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Effectiveness and Heterogeneous Effects of Purchase Grants for Electric Vehicles

Author

Listed:
  • Peter Haan

    (Free University Berlin, German Institute for Economic Research (DIW Berlin) and Berlin School of Economics)

  • Adrián Santonja

    (German Institute for Economic Research (DIW Berlin) and University of Potsdam.)

  • Aleksandar Zaklan

    (University of Rostock)

Abstract

We evaluate German purchase subsidies for battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) using data on new vehicle registrations in Germany during 2015-2022. We account for confounding time trends and interacting EU-level $$\text {CO}_{2}$$ standards using neighboring countries as a control group. We find that 40% of BEV and 25% of PHEV registrations were subsidy-induced. The program had strong distributional effects, with greater uptake in wealthier and greener counties. We estimate implied abatement costs of 870 euro per ton of $$\text {CO}_{2}$$ for BEVs and 2,470 euro for PHEVs, suggesting that policy makers should re-balance support schemes away from PHEVs.

Suggested Citation

  • Peter Haan & Adrián Santonja & Aleksandar Zaklan, 2025. "Effectiveness and Heterogeneous Effects of Purchase Grants for Electric Vehicles," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 88(1), pages 185-223, January.
    • Handle: RePEc:kap:enreec:v:88:y:2025:i:1:d:10.1007_s10640-024-00929-z
    DOI: 10.1007/s10640-024-00929-z
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    More about this item

    Keywords

    Decarbonizing road transport; Electric mobility; Purchase subsidies; Policy effectiveness; Distributional effects of climate policy;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

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