Cash for Clunkers Program Gets Second Life
Late last Thursday, an announcement that the $1 Billion budget of the Cash for Clunkers program had been expended sent shock waves through the auto industry. However, Congress quickly acted to help keep the incentive program running.
In a bill voted on last night by the Senate, an additional $2 Billion has been allocated to the Cash for Clunkers Program. Today, this bill is expected to be signed into law by President Obama.
The Cash for Clunkers Program provides an incentive for Americans to trade in their older vehicle for a new more fuel efficient model. Those that upgrade to a vehicle that has a 4mpg increase in fuel efficiency will receive $3,500, while a 10mpg increase receives $4,500.
Originally $1 Billion was allocated for the Cash for Clunkers Program and tens of thousands of car dealers all over the country quickly signed up for the program. By last week, it was estimated that around 250,000 new cars had been purchased as part of the Cash for Clunkers program, expending the $1 Billion budget.
With its renewed budget, the Cash for Clunkers Program has been revived and will continue to offer an incentive for new car purchases.
Cash for Clunkers: Short Term vs Long Term Effects
The short term effect of the Cash for Clunkers program is that it increases the number of new car sales at a time when the auto industry is on very shaky ground.
The program also offers a benefit to those purchasing a new car, who can receive a big discount on their new vehicle purchase, while also helping scrap yards who recycle the traded in vehicles.
However, this incentive program could also have some very significant long term effects on our overall fuel consumption. Since each new car purchased must be more fuel efficient and the trade in “destroyed,” each new vehicle is replacing a vehicle that has a lower mpg. This means the number of vehicles on the road stays the same, but their fuel efficiency is effectively increased.
As a result, each car purchased as part of the Cash for Clunkers program represents at least a 4mpg increase in fuel efficiency, with some representing 10mpg increases. Over time, this translates to a very significant decrease in fuel consumption.
Only 4mpg, Whats the Big Deal?
A 4mpg increase might not sound like a lot, but it is actually fairly significant increase, especially for those who are driving cars that get low gas mileage.
To help illustrate this point, consider the following example:
Lets say we have two vehicles, one that gets 20mpg and one that gets 50mpg. If each of these vehicles were driven 15,000 miles, the vehicle that gets 20mpg will use 750 gallons of gasoline, while the other vehicle uses 300 gallons.
Now, lets assume that both of these vehicles have a 4mpg increase.
At 24mpg, 625 gallons of gas would be used, which represents 125 fewer gallons of gas and a 15% decrease in fuel consumption.
At 54mpg, 278 gallons of gas would be used, which represents 28 fewer gallons of gas used and a 7% decrease in fuel consumption.
While the lower millage vehicle uses more gas, a 4mpg increase accounts for almost 5 times less gas used in the 24mpg vehicle. This means that replacing the cars and trucks that get only 15mpg or 20mpg will have a huge impact impact on fuel use, much more so than replacing cars that get higher mpg.
Since most people don’t drive a Prius that gets 50mpg, each car purchased as part of the Cash for Clunkers program will have a significant impact on gasoline consumption, even if it only has the minimum 4mpg increase instead of the full 10mpg.
About the Author
Tiger is a writer who writes about a number of health and financial topics. The Cash for Clunkers program is not the only incentive program currently offered by the government. As part of the American Recovery and Reinvestment Act, $237 Billion has been set aside for individual tax relief. This includes Obamas First Time Homebuyers tax credit, which provides up to $8,000 towards the purchase of a home.
Cash For Clunkers Begins Today
You can begin taking your car to your local dealer for the Cash For Clunkers Stimulus program. Dealers are ready to hand out the $3,500 – $4,500 incentives to trade in their old gas guzzling vehicles. If you have an old vehicle that on it’s last leg, take advantage of this program and try to buy as fuel efficient vehicle as possible. Check out http://www.cars.gov/ to find full details on whether your old car qualifies for this program.
Telsa Unveils Model S Highway Capable EV
Telsa Motors just announced that they are now taking orders for their new model, the Model S. This model is a series of all electric sedans that have a range of up to 300 miles on a full charge and can seat up to seven people.
