A pandemic-delayed incentive program offers rebates on fuel-efficient vehicles, but it’s been a tough sell so far.
A new initiative to help lower-income Vermonters buy fuel-efficient cars has faced challenges getting into gear during the pandemic.
The MileageSmart pilot program was passed as part of Vermont’s 2019 transportation legislation and has been allocated $750,000 by the state’s transportation agency. Eligible applicants can receive 25% off the cost, up to $5,000, toward a used high-efficiency car, regardless of fuel type. It’s one of several programs in the region that aims to help residents with modest incomes access cleaner transportation despite the often high costs of new electric vehicles.
The program had a soft launch in February but shut down amid the coronavirus outbreak and was restarted in early September. As of Oct. 1, one car had been sold through the program, but an administrator said several hundred people have inquired about the program.
Buying a car was already a challenge for low-income households, and that’s been exacerbated by the pandemic. Now, administrators are figuring out next steps to not only reach clients but also help them work through the process of securing loans and purchasing vehicles.
“We’re just kicking this thing off,” said Paul Zabriskie, the director of efficiency programs at Capstone Community Action, the Central Vermont agency that administers MileageSmart. Capstone works with Vermont’s four other community action agencies to market the program across the state.
“The first people we are reaching out to are the people who are in the greatest need.” They’re also the people least likely to say, “‘Oh yeah, I wasn’t going to get a car but now I’m going to get a car this week,’” Zabriskie said. “So we are learning our way through what we can do to facilitate this process.”
Even with the incentive, most people Capstone serves would need to finance a vehicle purchase like this through a loan, he said. “We also know many of the people we’re working with historically have not had great experiences with banks,” which they often feel are predatory — for example, by leveling high charges on clients who fail to maintain checking account balances.
Compounding those challenges are an already faltering economy now threatened by a new wave of coronavirus infections and accompanying business closures, and a used-car market that’s become more volatile during the pandemic. Zabriskie said one Capstone client was looking at a used car that in June was worth $6,200, and by September had increased nearly 15%, to $7,100.
The MileageSmart website was set up to streamline the process for clients. They can watch a video explaining the long-term financial and environmental benefits of fuel-efficient cars, and see the list of eligible vehicles, which include those with the equivalent of 40 mpg or higher. They’re encouraged to apply for their loan before shopping for a car so they have a clear idea of their budget.
But many people appear to need more assistance as they navigate loans and vehicle purchases. For organizations like Capstone operating on limited funding, this requires more strategizing. Zabriskie said it’s too early to say yet what their next steps will be, but they’re trying to figure out how to continue effectively.
“We’re responding to a social climate that is unlike anything I’ve ever seen, between the COVID-induced uncertainty and the background level of anxiety around November and the election,” factors he noted affect everyone, not just Capstone’s clients.
Clients “are tantalized by our offer, which is a significant offer … and at the same time, it’s just a really scary thought to be making commitments in this environment,” he said.
A step toward electrification
Supporters say that while it’s not perfect, MileageSmart is a start. Policy in Vermont has so far focused on electric vehicle incentives for new cars. This program aims to help residents who can’t afford new EVs, many of whom continue to commute during the pandemic and don’t have access to reliable public transit. In the future, as the current crop of new, higher-mileage all-electric vehicles cycle back to dealers, this program could help open up a local market for them.
The program also gives lawmakers a chance to gauge its success and value, so they can determine how to structure future iterations.
“I am very excited about this program,” said Rep. Sarah Copeland Hanzas, who represents part of Vermont’s central Orange County in the state legislature. Copeland Hanzas added that a program like this for low- and moderate-income families has been a longstanding need. She compared it to the “cash for clunkers” program started at the tail end of the Great Recession to offer financial incentives for drivers to trade in old cars for new fuel-efficient vehicles. Copeland Hanzas views MileageSmart as “the climate-friendly next phase” of that concept.
“Is $5,000 enough? Probably not,” she said. “But I’m thinking of this as a pilot program. We can see how it rolls out.”
If it turns out the incentive isn’t enough, she said, “then we as policymakers need to come back” and rethink it.
“We certainly have a lot of families who have been impacted by the pandemic,” she said of her district. “We are a rural community, and we don’t have a lot of options for public transit.” She hopes service industry workers who need to get to their jobs can take advantage of the program.
She acknowledged it hasn’t been a top priority for her lately, especially as she focuses on the upcoming election. But she added that many of her constituents want to reduce their carbon footprint, and this may be appealing to them.
“As somebody who advocates for vehicle electrification … I get constantly told that electric vehicles are only for the wealthy,” said Robb Kidd, conservation program manager at the Vermont chapter of the Sierra Club. He views this as an opportunity to change how people access electric vehicles. Even if they can’t get all-electric cars, they can at least get hybrids, he said, “so it’s like a step up towards getting them into more efficient vehicles.”
As for the effectiveness of the incentive, “I wish we had enough resources where we could give everyone with marginal incomes access to free transportation,” he said.
“For a lot of low-income folks whose primary income is going towards transportation, if their car dies and they need to go out and buy a vehicle, a $5,000 incentive … can be a big help,” Kidd said. “Not everyone is going to be able to afford that …but it can help.”
In the long term, he said, transportation electrification will be important, through incentives and increases in charging access, as well as more mass and micro transit options. But MileageSmart, he said, is “an important transitional piece.”