example, a 100% increase in MPG reduces GPM by 50%. A 50% improvement in MPG reduces GPM by 33%, and so on. CO2 is reduced as a linear function of changes in GPM, not MPG.
Note that CAFE calculations, which are based on the harmonic mean of all vehicles sold by a manufacturer, inherently involve GPM. The harmonic mean is simply a weighted average of GPM that is then flipped and expressed as MPG.
Carolyn Fischer at Resources for the Future has written a brief describing several benefits of switching from MPG to GPHM ("gallons per hundred miles"), including the ability to administer CAFE credits. The government routinely uses GPM for these calculations; why not make it a general practice?
Thanks to Frank Wang and Drew Carton for pointing out these misinterpretations of the CAFE increase.
Senators Feinstein, Snowe, and Schumer have proposed a Cash for Clunkers bill in response to the House compromise of May 5. Full details of the Senate bill are at the end of this post.
Here's a summary from a "GPHM" perspective:
This is a much stronger plan than the House compromise in terms of CO2reductions. It is stronger for two reasons.
Second, the system is more tiered than the House bill, encouraging drivers to seek higherlevels of gas savings, but giving them the option to choose any levelthey wish above a responsible minimum.
I think the new bill does a decent job of setting a minimum (closer between 1 and 2 GPHM) and providing tiered incentives for larger reductions in GPHM.Here's how the new trade ins compareon gphm (voucher value in parentheses):
Cars
17 to 24 saves 1.7 gphm ($2500)
17 to 27 saves 2.2 gphm ($3500)
17 to 30 saves 2.5 gphm ($4500)
Light trucks
17 to 20 saves .8 gphm ($2500)
17 to 23 saves 1.5 gphm ($3500)
17 to 26 saves 2 gphm ($4500)
Large light duty trucks *
(*This category has no maximum mpg for the old vehicle and simply requires that the new truck meet a minimum of 17 mpg. I picked a high starting mpg value for the old car, 16, to make this a more conservative test of gphm savings. A lower mpg value on the old vehicle would yield substantially greater gphm savings for the same mpg increments of 3, 5, and 7.)
16 to 19 saves 1.0 gphm ($2500)
16 to 21 saves 1.5 gphm ($3500)
16 to 23 saves 1.9 gphm ($4500)
The only increase that seems too small is the 17 to 20 mpg gain on lighttrucks, yielding less than 1 gallon saved per 100 miles.
This is where the MPG Illusion and the use of GPM is critical. Manypeople might think that the MPG increases on the Large Light Duty Trucks are unimpressive--starting at 14 and then moving to 17, 19, and 21. Butthose gas savings are greater than the savings produced by larger MPGincreases on the Light Trucks (from 17 to 20, 23, and 26).
The night and day difference between this Senate bill and the House bill is the requirements forLarge Light Duty Trucks. This bill is fairly responsible in thatcategory.
Here's a cut and paste of the May 19 fact sheet:
The revised “Cash for Clunkers” proposal introduced today would ensure that vehicles purchased under the program do not bring down the fleetwide averages that the Ten in Ten Fuel Economy Act intended to raise.
Feinstein-Collins-Schumer Counter Proposal
Passenger Cars
Light Duty Trucks
Large Light Duty Trucks (6000-8500 pounds)
Work Trucks (8500 to 10,000 pounds)
Minimum Fuel economy for purchased vehicle
24 mpg
20
17
n/a
$2,500 for new vehicle purchase, $1,000 for used vehicle purchase, 2004 model year or later
Mileage improvement of at least 7 mpg
Mileage improvement of at least 3 mpg
Mileage improvement of at least 3 mpg
Trade-in work truck must be pre-1999 model (used cars not included)
$3,500 voucher for new vehicle purchase
Mileage improvement of at least 10 mpg
Mileage improvement of at least 6 mpg
Mileage improvement of at least 5 mpg
n/a
$4,500 voucher for new vehicle purchase
Mileage improvement of at least 13 mpg
Mileage improvement of at least 9 mpg
Mileage improvement of at least 7 mpg
n/a
Trade-in vehicles must be 17 mpg or below. All fuel economy values are EPA combined city/highway fuel economy, as posted on the window sticker of new cars.
