IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v123y2018icp53-63.html
   My bibliography  Save this article

The economic and environmental impacts of tax incentives for battery electric vehicles in Europe

Author

Listed:
  • Yan, Shiyu

Abstract

Vehicle taxes and purchase subsidies have been used frequently to provide incentives for electric vehicle adoption. To examine the role of the incentives in reducing total ownership costs of battery electric vehicles (BEVs), increasing BEV sales, and obtaining environmental benefits from switching to BEVs, we carry out cost–benefit analyses and ordinary least square regressions. We study 10 pairs of BEVs and their internal combustion engine vehicle (ICEV) counterparts across 28 European countries from 2012 to 2014. The results show that, under the incentive schemes, the costs reduced by switching to large BEVs from their ICEV counterparts are larger than the costs reduced by switching to small BEVs from their ICEV counterparts. Owing to the cost-reduction effect, a 10% increase of the total tax incentive leads to an increase in the sales share of BEVs by around 3% on average. Finally, we find that it is still costly to use the tax incentives to reduce CO2 emissions and other environmental externalities through transport electrification, despite recent improvements in greening electricity generation and lowering battery costs.

Suggested Citation

  • Yan, Shiyu, 2018. "The economic and environmental impacts of tax incentives for battery electric vehicles in Europe," Energy Policy, Elsevier, vol. 123(C), pages 53-63.
    • Handle: RePEc:eee:enepol:v:123:y:2018:i:c:p:53-63
    DOI: 10.1016/j.enpol.2018.08.032
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421518305597
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2018.08.032?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jenn, Alan & Azevedo, Inês L. & Ferreira, Pedro, 2013. "The impact of federal incentives on the adoption of hybrid electric vehicles in the United States," Energy Economics, Elsevier, vol. 40(C), pages 936-942.
    2. Axsen, Jonn & Kurani, Kenneth S., 2013. "Hybrid, plug-in hybrid, or electric—What do car buyers want?," Energy Policy, Elsevier, vol. 61(C), pages 532-543.
    3. Philippe Crist, 2012. "Electric Vehicles Revisited: Costs, Subsidies and Prospects," International Transport Forum Discussion Papers 2012/3, OECD Publishing.
    4. Arie Beresteanu & Shanjun Li, 2011. "Gasoline Prices, Government Support, And The Demand For Hybrid Vehicles In The United States," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 52(1), pages 161-182, February.
    5. Javid, Roxana J. & Nejat, Ali, 2017. "A comprehensive model of regional electric vehicle adoption and penetration," Transport Policy, Elsevier, vol. 54(C), pages 30-42.
    6. Gallagher, Kelly Sims & Muehlegger, Erich, 2011. "Giving green to get green? Incentives and consumer adoption of hybrid vehicle technology," Journal of Environmental Economics and Management, Elsevier, vol. 61(1), pages 1-15, January.
    7. Diamond, David, 2009. "The impact of government incentives for hybrid-electric vehicles: Evidence from US states," Energy Policy, Elsevier, vol. 37(3), pages 972-983, March.
    8. Yan, Shiyu & Eskeland, Gunnar S., 2016. "Greening the Vehicle Fleet: Evidence from Norway’s CO2 Differentiated Registration Tax," Discussion Papers 2016/14, Norwegian School of Economics, Department of Business and Management Science.
    9. Lee, Yongseung & Kim, Chongman & Shin, Juneseuk, 2016. "A hybrid electric vehicle market penetration model to identify the best policy mix: A consumer ownership cycle approach," Applied Energy, Elsevier, vol. 184(C), pages 438-449.
    10. Kazimi, Camilla, 1997. "Evaluating the Environmental Impact of Alternative-Fuel Vehicles," Journal of Environmental Economics and Management, Elsevier, vol. 33(2), pages 163-185, June.
    11. Brownstone, David & Bunch, David S. & Train, Kenneth, 2000. "Joint mixed logit models of stated and revealed preferences for alternative-fuel vehicles," Transportation Research Part B: Methodological, Elsevier, vol. 34(5), pages 315-338, June.
    12. Troy R. Hawkins & Bhawna Singh & Guillaume Majeau‐Bettez & Anders Hammer Strømman, 2013. "Comparative Environmental Life Cycle Assessment of Conventional and Electric Vehicles," Journal of Industrial Ecology, Yale University, vol. 17(1), pages 53-64, February.
