Bill Clinton says 'Cash for Electric Vehicles': He's right.

The former president dropped this wisdom at the National Clean Energy Summit in Las Vegas yesterday, according to the Earth2Tech green blog. His logic? The "Cash for Clunkers" program worked so well that perhaps we should be spending our money on a more revolutionary solution, namely, the wholesale conversion of America to an electric car ecosystem.

It would be a bold move, no doubt, but a far smarter and more effective way to secure our energy future and to boost the development and scale of this still fledgling part of the U.S. economy. Besides, many automotive industry analysts believed cash for clunkers was really a waste of money, giving billions in cash to people who would probably have bought new or used replacements cars for their aged chariots anyway.

In fact, if Uncle Sam offered the same $4,500 deal to clunker-owners who wanted to upgrade to an electric vehicle, the existing tax breaks layered on top of the cash would give the program even more bang for the buck. Tax breaks are keyed to battery capacity and top out at $7,500 per vehicle for a full electric drive train.

With the clunker subsidy and tax breaks, the out-of-pocket cost of an EV would decline from the $35,0000 to $40,000 quote price range into the $25,000 range. That's low enough to get very close to mass adoption, which should be the true goal. "If you added in that clunker subsidy, you'd certainly get a lot more people to look at the electric vehicles at the dealers," is what John O'Dell, the senior editor of Edmunds.com's Green Car Advisor, told me today.

That may be a dramatic understatement. Consider that hybrid gas-electric cars have gone from a standing start to grab roughly 3.5 percent of the total U.S. new car market as of July 2009, according to HybridCars.com. Most of those hybrids had lesser tax breaks than the soon-to-be-released full EVs (Nissan Leaf) or the higher-end hybrids (Chevy Volt) so net cost was considerably higher. Add to this that many of the buyers were probably not trading in clunkers to get their hybrids and its clear there is already nascent and willing demand for highly efficient vehicles.

Based on these numbers, it's not inconceivable that EVs and big battery hybrids could snag two to four percent of the U.S. market within a matter of years. Such gains would push the economies of scale high enough to make production of EVs sustainable even without heavy government subsidies, which is the ultimate goal, anyway. Not to mention the fact that putting more EVs on the road reduces U.S. exposure to unstable foreign regimes and wildly fluctuating global oil markets.

So Big Bill, for all his loopiness at times, is really onto something here. President Obama should trade in the clunkers program, which primarily pushes new car purchases of legacy gas vehicles, and redirect those monies towards really changing the future.

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