Details of Feinstein-Collins-Schumer Counter Proposal
Consumers may trade in their gas-guzzling vehicles to be scrapped – with a fuel economy of less than 17 miles per gallon – and receive vouchers worth up to $4,500 to help pay for the purchase of more fuel efficient cars and trucks. The program will be authorized for up to one year and provide for approximately one million new car or truck purchases. There are approximately 27 million vehicles on the road today that could qualify for trade-in under this program.
This proposal is consistent with the framework of the House compromise legislation, and divides the cars and trucks that would be purchased with the incentive voucher into four categories. Miles per gallon figures below refer to EPA “window sticker” values.
· Passenger Cars: The trade-in vehicle must get 17 miles per gallon (mpg) or less. New passenger cars with mileage of at least 24 mpg – the current average for this vehicle class – are eligible for vouchers.
o If the mileage of the new car is at least 7 mpg higher than the old vehicle, the voucher will be worth $2,500 for a new car purchase.
o If the mileage of the new car is at least 10 mpg higher than the old vehicle, the voucher will be worth $3,500.
o If the mileage of the new car is at least 13 mpg higher than the old vehicle, the voucher will be worth $4,500.
o The purchase of a used passenger car with a mileage of at least 24 mpg would qualify for a voucher of $1,000.
· Light-Duty Trucks: The trade-in vehicle must get 17 miles per gallon (mpg) or less. New light trucks, minivans or SUVs with mileage of at least 20 mpg – the current average for this vehicle class – are eligible for vouchers.
o If the mileage of the newly purchased truck or SUV is at least 3 mpg higher than the old truck, the voucher will be worth $2,500 for a new vehicle purchase.
o If the mileage of the newly purchased truck or SUV is at least 6 mpg higher than the old truck, the voucher will be worth $3,500.
o If the mileage of the newly purchased truck or SUV is at least 9 mpg higher than the old truck, the voucher will be worth $4,500.
o The purchase of a used light-duty truck or SUV with a mileage of at least 20 mpg would qualify for a voucher of $1,000.
· Large Light-Duty Trucks: Newly purchased large trucks (pick-up trucks and vans weighing between 6,000 and 8,500 pounds) with mileage of at least 17 mpg – the current size-adjusted Corporate Average Fuel Economy Standard for the largest pickup trucks – are eligible for vouchers.
o If the mileage of the newly purchased truck is at least 3 mpg higher than the old truck, the voucher will be worth $2,500.
o If the mileage of the newly purchased truck is at least 5 mpg higher than the old truck, the voucher will be worth $3,500.
o If the mileage of the newly purchased truck is at least 7 mpg higher than the old truck, the voucher will be worth $4,500.
o The purchase of a used large light-duty truck with a mileage of at least 17 mpg and 3 miles per gallon higher than the trade-in vehicle would qualify for a voucher of $1,000.
· Work Trucks: Under the proposal, consumers can trade in a pre-1999 work truck (defined as a pick-up truck or cargo van weighing from 8,500-10,000 pounds) and receive a voucher worth $2,500 for a new work truck in the same or smaller weight class. There will be a limit on these vouchers, based on this vehicle class’s market share. There are no EPA mileage measures for these trucks; however, because newer models are cleaner than older models, the age requirement ensures that the trade will improve air quality. Consumers can also “trade down,” receiving a $2,500 voucher for trading in an older work truck and purchasing a smaller light-duty truck weighing from 6,000 – 8,500 pounds.
Because CO2 reductions are not a linear function of MPG increases, it is very difficult to craft a sensible Cash for Clunkers bill using MPG.
Relying on MPG forces policy makers to set many different tiers and increments for trucks and cars. And, even then, not all MPG increments have the same implication. A 10 MPG increase has different CO2 implications depending on whether you’re starting with an original vehicle that gets 12 MPG or 18 MPG (the first starting point would save over 70 pounds of CO2 every 100 miles; the second starting point would save only 40 pounds of CO2). (See this post for details on the final June 18 Cash for Clunkers billl.)
In terms of CO2 reduction, however, all GPM decreases are created equal: Saving 1 gallon of gas every 100 miles saves 20 pounds of CO2.
A Tiered System based on GPHM (Gallons per 100 Miles)
As we’ve argued in many previous posts, the ideal Cash for Clunkers would be a tiered voucher system tied to GPM decreases. In this post, we’ll illustrate a simple tiered system using “gallons per 100 miles” (GPHM).