Model S
Tesla’s new Model S is different from their well-know roadster in that it is a sedan and a much more practical car for daily use. The main differences are the body style and interior, its performance and the
price.
Body Style and Interior
The body style is a sleek and stylish body that is comparable to a car like the BMW 5 series. The interior is roomy as it holds a total of 5 adults comfortable along with 2 child seats. It actually has more trunk room than a traditional station wagon. It even has a trunk under the hood to provide more storage space. I actually think this vehicle looks better than the Roadster and many comparable cars on the market today.
Battery
The Model S will come with one of three battery options, a 160, 230 and 300 mile range. The batteries can be charge to full power in just around 4 hours and has a 45-minute quick charge option. It can be charge from just about any outlet type including a 120, 240 or 480 volt. The battery pack lifespan is expected to last approximately 7-10 years.
Price
Price is a huge factor as to why this vehicle may become extremely popular and make Tesla a much more prevalent automaker in America. The starting price for the Model S is at $57,400. It has the maximum tax credit for any vehicle at $7,500, reducing the car to a cost of just under $50k. Those prices are comparable to similar luxury cars like Audi’s or BMW, but is fully electric and has much lower maintainence costs over the lifetime of the vehicle.
Performance
It’s not as fast as the Roadster, but it still has a 0-6 in 5.6 seconds and a top speed of 120 miles per hour. Unlike gas cars, it only has two gears, drive and reverse. The ride in Tesla’s vehicles are much smoother as shifting is not required.
Overall, the new Model S seems like a viable option for people across the nation. If you are going to spend $50k on a luxury vehicle, why not get one that is fully electric. It will be available in late 2011 and you can reserve yours today. Let’s hope the efforts of Aptera and Tesla make a huge impact on the America auto-making industry.
Tesla Motors
Tesla History
Tesla Motors is the first automaker in America and Europe to manufacture highway-capable electric vehicles. The company is based out of Silicon Valley and is focused on manufacturing electric vehicles. Martin Eberhard and Marc Tarpenning originally founded the company in 2003 and named the company after famous inventor and physicist Nikola Tesla. Tesla’s goal in producing their cars is to make electric automobiles a viable alternative. None of their models do not sacrifice quality or style and still maintain high performance. The first of their stores opened in April 2008 in Los Angelos, California and their currently have support centers in several states across the nation. They plan to build more in the coming years. They are expanding as we speak as they plan to have stores in every major city across America within the next few years.
Roadster
The Roadster is the first of Tesla Motors vehicles that was first unveiled to the public in April of 2006. It uses a lithium-ion battery pack that allows it to get up to 227 miles per charge. This sports car is extremely fast as it can go from 0-60 in about 3.9 seconds with a top speed of 125 miles per hour. They have a new Sports model that lowers that number to abou 3.7 seconds. Tesla Motors originally brought in Lotus Cars to help them design the body on the car, if you can’t tell from how it looks. Their vehicles are currently manufactured by Lotus in their England factory with a few parts shared from Lotus models, but many shipped in from California. This car is actually one of the least expensive cars with any entirely carbon fiber body. This allows for minimal weight while still maintaining a strong body.
The lithium ion battery packs in the Roadster maintain good driving performance for up to 5 years or 100,000 miles. Tesla will recycle the battery for you once it’s reached the end of it’s life. In 2007, it was estimated to cost about $20,000 to replace the battery system, but should have gone down since then. In the next 5 years, the technology will most likely be dramatically better and at a cheaper cost. The space if fairly limited in these cars and only can fit 2 people and approximately a golf bag in the trunk. Over 250 Roadsters have already been delivered and are becoming more and more popular. The currently list price on one of these cars is $109,000
Tesla’s electric vehicles are the first production ready and have already gotten great reviews. Let’s hope this company makes a huge impact by getting large car manufacturers to start developing electric cars that get more than 50 miles per charge. Maybe one day we will see charge stations all around the nation…
