Evaluation of European electric vehicle support schemes FABIAN KLEy , MARTIN WIETSCHEL AND DAVID DALLINGER
Support schemes currently in place In recent years, most European countries have published politically motivated national development plans for EVs, setting goals for EV driving stock, the expansion of charging infrastructure or production targets. Targets for EVs in vehicle stocks differ by year and are either given as a percentage of the market or in absolute figures. Most countries aim for a certain EV market penetration of the vehicle stock by 2020, ranging from roughly 2 per cent (such as in Germany) up to 10 per cent (e.g. Ireland or Norway).1 In order to reach these targets, various support schemes have been established or are under way. This chapter analyses the actual and planned instruments in the largest 16 European economies. The bandwidth of support schemes ranges from free parking in inner-city areas to public purchasing programmes. In order to structure the applied support schemes, the classification used by Rentz et al. (2001) for environmental instruments was adapted. This scheme groups instruments into four major categories: regulatory, economic, suasive and organizational (see Figure 5.1). Regulatory instruments impose restrictions on automotive manufacturers, e.g. certain emission targets for new vehicles. These restrictions focus on the inputs, the outputs or define certain required production processes. Economic instruments aim to influence the natural market outcome using quantity or price changes. Quantity-oriented instruments define the traded volumes, either by limiting the total output (maximum quantity approach) or by defining the minimal necessary contribution (minimum quantity approach). For EVs, changes can be made on the emission side, e.g. reducing the number of CO2 certificates, or at the car level, e.g. requiring certain quotas from the OEMs. Price changes in the form of tax reductions and subsidies focus on reducing overall vehicle costs (tax reduction on sales price, subsidies, scrapping scheme, reduction of annual vehicle tax); others comparatively penalize ICEs (feebate systems, increased fossil fuel taxes, congestion charges/parking fees). Suasive instruments are used to persuade buyers and manufacturers by providing information (special labelling, campaigns), creating a better administrative landscape (standards) or funding R&D programmes. Lastly, organizational instruments help to reduce hurdles such as developing the necessary infrastructure (build-up of charging infrastructure, high-occupancy lanes) or installing supervisory bodies to control market structures. Besides government
instruments, some initiatives are launched by the private sector, but these are not further investigated in this study. At the moment, the major obstacle to rapid market penetration is seen as the significantly higher initial investment required compared to conventional vehicles (Brooker et al., 2010; Chéron and Zins, 1997; Nemry et al., 2009a). In addition, the lower running costs of electric cars cannot compensate for the higher initial investment and result in a significant difference even on a total cost basis (Delucchi and Lipman, 2001; Thiel et al., 2010). Therefore, this study focuses on economic instruments, assuming that EVs will not be able to capture a significant share of the market unless there is a clear reduction in their total costs. Accordingly, the other instruments in Figure 5.1, such as labelling or free parking are also assumed to have an effect as soon as the total costs are in a similar range. The instruments themselves target different steps in the value chain. While many instruments tend to focus on the manufacturer or the infrastructure side,
price incentives target the end customer directly, such as fleet or private car users. To reach a faster, customer-driven EV adoption, governments are currently discussing which form and volume of price instruments should be applied. Each price instrument mentioned above exists in one or more of the European countries considered. The existing instruments are compared and evaluated regarding their success in speeding up EV market adoption. As depicted in Figure 5.2, the incentives for EVs differ strongly in Europe, with some countries already applying up to three price instruments with a high overall volume and others with no dedicated EV incentive scheme in place. There seems to be no clear favourite instrument, although almost half the countries use a reduced annual vehicle tax and a reduced sales tax. Legislation can address EVs directly, e.g. excluding them from certain taxes or granting special permissions, or by a more global criteria where EVs can profit indirectly from the system in place. This is especially true for the CO2-based annual vehicle tax, which most European countries have already adopted, or the different taxation of fuel and electricity.