First, we need to set a minimum GPHM savings. In previous posts we’ve argued that a trade-in that saves 1 gallon per 100 miles would offset the CO2 emissions that are released when manufacturing the new car in a reasonable period of driving. Specifically, 7 tons of CO2 are produced in manufacture, so the new car requires saving 700 gallons of gas to offset its production. A 1 GPHM decrease would offset the CO2 emissions from the new car in 70,000 miles of driving. Other proposals would require a 2.5 gallon increase per 100 miles to achieve this offset with less driving. We’ll work with a 2 GPHM principle: The minimum trade in that qualifies for a voucher must save 2 gallons per 100 miles.
Let’s start by rewarding the minimum trade-in $3,000. Then reward each additional gallon per 100 miles saved with a $1,000 voucher. Car buyers could receive larger vouchers by saving up to 3 more gallons per 100 miles. Here is the policy in a chart:
A decrease of.... 2 gallons per 100 miles (GPHM) = $3,000 voucher 3 gallons per 100 miles (GPHM) = $4,000 voucher 4 gallons per 100 miles (GPHM) = $5,000 voucher 5 gallons per 100 miles (GPHM) = $6,000 voucher
A trade in that saves the minimum 2 gallons per 100 miles would offset the CO2 from manufacturing the new car in 35,000 miles of driving. A trade in that saves a full 5 gallons per 100 miles (or more) would offset the CO2 from manufacturing the new car in 14,000 miles of driving (or less).
• It ensures covering the CO2 emissions from production of the new car. • Each level of GPHM decrease saves 1 ton of CO2 every 10,000 miles • There doesn’t need to be a maximum efficiency for the original car • There doesn’t need to be a minimum efficiency for the new car
Why no maximum or minimum? Because all GPHMs are created equal. We don’t care where the reductions come from. Any time a gallon is saved in 100 miles of driving it reduces CO2 emissions by about a ton in a year’s worth of driving.
Realistically, however, efficient cars will not be able to qualify for a large voucher. Someone who currently owns a 25 MPG car (which consumes 4 gallons per 100 miles) can qualify for a voucher by trading it in for a 50 MPG car (which uses 2 gallons per 100 miles). This yields a 2 GPHM decrease and the $3,000 voucher.
However, someone who currently owns a 12 MPG car (which consumes more than 8 gallons per 100 miles) has many trade in options. The person could trade it in for a 16 MPG car (6.25 gallons per 100 miles) to qualify for the $3,000 voucher. Alternatively, the person could earn the $5,000 voucher by switching to a 25 MPG vehicle (which consumes 4 gallons per 100 miles--and save $1,000 per year in gas costs).
The Limits of a Tiered Voucher System based on GPHM
The only limit, of course, is that people are not familiar with gallons per 100 miles. Yet.
The table shows the gas savings of turning in a low MPG car (18 and below) for a higher MPG car. The gas savings are over 10,000 miles of driving. Saving 100 gallons of gas saves 1 ton of CO2 emissions.
There are two personal benefits from Cash for Clunkers. One is the voucher. That one's obvious. (See this post with a link to the final June 18 plan and voucher descriptions.) But the other benefit is the dollar value of the gas savings that result from a trade in. That one is less obvious because gas savings are a curvilinear function of MPG increases.
In many cases--especially for very inefficient cars--the savings in gas costs will be larger than the rebate. In that sense, the gas savings can be thought of as a kind of "matching" program for the voucher. It doubles the value of the voucher.
To see the value of gas savings from a possible trade in, use the GPM Calculator or this downloadable table:
To read each table, look in the top row of numbers for the MPG level of your current vehicle. Then read down that column to see the amount of gas (or money) you will save over 10,000 miles of driving by buying a car with higher levels of MPG.
This table can help car buyers and car dealers make more accurate judgments of gas consumption when comparing an old car with a new car. Please share it with others. Example
Imagine you have a truck that gets 14 MPG and you drive it 15,000 miles per year.
Suppose you trade it in for a vehicle that gets 20 MPG. You qualify for a $4,500 voucher. But you'll also save more than 300 gallons of gas over 15,000 miles of driving. At $2.50 a gallon, that will save more than $4,500 over six years of driving. Trading in a 14 MPG vehicle for a 20 MPG vehicle is worth $9,000 over six years (gas savings + voucher).
