The Effect of Reducing Electric Car Purchase Incentives in the European Union

Abstract

The importance of electric car purchase incentives is starting to be questioned. The objective of this paper is to explore the potential effect of reducing or removing electric car purchase public subsidies in the European Union. To this end, the system dynamics Powertrain Technology Transition Market Agent Model is used. The size and timing of purchase incentives for this technology in European countries are investigated under eight scenarios and sensitivity analysis performed. The simulations suggest that, in the short-run, the electric car market share is higher when the subsidies remain in place. In the medium-run, a purchase subsidy scheme granting €3000 for plug-in hybrid electric cars and €4000 for battery electric cars over the period 2020-2024 yields the fastest electric car market uptake of all the scenarios considered. We conclude that, though the current evolution of the battery price is favorable, electric car purchase subsidies remain an effective policy measure to support electro-mobility in the next years.

The Tax Incentives in the IVTM and “Eco-Friendly Cars”: The Spanish Case

“…However, we must also consider the position of [11] when the authors indicate that "more subsidies do not always involve more sales" or greater acceptance, purchase, and use of the electric vehicle. This last position is also shared in [12] and [13], studies on reducing incentives for the purchase of electric vehicles in the European Union. At a more local level, studies have also been carried out on the effect of incentives via electric vehicle subsidies in Norway and the Netherlands, where different scenarios for the subsidization of electric vehicles and their effects were analyzed [14]; in Denmark, along with the incentives for its purchase [15], some psychological factors were also added.…”

On the economics and the future prospects of battery electric vehicles

“…One of the first comparative analyses of different types of EVs and their role in the future transport system has been conducted by Offer et al 8 The effect of incentives for EVs in the EU has been analyzed by Vilchez and Thiel. 9 They have stressed importance of subsidies for EVs in the mid-term. However, in the majority of countries, BEVs are still more expensive than their ICE pairs.…”

“…The dynamic behavior of EV sales is mostly the result of the changeable supporting policy framework. 9 Although BEV sales are increasing in all countries, there is a significant difference in their market share. It is obvious that Norway is the leader in terms of market share of BEVs, with almost 30%, followed by the Netherlands, with 5.65% market share.…”

“…In Europe, the increase in BEV sales is different from year to year, as well as there are significant differences between countries. The dynamic behavior of EV sales is mostly the result of the changeable supporting policy framework 9 …”

Electric Car Purchase Price as a Factor Determining Consumers’ Choice and their Views on Incentives in Europe

“…the evidence provided by Zarazua de Rubens et al [45]). Some of these factors and policies could be explored with other tools, such as the Powertrain Technology Transition Market Agent Model (PTTMAM; available at: https://ec.europa.eu/jrc/en/pttmam) grounded on the SD method (for a recent application of this model to simulate the effect of purchase incentives, see [46]; for the model documentation, see Harrison et al [47]).…”