Feebates can help drive two vital directions of automotive innovation.
First, feebates beautifully reinforce the rapidly emerging global trend toward lightweighting. That’s the strongest way to make cars very efficient with great economics: lightweighting can be largely or wholly paid for by shrinking the powertrain to get the same acceleration.
Lightweighting is also the key prerequisite to making advanced powertrains (notably electrification) affordable by eliminating most of the costly batteries. (So far, Federal investments in automotive innovation have been about 100 times as big for advanced powertrain development as lightweighting and other forms of “platform fitness,” though there are recent signs this may be about to change.)
Second, in "Winning the Oil Endgame," RMI proposed a low-income financing innovation that would enable low-income households handicapped by inefficient and unreliable old cars to afford to buy new, reliable, warranted, and extremely efficient models. Achievable at small to negative net cost, this would greatly stimulate both poor communities (many of which lack another way to travel to jobs) and the general economy.
Our proposal, which included a scrap-and-replace component, would also give automakers a new million-car-a-year market from new customers who could never before afford a new car. This would help avoid the pitfalls associated with relaxing lending criteria (akin to sub-prime mortgages); instead, it would preserve loan quality and manage lending risk while achieving remarkable benefits.
Amory B. Lovins is RMI's Co-founder and Chief Scientist.