An interesting contrast is if you trade in a 14 MPG truck for a 15 MPG truck. In that case, you get the $3,500 voucher, but save only 75 gallons of gas over 15,000 miles of driving. At $2.50 a gallon, that will save only $1,125 over 6 years of driving. Going from 14 to 15 MPG vehicle is worth about $4,500 over six years when you combine the voucher and gas savings--just half the value of trading in the truck for a 20 MPG vehicle.
Dual Benefits
In implementing Cash for Clunkers, it would be helpful if the press--and, later on, car dealerships--could focus on the dual sources of personal benefit from the trade in of low MPG cars: The benefit is the sum of the voucher value and the gas savings.
It takes only small MPG improvements to yield large gas (and money) savings on cars in the teens. For the right, modest increase in MPG, the dollar value of gas savings will be larger than the voucher. That's the message of GPM.
For older posts on Cash for Clunkers, see the blog archive on the right.
Nicholas School Dean Bill Chameides proposes a tougher pay back rule than our proposal of 1 GPM: He proposes that any new car needs to pay back the carbon debt in about 2.3 years of driving at 13,000 miles per year. Put somewhat differently, this requires a payback over 30,000 miles of driving to be carbon neutral. (We proposed that a new car pay back over 70,000 miles, which, at 13,000 miles per year, is a maximum of 5.4 years).
Dean Chameides has prepared some nice graphs at his Green Grok site:
This cool table translates to something like the following rule for old and new cars: 12 MPG must be raised to at least 17 MPG 13 MPG must be raised to at least 18 MPG 14 MPG must be raised to at least 21 MPG 15 MPG must be raised to at least 23 MPG 16 MPG must be raised to at least 26 MPG 17 MPG must be raised to at least 28 MPG 18 MPG must be raised to at least 31 MPG .... to merit a voucher.
Of course, because of the non-linear relationship between CO2 reduction and MPG, there is no simple rule about MPG increase that captures these changes. Let's translate it to GPM, which is linear in CO2.
The Green Grok standard equates to a 2.5 GPM principle: A new car needs to save 2.5 gallons of gas every 100 miles compared to the original car to be carbon neutral.
I would add, as in earlier posts, that a tiered system that increased the voucher size directly with the reduction in GPM makes the most sense. Let's have more voucher levels that increase as GPM shrinks. [Update: See this May 10 post for a tiered system based on GPM (not MPG!). This post links to the final June 18 Cash for Clunkers bill.]
Finally, note the (necessary) connection between our gas savings table and Dean Chameides' pay back table. The MPG combinations that yield a 2.3 year pay back in his table are the same as our MPG combinations that yield gas savings of roughly 240 gallons over 10,000 miles, or 2.4 gallons per 100 miles.
When trading in an old car for a new one, what gain in fuel efficiency is needed to yield a net reduction in CO2 emissions? This question lies at the heart of whether a Cash for Clunkers bill will help or hurt US CO2 emissions.
We argue for a 1 GPM principle: A new car needs to save 1 gallon of gas every 100 miles compared to the original car to be carbon neutral. The new car will then offset the CO2 emissions from its own production in 70,000 miles of driving, which would occur in 4 to 7 years for most drivers.
The rest of this post provides background on Cash for Clunkers and an explanation of the 1 GPM principle. Background
Yesterday's post has a description of the new Cash for Clunkers compromise. (See the blog archive for older posts on Cash for Clunkers starting in January 2009.)
In general, Cash for Clunkers is appealing because it garners support from many constituencies. It spurs consumer spending, helps the automobile industry, and reduces CO2 emissions. All bills therefore must combine and balance these interests. Inevitably, however, bills force a tradeoff when it comes to the size of MPG improvements. Larger improvements yield greater CO2 reductions but limit the number of cars that can be purchased.
Although the current bill has some desirable features from the perspective of CO2 reductions (namely, increased voucher amounts as MPG improvements increase), some of the MPG improvements are too small to yield a net reduction in CO2 emissions. Specifically, the bill requires 1 or 2 MPG improvements on "large light duty trucks" to qualify for a voucher. In some cases, this will yield less than half a gallon of gas savings over 100 miles of driving. For example, trading in a 15 MPG truck for a 16 MPG truck would qualify for the $3,500 voucher, but save only .4 gallons of gas every 100 miles.
