Design and selection of government policies for electric vehicles adoption: A global perspective

Srivastava, Abhishek, Kumar, Rajeev Ranjan, Chakraborty, Abhishek, Mateen, Arqum and Narayanamurthy, Gopalakrishnan ORCID: 0000-0002-3119-5248 (2022) Design and selection of government policies for electric vehicles adoption: A global perspective. TRANSPORTATION RESEARCH PART E-LOGISTICS AND TRANSPORTATION REVIEW, 161. p. 102726.

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Abstract

Regardless of increased attention in electric vehicles (EV) market expansion, the actual penetration of EVs remains low globally. Almost all major OEMs have announced investment plans to ensure that EVs constitute a major, if not complete, chunk of their product portfolios. On their part, governments worldwide (e.g., China, Poland, India, USA, etc.) have used various policy measures to facilitate EV adoption. In this paper, we study how incentives offered in terms of subsidy and differential taxation schemes could increase the market penetration of EVs. We analyze different models under uniform and differential taxation policies with and without subsidy, using a non-cooperative game-theoretic approach. Our analysis reveals that the government can follow any of the three tax-subsidy mixes that could maximize social welfare, i.e., differential taxation with and without subsidy, and identical tax with a subsidy. Surprisingly, the manufacturer's profit, the government's income, and consumer surplus for these three models are also the same and are better than the other two models depending on the consumer's green sensitivity, i.e., for higher green sensitivity, these three models can provide a win–win outcome. From an environmental perspective, levying tax on gasoline vehicles (GV) without subsidy to the manufacturer minimizes the overall environmental impact. In contrast, levying the same tax for both types of vehicles without subsidy to the manufacturer generates the maximum overall environmental impact. Furthermore, an increase in the unit environmental impact of vehicles attracts higher taxes. We portray that the increase in the cost-difference between EV and GV increases GV demand and is detrimental for EV acceptance. In addition, multifaceted insights are drawn for manufacturers and policymakers to envisage electric mobility. We extend our models and show that our main results hold under the implementation of mandate on EV manufacturers under subsidy and non-subsidy model, and inclusion of hassle cost for consumers due to lack of infrastructure in terms of charging facilities and maintenance.

Item Type:	Article
Uncontrolled Keywords:	Electric vehicles, Taxation, Subsidy, Social welfare, Environmental impact
Divisions:	Faculty of Humanities and Social Sciences > School of Management
Depositing User:	Symplectic Admin
Date Deposited:	03 May 2022 07:43
Last Modified:	03 May 2023 01:30
DOI:	10.1016/j.tre.2022.102726
Related URLs:	Author Publisher
URI:	https://livrepository.liverpool.ac.uk/id/eprint/3154188