IDEAS home Printed from https://ideas.repec.org/a/gam/jjrfmx/v16y2023i6p283-d1155079.html
   My bibliography  Save this article

How Efficient and Socially Sensitive Are Fiscal Incentives for Electric Cars in Europe?

Author

Listed:
  • Krešimir Jurlin

    (Department for International Economic and Political Relations, Institute for Development and International Relations, Lj. F. Vukotinovića 2, 10000 Zagreb, Croatia)

Abstract

The main aim of the study was to analyse the impact of fiscal incentives on the share of electric passenger cars in total sales in 31 European countries in 2021 and 2022. Research methods included an assessment of the active fiscal incentives and passive financial gain on fuel of owning electric over petrol-powered vehicles, calculating the ratio of these variables to the net savings in emissions, and conducting regression analysis of the impact of these two variables, as well as indicators of national wealth and the distribution of population by urbanization, on the share of electric vehicles in total sales. The most important finding of the research is that, in the countries under review, incentives are not well designed. For a saving of 1 ton of CO 2 for business-owned plug-in hybrid electric sports utility vehicles, tax incentives stood at EUR 3400, as compared to only EUR 106 for small battery powered electric vehicles, with very high differences between countries. Applied panel data regressions with random effects indicated that active tax incentives had a rather low impact on the share of battery electric vehicles (BEVs) in total passenger car sales in 31 European countries in 2021 and 2022, while the difference in electricity price over petrol price combined with the share of the population living in houses in towns and suburbs may be a rather strong stimulus for buying BEVs (R 2 = 0.452 for the total sample and R 2 = 0.579 for the reduced sample). However, national wealth between countries, measured by relative final consumption expenditure per capita, had the highest impact on the share of battery electric vehicles in total sales (R 2 = 0.634). The study suggests that fiscal incentives for electricity powered vehicles in Europe were too large, and neither well designed nor directed towards less wealthy households.

Suggested Citation

  • Krešimir Jurlin, 2023. "How Efficient and Socially Sensitive Are Fiscal Incentives for Electric Cars in Europe?," JRFM, MDPI, vol. 16(6), pages 1-19, May.
    • Handle: RePEc:gam:jjrfmx:v:16:y:2023:i:6:p:283-:d:1155079
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/1911-8074/16/6/283/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/1911-8074/16/6/283/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Santos, Georgina & Rembalski, Sebastian, 2021. "Do electric vehicles need subsidies in the UK?," Energy Policy, Elsevier, vol. 149(C).
    2. Breetz, Hanna L. & Salon, Deborah, 2018. "Do electric vehicles need subsidies? Ownership costs for conventional, hybrid, and electric vehicles in 14 U.S. cities," Energy Policy, Elsevier, vol. 120(C), pages 238-249.
    3. Lévay, Petra Zsuzsa & Drossinos, Yannis & Thiel, Christian, 2017. "The effect of fiscal incentives on market penetration of electric vehicles: A pairwise comparison of total cost of ownership," Energy Policy, Elsevier, vol. 105(C), pages 524-533.
    4. Jia Yao & Siqin Xiong & Xiaoming Ma, 2020. "Comparative Analysis of National Policies for Electric Vehicle Uptake Using Econometric Models," Energies, MDPI, vol. 13(14), pages 1-18, July.
    5. Zhao, Xin & Doering, Otto C. & Tyner, Wallace E., 2015. "The economic competitiveness and emissions of battery electric vehicles in China," Applied Energy, Elsevier, vol. 156(C), pages 666-675.
    Full references (including those not matched with items on IDEAS)