This earlier post summarized Bill Chameides's analysis of the MPG gains needed to "cover" the incremental CO2 emissions when producing a new car. After reviewing several sources, Dean Chameides found that producing a new car emits about 7 tons of CO2. Given that burning one gallon of gas emits about 20 pounds of CO2 and that a 15 to 16 MPG saves .4 gallons per 100 miles, it would take 175,000 miles of driving for a 15 to 16 MPG improvement to offset the CO2 from producing the new car. (And, under the compromise bill, a 17 to 18 MPG improvement would also qualify for $3,500 and yield even smaller reductions in gas savings and CO2 emissions).
In the current bill, efficiency improvements are expressed as fixed MPG improvements. Because gas consumption has an inverse relationship to MPG, the same size MPG improvement yields different CO2 reductions depending on the MPG of the original vehicle. CO2 reductions are not a linear function of MPG improvements.
CO2 reductions are directly and linearly related to improvements in gallons per 100 Miles (GPM). The following proposal uses GPM to argue for a minimum improvement in fuel efficiency that ensures carbon neutrality (or better) in the process of replacing one car with another.
A Modest Proposal: The 1 GPM Principle
Because burning 1 gallon of gas emits 20 pounds of CO2, new vehicles need to save 700 gallons of gas compared to old vehicles to remain carbon neutral. The 700 gallons do not need to be saved at once, but they do need to be saved during the lifetime of the car, and ideally faster--they should be thought of as replacing the remaining time and miles from the original vehicle.
Based on these goals, the 1 GPM principle states that a new car needs to save 1 gallon of gas every 100 miles compared to the original car. The new car will then offset the CO2 emissions from its own manufacture in 70,000 miles of driving, which would occur in 4 to 7 years for most drivers. (The original vehicle might have been retired at this point.)
13 to 15 MPG 14 to 16 15 to 18 16 to 19 17 to 21 18 to 22 19 to 24 20 to 25 21 to 27 22 to 28 23 to 30 24 to 32 25 to 33
Here's a scheme to simplify these numbers. The scheme rounds the improvements to make 1 GPM easier to achieve and ignores the car/SUV/truck distinction:
Vehicles that get 16 MPG and below must be increased by 2 MPG to qualify for a voucher
Vehicles that get 17 MPG to 20 MPG must be increased by 4 MPG to qualify for a voucher
Vehicles that get 21 MPG or above must be increased by 6 MPG to qualify for a voucher
Note that the 1 GPM principle describes the absolute minimum gain in efficiency that should be rewarded. Ideally, larger vouchers would then be tied to multiples of these MPG improvements.
The requirements described in yesterday's compromise proposal largely achieve the 1 GPM principle for cars and light trucks; however, they fail to achieve the 1 GPM for large light duty trucks and work trucks. This is where revisions to the compromise need to focus.
Of course, the average car buyer (and voter) probably looks at a 2 MPG gain and thinks it is worthless. The surprising insight revealed by GPM is that small MPG improvements on really inefficient cars can save a substantial amount of gas (e.g., a 2 MPG improvement on a 13 MPG vehicle). GPM helps usrecognize which gains pay for themselves in carbon reduction, and which ones don't.
[Update June 20: If you are interested in a "Cash for Clunkers" trade in, it is useful to know that the gas savings from a trade in can be worth more than the Cash for Clunkers voucher. See this post for various tools for calculating your gas (and cost) savings of trading in a lower MPG car for a higher MPG car.
Here are the details on the May 5 compromise Cash for Clunkers. The press release is below. See the blog archive on the right for older and newer posts on Cash for Clunkers.
One plus: It has increasing rebates for larger MPG improvements.
One minus: The MPG jumps required for a large light-duty truck are quite small. Of course, GPM shows that even small MPG jumps can produce decent gas savings when they are applied to really inefficient trucks (e.g., 12 MPG to 15 MPG improvement saves almost 200 gallons of gas per 10,000 miles). But the structure would allow people to qualify for vouchers for 1 MPG increases (e.g., 15 MPG to 16 MPG, which saves only 40 gallons of gas per 10,000 miles) that yield small gas savings. The 15 to 16 MPG improvement would qualify for a $3,500 voucher.
Overall, the carbon payback--as discussed in an earlier post--will tend to be pretty long if people make the minimum MPG improvement in their category. From a greenhouse gas perspective one has to then hope that many people will go beyond the minimum.
