Sweden's government is ending its cash-for-clunkers program after disappointing participation rates. The initiative offered financial incentives for drivers to scrap old vehicles and switch to electric cars.
Only 55 million kronor of the allocated 500 million kronor budget has been approved for payment. The program concludes on October 31.
The scheme initially provided 10,000 kronor to drivers who scrapped vehicles at least 15 years old and purchased an electric car. Climate and Environment Minister Romina Pourmokhtari had promoted the premium as a key climate initiative.
Government officials expected the program would lead to 10,000 additional scrapped vehicles. But by spring, only 412 applications had been approved.
In response to low interest, the government sweetened the deal in May. They increased the premium to 25,000 kronor and expanded eligibility to include Euro5 emission class vehicles. The higher support could also be claimed retroactively by those who had already received the original 10,000 kronor payment.
Pourmokhtari said at the time that officials hoped the increase would boost participation.
The government's prediction missed the mark significantly. With just one month remaining in the program, only 2,244 applications have been approved according to the latest statistics from the Swedish Board of Housing, which managed the premium.
This means the vast majority of the 500 million kronor allocated for the initiative remains unused. The utilization rate stands at just 11 percent.
The program has faced criticism from multiple quarters. The 2030 Secretariat, an industry organization working to reduce transport emissions, repeatedly urged the government to improve and extend the premium to achieve climate benefits.
When contacted about what will happen to the unused funds, officials provided no clear answers about the remaining budget allocation.
The disappointing results highlight the challenges governments face when designing effective climate incentives. Even with increased financial incentives, the program failed to attract significant participation from Swedish drivers.