Sadly this sort of mandate leads to a very inefficient application of money to reducing pollution. After that $14,000 "subsidy" the 500e still a $32,500 car, which will appeal primarily to people who are likely replacing an already efficient late model vehicle for a tiny net carbon savings. That same $14,000 applied to the base model 500 Pop would make the price about $3,000(!) and you'd have buyers replacing old clunkers with something that gets 40 mpg and a huge net savings.
Maybe, but you're making a bunch of assumptions here - people might well replace an old clunker with a small compact for only $3000, but you can't take that for granted. People who don't own a car already might enter the market at this price (adding to pollution and congestion) or those who have efficient cars might replace them with an equally efficient but much cheaper car and and simply pocket the savings, for no marginal gain.
I agree the existing system isn't very economically efficient but ISTM that you're assuming rather than demonstrating the efficiencies that would result from your alternative scheme.
My example was really meant as a thought experiment rather than a credible program, but obviously governments and institutions can formulate such plans with requirements for the replaced vehicle, e.g.
The Federal and State subsidies for EV's drive down the used market value of the cars substantially. I just purchased a 2013 Nissan Leaf and you can get the base models all day long for 10k, or 13k'ish for the high end model. There is probably a little bit of a FUD discount as well since nobody knows how long the batteries will last, or what will happen when you want to change them. Incidentally, my Leaf replaced a Nissan XTerra :)
I always answer 'have you considered how expensive the batteries will be to replace' with have you ever had to pay to have an automatic transmission replaced? Not cheap! A blown head gasket is also not cheap either.