    13. Chandra, Ambarish & Gulati, Sumeet & Kandlikar, Milind, 2010. "Green drivers or free riders? An analysis of tax rebates for hybrid vehicles," Journal of Environmental Economics and Management, Elsevier, vol. 60(2), pages 78-93, September.
    14. Bubeck, Steffen & Tomaschek, Jan & Fahl, Ulrich, 2016. "Perspectives of electric mobility: Total cost of ownership of electric vehicles in Germany," Transport Policy, Elsevier, vol. 50(C), pages 63-77.
    15. Eppstein, Margaret J. & Grover, David K. & Marshall, Jeffrey S. & Rizzo, Donna M., 2011. "An agent-based model to study market penetration of plug-in hybrid electric vehicles," Energy Policy, Elsevier, vol. 39(6), pages 3789-3802, June.
    16. Axsen, Jonn & Mountain, Dean C. & Jaccard, Mark, 2009. "Combining stated and revealed choice research to simulate the neighbor effect: The case of hybrid-electric vehicles," Institute of Transportation Studies, Working Paper Series qt02n9j6cv, Institute of Transportation Studies, UC Davis.
    17. Hess, Alan C, 1977. "A Comparison of Automobile Demand Equations," Econometrica, Econometric Society, vol. 45(3), pages 683-701, April.
    18. Mau, Paulus & Eyzaguirre, Jimena & Jaccard, Mark & Collins-Dodd, Colleen & Tiedemann, Kenneth, 2008. "The 'neighbor effect': Simulating dynamics in consumer preferences for new vehicle technologies," Ecological Economics, Elsevier, vol. 68(1-2), pages 504-516, December.
    19. Doucette, Reed T. & McCulloch, Malcolm D., 2011. "Modeling the CO2 emissions from battery electric vehicles given the power generation mixes of different countries," Energy Policy, Elsevier, vol. 39(2), pages 803-811, February.
    20. de Haan, Peter & Mueller, Michel G. & Scholz, Roland W., 2009. "How much do incentives affect car purchase? Agent-based microsimulation of consumer choice of new cars--Part II: Forecasting effects of feebates based on energy-efficiency," Energy Policy, Elsevier, vol. 37(3), pages 1083-1094, March.
    21. Sierzchula, William & Bakker, Sjoerd & Maat, Kees & van Wee, Bert, 2014. "The influence of financial incentives and other socio-economic factors on electric vehicle adoption," Energy Policy, Elsevier, vol. 68(C), pages 183-194.
    22. Brownston, David & Bunch, David S. & Train, Kenneth, 1999. "Joint mixed logit models of stated and revealed preferences for alternative-fuel vehicles," University of California Transportation Center, Working Papers qt7rf7s3nx, University of California Transportation Center.
    23. Axsen, Jonn & Mountain, Dean C. & Jaccard, Mark, 2009. "Combining stated and revealed choice research to simulate the neighbor effect: The case of hybrid-electric vehicles," Resource and Energy Economics, Elsevier, vol. 31(3), pages 221-238, August.
    24. Delucchi, Mark & Lipman, Timothy, 2001. "An Analysis of the Retail and Lifecycle Cost of Battery-Powered Electric Vehicles," Institute of Transportation Studies, Working Paper Series qt50q9060k, Institute of Transportation Studies, UC Davis.
    25. DeShazo, J.R. & Sheldon, Tamara L. & Carson, Richard T., 2017. "Designing policy incentives for cleaner technologies: Lessons from California's plug-in electric vehicle rebate program," Journal of Environmental Economics and Management, Elsevier, vol. 84(C), pages 18-43.
    26. Wu, Ye & Yang, Zhengdong & Lin, Bohong & Liu, Huan & Wang, Renjie & Zhou, Boya & Hao, Jiming, 2012. "Energy consumption and CO2 emission impacts of vehicle electrification in three developed regions of China," Energy Policy, Elsevier, vol. 48(C), pages 537-550.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Zeng, Isabella Yunfei & Du, Chenmu & Xiong, Jianliang & Gong, Ting & Wu, Tian, 2024. "Tax policy or carbon emission quota: A theory on traditional ICEV transportation regulation," Energy, Elsevier, vol. 289(C).
    2. Kowalska-Pyzalska, Anna & Kott, Joanna & Kott, Marek, 2020. "Why Polish market of alternative fuel vehicles (AFVs) is the smallest in Europe? SWOT analysis of opportunities and threats," Renewable and Sustainable Energy Reviews, Elsevier, vol. 133(C).
    3. Zhongqi Deng & Peng Tian, 2020. "Are China's subsidies for electric vehicles effective?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 41(4), pages 475-489, June.
    4. Qi, Yu & Zhang, Hongxuan & Shao, Shuai, 2024. "Valuing high temperature's fiscal costs: Evidence from China," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 134-152.