    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. Scorrano, Mariangela & Danielis, Romeo & Giansoldati, Marco, 2020. "Dissecting the total cost of ownership of fully electric cars in Italy: The impact of annual distance travelled, home charging and urban driving," Research in Transportation Economics, Elsevier, vol. 80(C).
    2. Mariangela Scorrano & Terje Andreas Mathisen & Marco Giansoldati, 2019. "Is electric car uptake driven by monetary factors? A total cost of ownership comparison between Norway and Italy," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 0(2), pages 99-132.
    3. Santos, Georgina & Rembalski, Sebastian, 2021. "Do electric vehicles need subsidies in the UK?," Energy Policy, Elsevier, vol. 149(C).
    4. Nenming Wang & Guwen Tang, 2022. "A Review on Environmental Efficiency Evaluation of New Energy Vehicles Using Life Cycle Analysis," Sustainability, MDPI, vol. 14(6), pages 1-35, March.
    5. Schwab, Julia & Sölch, Christian & Zöttl, Gregor, 2022. "Electric Vehicle Cost in 2035: The impact of market penetration and charging strategies," Energy Economics, Elsevier, vol. 114(C).
    6. Goel, Pooja & Kumar, Aalok & Parayitam, Satyanarayana & Luthra, Sunil, 2023. "Understanding transport users' preferences for adopting electric vehicle based mobility for sustainable city: A moderated moderated-mediation model," Journal of Transport Geography, Elsevier, vol. 106(C).
    7. Srivastava, Abhishek & Kumar, Rajeev Ranjan & Chakraborty, Abhishek & Mateen, Arqum & Narayanamurthy, Gopalakrishnan, 2022. "Design and selection of government policies for electric vehicles adoption: A global perspective," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 161(C).
    8. Amela Ajanovic & Reinhard Haas, 2020. "On the economics and the future prospects of battery electric vehicles," Greenhouse Gases: Science and Technology, Blackwell Publishing, vol. 10(6), pages 1151-1164, December.
    9. Martins, H. & Henriques, C.O. & Figueira, J.R. & Silva, C.S. & Costa, A.S., 2023. "Assessing policy interventions to stimulate the transition of electric vehicle technology in the European Union," Socio-Economic Planning Sciences, Elsevier, vol. 87(PB).
    10. Maxwell Woody & Shawn A. Adderly & Rushabh Bohra & Gregory A. Keoleian, 2024. "Electric and gasoline vehicle total cost of ownership across US cities," Journal of Industrial Ecology, Yale University, vol. 28(2), pages 194-215, April.
    11. 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.
    12. Schloter, Lukas, 2022. "Empirical analysis of the depreciation of electric vehicles compared to gasoline vehicles," Transport Policy, Elsevier, vol. 126(C), pages 268-279.
    13. Hao, Xu & Lin, Zhenhong & Wang, Hewu & Ou, Shiqi & Ouyang, Minggao, 2020. "Range cost-effectiveness of plug-in electric vehicle for heterogeneous consumers: An expanded total ownership cost approach," Applied Energy, Elsevier, vol. 275(C).
    14. Malima, Gabriel Clement & Moyo, Francis, 2023. "Are electric vehicles economically viable in sub-Saharan Africa? The total cost of ownership of internal combustion engine and electric vehicles in Tanzania," Transport Policy, Elsevier, vol. 141(C), pages 14-26.
    15. Liu, Zhe & Song, Juhyun & Kubal, Joseph & Susarla, Naresh & Knehr, Kevin W. & Islam, Ehsan & Nelson, Paul & Ahmed, Shabbir, 2021. "Comparing total cost of ownership of battery electric vehicles and internal combustion engine vehicles," Energy Policy, Elsevier, vol. 158(C).
    16. 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).
    17. Waranan Tantiwat & Christopher Gan & Wei Yang, 2021. "The Estimation of the Willingness to Pay for Air-Quality Improvement in Thailand," Sustainability, MDPI, vol. 13(21), pages 1-23, November.
    18. Shangfeng Han & Baosheng Zhang & Xiaoyang Sun & Song Han & Mikael Höök, 2017. "China’s Energy Transition in the Power and Transport Sectors from a Substitution Perspective," Energies, MDPI, vol. 10(5), pages 1-25, April.
    19. Liu, Changyu & Song, Yadong & Wang, Wei & Shi, Xunpeng, 2023. "The governance of manufacturers’ greenwashing behaviors: A tripartite evolutionary game analysis of electric vehicles," Applied Energy, Elsevier, vol. 333(C).
    20. Iogansen, Xiatian & Wang, Kailai & Bunch, David & Matson, Grant & Circella, Giovanni, 2023. "Deciphering the factors associated with adoption of alternative fuel vehicles in California: An investigation of latent attitudes, socio-demographics, and neighborhood effects," Transportation Research Part A: Policy and Practice, Elsevier, vol. 168(C).

    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:gam:jjrfmx:v:16:y:2023:i:6:p:283-:d:1155079. 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: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    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.