The press release appears below. I've added my own "GPM" translations in brackets [gallons per 10,000 miles] and some examples in italics following each vehicle category.
May 5, 2009 Fact Sheet: Cash for Clunkers Committee on Energy and Commerce
Consumers may trade in their old, gas-guzzling vehicles and receive vouchers worth up to $4,500 to pay for new, more fuel efficient cars and trucks. The program will be authorized for up to one year and provide for approximately one million new car or truck purchases. The agreement divides these new cars and trucks into four categories. Miles per gallon figures below refer to EPA "window sticker" values.
Passenger Cars:The old vehicle must get less than 18 mpg [555 GPM] .New passenger cars with mileage of at least 22 mpg [454 GPM] are eligible for vouchers.If the mileage of the new car is at least 4 mpg higher than the old vehicle, the voucher will be worth $3,500.If the mileage of the new car is at least 10 mpg higher than the old vehicle, the voucher will be worth $4,500.
Example: An MPG improvement from 16 MPG to 26 MPG reduces GPM from 625 to 384, which saves about 250 gallons of gas per 10,000 miles ($4,500 rebate)
Example: An MPG improvement from 12 MPG to 22 MPG reduces GPM from 850 to 454, which saves about 400 gallons of gas ($4,500 rebate)
Example: An MPG improvement from 14 MPG to 18 MPG reduces GPM from 714 to 555, which saves about 150 gallons of gas ($3,500 rebate)
Light-Duty Trucks:The old vehicle must get less than 18 mpg [555 GPM].New light trucks or SUVs with mileage of at least 18 mpg are eligible for vouchers. If the mileage of the new truck or SUV is at least 2 mpg higher than the old truck [e.g., 20 MPG, which is 500 GPM], the voucher will be worth $3,500.If the mileage of the new truck or SUV is at least 5 mpg higher than the old truck [e.g., 23 MPG, which is 434 GPM], the voucher will be worth $4,500.
Example: An MPG improvement from 16 MPG to 23 MPG reduces GPM from 625 to 434, which saves about 200 gallons of gas per 10,000 miles ($4,500 rebate)
Example: An MPG improvement from 16 to 18 MPG reduces GPM from 625 to 555, which saves about 70 gallons of gas ($3,500 rebate)
Large Light-Duty Trucks:New large trucks (pick-up trucks and vans weighing between 6,000 and 8,500 pounds) with mileage of at least 15 mpg [666 GPM] are eligible for vouchers.If the mileage of the new truck is at least 1 mpg higher than the old truck, the voucher will be worth $3,500.If the mileage of the new truck is at least 2 mpg higher than the old truck, the voucher will be worth $4,500.
The value of this one all depends on how bad the original vehicle is. Some GPM gains are small.
Example: A 12 MPG to 15 MPG improvement reduces GPM from 850 to 666, and saves 180 gallons of gas ($4,500 rebate)
Example: A 15 MPG to 16 MPG improvement reduces GPM from 666 to 625, and saves 40 gallons of gas ($3,500 rebate)
Work Trucks:Under the agreement, consumers can trade in a pre-2002 work truck (defined as a pick-up truck or cargo van weighing from 8,500-10,000 pounds) and receive a voucher worth $3,500 for a new work truck in the same or smaller weight class.There will be a finite number of these vouchers, based on this vehicle class’s market share.There are no EPA mileage measures for these trucks; however, because newer models are cleaner than older models, the age requirement ensures that the trade will improve environmental quality.Consumers can also “trade down,” receiving a $3,500 voucher for trading in an older work truck and purchasing a smaller light-duty truck weighing from 6,000 – 8,500 pounds.
Summary of Cash for Clunkers Agreement
Passenger Car
Light-DutyTruck
Large Light-Duty Truck
(6,000 – 8,500 pounds)
Work Truck
(8,500 – 10,000 pounds)
Minimum Fuel Economy for New Vehicle
22 mpg
(EPA combined)
[454 GPM]
18 mpg
(EPA combined)
[555 GPM]
15 mpg
(EPA combined)
[666 GPM]
$3,500 Voucher
Mileage improvement of at least 4 mpg
Mileage improvement of at least 2 mpg
Mileage improvement of at least 1 mpg or trade-in of a Work Truck.