    5. Kristián Čulík & Vladimíra Štefancová & Karol Hrudkay & Ján Morgoš, 2021. "Interior Heating and Its Influence on Electric Bus Consumption," Energies, MDPI, vol. 14(24), pages 1-19, December.
    6. Caulfield, Brian & Furszyfer, Dylan & Stefaniec, Agnieszka & Foley, Aoife, 2022. "Measuring the equity impacts of government subsidies for electric vehicles," Energy, Elsevier, vol. 248(C).
    7. Johannes Mauritzen, 2023. "With great power (prices) comes great tail pipe emissions? \\ A natural experiment of electricity prices and electric car adoption," Papers 2304.01709, arXiv.org.
    8. Ji, Qing & Wang, Chunan & Fan, Ying, 2022. "Environmental and welfare effects of vehicle purchase tax: Evidence from China," Energy Economics, Elsevier, vol. 115(C).
    9. Majumder, Suman & De, Krishnarti & Kumar, Praveen & Sengupta, Bodhisattva & Biswas, Pabitra Kumar, 2021. "Techno-commercial analysis of sustainable E-bus-based public transit systems: An Indian case study," Renewable and Sustainable Energy Reviews, Elsevier, vol. 144(C).
    10. Sofia, Daniele & Gioiella, Filomena & Lotrecchiano, Nicoletta & Giuliano, Aristide, 2020. "Cost-benefit analysis to support decarbonization scenario for 2030: A case study in Italy," Energy Policy, Elsevier, vol. 137(C).
    11. Burra, Lavan T. & Sommer, Stephan & Vance, Colin, 2023. "Free-Ridership in Subsidies for Company- and Private Electric Vehicles," Ruhr Economic Papers 1015, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    12. Zhuge, Chengxiang & Wei, Binru & Shao, Chunfu & Shan, Yuli & Dong, Chunjiao, 2020. "The role of the license plate lottery policy in the adoption of Electric Vehicles: A case study of Beijing," Energy Policy, Elsevier, vol. 139(C).
    13. Hu, Xu & Yang, Zhaojun & Sun, Jun & Zhang, Yali, 2021. "Exempting battery electric vehicles from traffic restrictions: Impacts on market and environment under Pigovian taxation," Transportation Research Part A: Policy and Practice, Elsevier, vol. 154(C), pages 53-91.
    14. Balali, Yasaman & Stegen, Sascha, 2021. "Review of energy storage systems for vehicles based on technology, environmental impacts, and costs," Renewable and Sustainable Energy Reviews, Elsevier, vol. 135(C).
    15. Cheng, Xiu & Wu, Fan & Long, Ruyin & Li, Wenbo, 2021. "Uncovering the effects of learning capacity and social interaction on the experienced utility of low-carbon lifestyle guiding policies," Energy Policy, Elsevier, vol. 154(C).
    16. Metais, M.O. & Jouini, O. & Perez, Y. & Berrada, J. & Suomalainen, E., 2022. "Too much or not enough? Planning electric vehicle charging infrastructure: A review of modeling options," Renewable and Sustainable Energy Reviews, Elsevier, vol. 153(C).
    17. Jacobus Nel & Roula Inglesi-Lotz, 2022. "Electric Vehicles Market and Policy Conditions: Identifying South African Policy ``Potholes"," Working Papers 202257, University of Pretoria, Department of Economics.
    18. Thanh Tung Ha & Thanh Chuong Nguyen & Sy Sua Tu & Minh Hieu Nguyen, 2023. "Investigation of Influential Factors of Intention to Adopt Electric Vehicles for Motorcyclists in Vietnam," Sustainability, MDPI, vol. 15(11), pages 1-16, May.
    19. Austmann, Leonhard M., 2021. "Drivers of the electric vehicle market: A systematic literature review of empirical studies," Finance Research Letters, Elsevier, vol. 41(C).
    20. Hensher, David A. & Wei, Edward & Liu, Wen, 2021. "Battery electric vehicles in cities: Measurement of some impacts on traffic and government revenue recovery," Journal of Transport Geography, Elsevier, vol. 94(C).
    21. Di Foggia, Giacomo, 2021. "Energy-Efficient Products and Competitiveness in the Manufacturing Sector," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 7(1).
    22. Sun, Chuanwang & Zhan, Yanhong & Du, Gang, 2020. "Can value-added tax incentives of new energy industry increase firm's profitability? Evidence from financial data of China's listed companies," Energy Economics, Elsevier, vol. 86(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Egnér, Filippa & Trosvik, Lina, 2018. "Electric vehicle adoption in Sweden and the impact of local policy instruments," Energy Policy, Elsevier, vol. 121(C), pages 584-596.
    2. Makena Coffman & Paul Bernstein & Sherilyn Wee, 2017. "Electric vehicles revisited: a review of factors that affect adoption," Transport Reviews, Taylor & Francis Journals, vol. 37(1), pages 79-93, January.
