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A new business model for encouraging the adoption of electric vehicles in the absence of policy support

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  • Nian, Victor
  • Hari, M.P.
  • Yuan, Jun

Abstract

The developments in electric vehicles (EVs) are driven by the need for cleaner and more efficient road transport. Despite the benefits of electrifying the transport sector, both EVs and internal combustion engine vehicles add to road congestion. Major cities around the world have thus employed vehicle control measures to rein the growth rate of vehicle populations. In the case of Singapore, heavy taxes are levied onto the purchase price of all vehicles registered and sold in the country making it literally the most expensive city to own a car. EVs are also penalized under the taxation scheme implemented in Singapore. The vehicle taxation schemes and the absence of incentive measures for EVs make Singapore the worst-case market environment for EV adoption. Through a dissection of Singapore’s vehicle control measures, a new business model is proposed for promoting the adoption of EVs under Singapore’s market environment. The proposed business model, inspired by telecommunication companies' mobile phone purchase contract aims at reducing the upfront purchase price of EVs via quasi-discount by vehicle dealers without affecting the transport sector tax revenues. Under a contractual arrangement over usage and electricity tariff managed by vehicle dealers, EV buyers effectively pay back the discounted upfront cost over a fixed period of time. Through an examination over a range of repayment periods and their impacts on costs, we find that the repayment period has virtually no impact on the total cost of vehicle ownership. We further contemplate that the same business model can be applicable to all cities in promoting the adoption of EVs without affecting the existing policy infrastructure.

Suggested Citation

  • Nian, Victor & Hari, M.P. & Yuan, Jun, 2019. "A new business model for encouraging the adoption of electric vehicles in the absence of policy support," Applied Energy, Elsevier, vol. 235(C), pages 1106-1117.
    • Handle: RePEc:eee:appene:v:235:y:2019:i:c:p:1106-1117
    DOI: 10.1016/j.apenergy.2018.10.126
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    Cited by:

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    3. Zhu, Lijing & Wang, Peize & Zhang, Qi, 2019. "Indirect network effects in China’s electric vehicle diffusion under phasing out subsidies," Applied Energy, Elsevier, vol. 251(C), pages 1-1.
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    5. Christian Thiel & Anastasios Tsakalidis & Arnulf Jäger-Waldau, 2020. "Will Electric Vehicles Be Killed (again) or Are They the Next Mobility Killer App?," Energies, MDPI, vol. 13(7), pages 1-10, April.
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    7. Maryam Ghalkhani & Saeid Habibi, 2022. "Review of the Li-Ion Battery, Thermal Management, and AI-Based Battery Management System for EV Application," Energies, MDPI, vol. 16(1), pages 1-16, December.
    8. Oluleye, Gbemi & Gandiglio, Marta & Santarelli, Massimo & Hawkes, Adam, 2021. "Pathways to commercialisation of biogas fuelled solid oxide fuel cells in European wastewater treatment plants," Applied Energy, Elsevier, vol. 282(PA).
    9. Aritra Ghosh, 2020. "Possibilities and Challenges for the Inclusion of the Electric Vehicle (EV) to Reduce the Carbon Footprint in the Transport Sector: A Review," Energies, MDPI, vol. 13(10), pages 1-22, May.
    10. Haider Ali Abbasi & Satirenjit Kaur Johl & Zullina Bt Hussain Shaari & Wajiha Moughal & Muhammad Mazhar & Muhammad Ali Musarat & Waqas Rafiq & Asaad Salam Farooqi & Alexey Borovkov, 2021. "Consumer Motivation by Using Unified Theory of Acceptance and Use of Technology towards Electric Vehicles," Sustainability, MDPI, vol. 13(21), pages 1-22, November.
    11. Qiu, Y.Q. & Tsan Sheng Ng, Adam & Zhou, P., 2022. "Optimizing urban electric vehicle incentive policy mixes in China: Perspective of residential preference heterogeneity," Applied Energy, Elsevier, vol. 313(C).
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    13. Bo Li & Victor Nian & Xunpeng Shi & Hailong Li & Augustin Boey, 2020. "Perspectives of energy transitions in East and Southeast Asia," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 9(1), January.

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