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Getting to India's electric vehicle targets cost-effectively: To subsidize or not, and how?

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  • Shrimali, Gireesh

Abstract

In the context of India's ambitious electric vehicle targets, we examine two related questions. First, based on lifetime costs, which electric vehicles need to be subsidized? Second, based on lifetime subsidies, which subsidy option would be the most cost-effective? We find that electric two-wheelers, three-wheelers, four-wheeler-taxis, and buses do not need to be subsidized given that they are already cost competitive with comparable vehicles using internal combustion engines. We also find that personal cars and long-haul trucks need to be subsidized significantly, by one-third to one-half of the upfront costs. Finally, we find that an upfront subsidy is the most cost-effective subsidy option, followed by a per kilometer subsidy, which is effectively 19–31% costlier, whereas financing subsidies are found to be the least cost effective. Our results suggest that a cost-effective policy in India would be to subsidize only personal cars and long-haul trucks, while using the upfront subsidies.

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  • Shrimali, Gireesh, 2021. "Getting to India's electric vehicle targets cost-effectively: To subsidize or not, and how?," Energy Policy, Elsevier, vol. 156(C).
    • Handle: RePEc:eee:enepol:v:156:y:2021:i:c:s0301421521002548
    DOI: 10.1016/j.enpol.2021.112384
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    2. Hossain, M.S. & Fang, Yan Ru & Ma, Teng & Huang, Chen & Peng, Wei & Urpelainen, Johannes & Hebbale, Chetan & Dai, Hancheng, 2023. "Narrowing fossil fuel consumption in the Indian road transport sector towards reaching carbon neutrality," Energy Policy, Elsevier, vol. 172(C).
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    4. Wang, Zhuowei & Yu, Jiangbo (Gabe) & Chen, Anthony & Fu, Xiaowen, 2024. "Subsidy policies towards zero-emission bus fleets: A systematic technical-economic analysis," Transport Policy, Elsevier, vol. 150(C), pages 1-13.
    5. Munshi, Talat & Dhar, Subash & Painuly, Jyoti, 2022. "Understanding barriers to electric vehicle adoption for personal mobility: A case study of middle income in-service residents in Hyderabad city, India," Energy Policy, Elsevier, vol. 167(C).

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