    3. Soares, N. & Martins, A.G. & Carvalho, A.L. & Caldeira, C. & Du, C. & Castanheira, É. & Rodrigues, E. & Oliveira, G. & Pereira, G.I. & Bastos, J. & Ferreira, J.P. & Ribeiro, L.A. & Figueiredo, N.C. & , 2018. "The challenging paradigm of interrelated energy systems towards a more sustainable future," Renewable and Sustainable Energy Reviews, Elsevier, vol. 95(C), pages 171-193.
    4. DeShazo, J.R. & Sheldon, Tamara L. & Carson, Richard T., 2017. "Designing policy incentives for cleaner technologies: Lessons from California's plug-in electric vehicle rebate program," Journal of Environmental Economics and Management, Elsevier, vol. 84(C), pages 18-43.
    5. Azarafshar, Roshanak & Vermeulen, Wessel N., 2020. "Electric vehicle incentive policies in Canadian provinces," Energy Economics, Elsevier, vol. 91(C).
    6. Wee, Sherilyn & Coffman, Makena & Allen, Scott, 2020. "EV driver characteristics: Evidence from Hawaii," Transport Policy, Elsevier, vol. 87(C), pages 33-40.
    7. Alali, Layla & Niesten, Eva & Gagliardi, Dimitri, 2022. "The impact of UK financial incentives on the adoption of electric fleets: The moderation effect of GDP change," Transportation Research Part A: Policy and Practice, Elsevier, vol. 161(C), pages 200-220.
    8. Chakraborty, Debapriya & Bunch, David S. & Brownstone, David & Xu, Bingzheng & Tal, Gil, 2022. "Plug-in electric vehicle diffusion in California: Role of exposure to new technology at home and work," Transportation Research Part A: Policy and Practice, Elsevier, vol. 156(C), pages 133-151.
    9. Sun, Shanxia & Delgado, Michael & Khanna, Neha, 2017. "Hybrid Vehicles and Household Driving Behavior: Implications for Miles Traveled and Gasoline Consumption," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258502, Agricultural and Applied Economics Association.
    10. Wolinetz, Michael & Axsen, Jonn, 2017. "How policy can build the plug-in electric vehicle market: Insights from the REspondent-based Preference And Constraints (REPAC) model," Technological Forecasting and Social Change, Elsevier, vol. 117(C), pages 238-250.
    11. Chandra, Minal, 2022. "Investigating the impact of policies, socio-demography and national commitments on electric-vehicle demand: Cross-country study," Journal of Transport Geography, Elsevier, vol. 103(C).
    12. Daziano, Ricardo A. & Chiew, Esther, 2012. "Electric vehicles rising from the dead: Data needs for forecasting consumer response toward sustainable energy sources in personal transportation," Energy Policy, Elsevier, vol. 51(C), pages 876-894.
    13. Sun, Shanxia & Delgado, Michael S. & Khanna, Neha, 2019. "Hybrid vehicles, social signals and household driving: Implications for miles traveled and gasoline consumption," Energy Economics, Elsevier, vol. 84(C).
    14. Requia, Weeberb J. & Adams, Matthew D. & Arain, Altaf & Koutrakis, Petros & Ferguson, Mark, 2017. "Carbon dioxide emissions of plug-in hybrid electric vehicles: A life-cycle analysis in eight Canadian cities," Renewable and Sustainable Energy Reviews, Elsevier, vol. 78(C), pages 1390-1396.
    15. Garth Heutel & Erich Muehlegger, 2015. "Consumer Learning and Hybrid Vehicle Adoption," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 62(1), pages 125-161, September.
    16. Li, Xiaomin & Chen, Pu & Wang, Xingwu, 2017. "Impacts of renewables and socioeconomic factors on electric vehicle demands – Panel data studies across 14 countries," Energy Policy, Elsevier, vol. 109(C), pages 473-478.
    17. Mekky, Maher F. & Collins, Alan R., 2024. "The Impact of state policies on electric vehicle adoption -A panel data analysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 191(C).
    18. Lee, Yongseung & Kim, Chongman & Shin, Juneseuk, 2016. "A hybrid electric vehicle market penetration model to identify the best policy mix: A consumer ownership cycle approach," Applied Energy, Elsevier, vol. 184(C), pages 438-449.
    19. Münzel, Christiane & Plötz, Patrick & Sprei, Frances & Gnann, Till, 2019. "How large is the effect of financial incentives on electric vehicle sales? – A global review and European analysis," Energy Economics, Elsevier, vol. 84(C).
    20. Oliveira, Gabriela D. & Roth, Richard & Dias, Luis C., 2019. "Diffusion of alternative fuel vehicles considering dynamic preferences," Technological Forecasting and Social Change, Elsevier, vol. 147(C), pages 83-99.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:123:y:2018:i:c:p:53-63. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.