Green Car Incentives: Industry success in four national EV markets led by incentive schemes
While there are undoubtedly a number of factors impacting the varying rate of uptake of electric and hybrid vehicles (EVs) across the globe, government funded incentive schemes appear to play a key role. This case study investigates the success of some of these schemes in some of the major national markets, in an attempt to establish which facets are central to an effective incentive program.
Analyzes different incentive schemes for increasing electric vehicle usage
Analyzes industry growth for some of the major national markets
Provides MIT research utilizing some of the main pros & cons behind its approach to government subsidies
Reasons To Buy
What are the main benefits of electric vehicles?
Why is the industry growing at such a fast rate?
What sort of incentives do markets use to push EV usage?
Are financial incentives the only factor behind the increase in EVs?
With some countries worldwide, regulating incentives on a national scale is not quite viable being that many must propose regulation and incentive dependent on the countries region or state. Examples such as China and the US have different laws applicable to different regions.
Norway has become a global front runner in the field of electro mobility and the Battery Electric Vehicle (BEV) market share is far higher than any other country. The apparent success of incentive policies for increasing sales of BEVs makes Norway an interesting case to learn from for other regions aiming to move in the same direction. Also, the diversity of incentives allows for discerning which strategies are likely to be the most successful in order to achieve higher market shares of any type of EVs.
Georgia Perakins of the MIT Sloan School of Management has developed a model that will help government decision makers set optimal subsidies to encourage the adoption of a green technology, taking into account the probable responses of suppliers and buyers of the new technology (in this case, EVs).
- UK Fast industry growth result of lower costs and government funded schemes
- Carbon saving benefits over conventional vehicles
- Huge industry growth over recent years leads to an astonishing forecast ahead for the UK
- EVs market share over new purchased vehicles is growing fast
- Even with UK government funded incentives, it still makes an EV more expensive than its substitute
- Incentive not sole factor for purchase as UK falls behind on EV pledge
- Norway has become global front runner in ev market
- Norway's growth is strongly down to BEV sales
- Role of incentive has had large impact on EV uptake in Norway
- The incentive itself is the most generous of its kind
- Geographical size, population and electricity production in Norway is also a strong reason behind the success
- Norway is tremendously small compared to other major EV markets
- A low population increases the EV market share in new car sales
- Overproduction in hydroelectric electricity means Norwegians pay less for electricity
- Regional incentives have worked better in larger countries
- Triple digit growth for China over recent years
- Incentives in different regions to be a key explanation to its growth
- USA's regional benefits often come down to tax situation
- Car and battery manufacturers are challenged with further advancement obligation
- MIT research has found a key for policy makers
- Critical to the optimization process is prediction of consumer response
- Modelling consumer demand
- MIT model right to some extent
- Incentives are the main contributor to demand increases, but not the only factor
- Further Reading
- Ask the analyst
- About MarketLine
- List of Tables
- Table 1: Examples of purchase costs with and without exemption from vehicle registration tax and value added tax in 2014. Approximate figures in $
- Table 2: Incentives of local governments to market models manufactured by BYD (in thousands)
- List of Figures
- Figure 1: EV: Key benefits and hurdles
- Figure 2: Hybrid & Electric car sales in the UK
- Figure 3: Sales and Market Share of ULEVs in the UK over time
- Figure 4: Volume of sales for BEV/PHEV/HEV vehicles in Norway (2008-2015)
- Figure 5: Financial incentives and EV market share by country in 2014
- Figure 6: Incentives for promoting Battery Electric Vehicle (BEV) adoption in Norway
- Figure 7: China EV industry value in ($m)
- Figure 8: Subsidies for green technology adoption: Modeling market dynamics
- Figure 9: EVs sales before and after the withdrawal of incentives (Netherlands)