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The effectiveness of financial purchase incentives for battery electric vehicles – A review of the evidence


  • Hardman, Scott
  • Chandan, Amrit
  • Tal, Gil
  • Turrentine, Tom


Plug-in electric vehicles (PEVs) are in an early stage of market entry. Nevertheless, there are now more than 2 million PEVs in use globally. PEVs result in lower energy consumption, greenhouse gas emissions, and urban air pollution compared to internal combustion engine vehicles (ICEVs). For these reasons policy makers are eager to see PEVs purchased by consumers in larger numbers. Many policy makers have introduced financial purchase incentives to nurture the growth of PEV markets. These incentives range in value from around US$2500 to US$20,000 per vehicle. There are several studies that either directly consider the effectiveness of purchase incentives or at least include analysis of these incentives as part of a larger study. The results of these studies have not been assimilated in one place to gain an understanding of whether purchase incentives are effective in promoting PEV sales. This means that how effective these incentives are in increasing PEV sales is not well understood. This paper systematically reviews the literature with the aim of understanding purchase incentives effectivity in increasing PEV sales. In doing so this paper builds a deeper understanding of purchase incentives. This in-depth understanding allows recommendations to be made on how to design purchase incentives so that they are most effective in promoting PEV market growth. Incentives should be applied when someone is buying a PEV, not afterwards. Incentives should promote BEVs and PHEV with high electric ranges more than PHEVs with low electric ranges. VAT and purchase tax exemptions for PEVs are most effective. Incentives should not be available on high-end BEVs, education and awareness campaigns should promote incentives to consumers. Finally, the premature removal of incentives could negatively affect PEVs therefore incentives should be designed with longevity in mind.

Suggested Citation

  • Hardman, Scott & Chandan, Amrit & Tal, Gil & Turrentine, Tom, 2017. "The effectiveness of financial purchase incentives for battery electric vehicles – A review of the evidence," Renewable and Sustainable Energy Reviews, Elsevier, vol. 80(C), pages 1100-1111.
  • Handle: RePEc:eee:rensus:v:80:y:2017:i:c:p:1100-1111
    DOI: 10.1016/j.rser.2017.05.255

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    References listed on IDEAS

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    Cited by:

    1. Ji, Zhenya & Huang, Xueliang, 2018. "Plug-in electric vehicle charging infrastructure deployment of China towards 2020: Policies, methodologies, and challenges," Renewable and Sustainable Energy Reviews, Elsevier, vol. 90(C), pages 710-727.
    2. Jonatan J. Gómez Vilchez & Austin Smyth & Luke Kelleher & Hui Lu & Charlene Rohr & Gillian Harrison & Christian Thiel, 2019. "Electric Car Purchase Price as a Factor Determining Consumers’ Choice and their Views on Incentives in Europe," Sustainability, MDPI, Open Access Journal, vol. 11(22), pages 1-14, November.
    3. Held, Tobias & Gerrits, Lasse, 2019. "On the road to electrification – A qualitative comparative analysis of urban e-mobility policies in 15 European cities," Transport Policy, Elsevier, vol. 81(C), pages 12-23.
    4. Fritz, Markus & Plötz, Patrick & Funke, Simon A., 2019. "The impact of ambitious fuel economy standards on the market uptake of electric vehicles and specific CO2 emissions," Energy Policy, Elsevier, vol. 135(C).
    5. Turrentine, Tom & Hardman, Scott & Garas, Dahlia, 2018. "Steering the Electric Vehicle Transition to Sustainability," Institute of Transportation Studies, Working Paper Series qt1w3836d3, Institute of Transportation Studies, UC Davis.
    6. Jenn, Alan & Lee, Jae Hyun & Hardman, Scott & Tal, Gil, 2019. "An Examination of the Impact That Electric Vehicle Incentives Have on Consumer Purchase Decisions Over Time," Institute of Transportation Studies, Working Paper Series qt0x28831g, Institute of Transportation Studies, UC Davis.
    7. Canepa, Kathryn & Hardman, Scott & Tal, Gil, 2019. "An early look at plug-in electric vehicle adoption in disadvantaged communities in California," Transport Policy, Elsevier, vol. 78(C), pages 19-30.
    8. Ji, Wei, 2018. "Data-Driven Behavior Analysis and Implications in Plug-in Electric Vehicle Policy Studies," Institute of Transportation Studies, Working Paper Series qt6dw4d18t, Institute of Transportation Studies, UC Davis.
    9. Ma, Shao-Chao & Xu, Jin-Hua & Fan, Ying, 2019. "Willingness to pay and preferences for alternative incentives to EV purchase subsidies: An empirical study in China," Energy Economics, Elsevier, vol. 81(C), pages 197-215.
    10. Hardman, Scott, 2019. "Understanding the Impact of Reoccurring and Non-Financial Incentives on Plug-in Electric Vehicle Adoption – A Review," Institute of Transportation Studies, Working Paper Series qt7v13w987, Institute of Transportation Studies, UC Davis.
    11. Eunsung Kim & Eunnyeong Heo, 2019. "Key Drivers behind the Adoption of Electric Vehicle in Korea: An Analysis of the Revealed Preferences," Sustainability, MDPI, Open Access Journal, vol. 11(23), pages 1-15, December.
    12. Funke, Simon Árpád & Plötz, Patrick & Wietschel, Martin, 2019. "Invest in fast-charging infrastructure or in longer battery ranges? A cost-efficiency comparison for Germany," Applied Energy, Elsevier, vol. 235(C), pages 888-899.
    13. Hardman, Scott, 2019. "Understanding the impact of reoccurring and non-financial incentives on plug-in electric vehicle adoption – A review," Transportation Research Part A: Policy and Practice, Elsevier, vol. 119(C), pages 1-14.
    14. Du, Jiuyu & Li, Feiqiang & Li, Jianqiu & Wu, Xiaogang & Song, Ziyou & Zou, Yunfei & Ouyang, Minggao, 2019. "Evaluating the technological evolution of battery electric buses: China as a case," Energy, Elsevier, vol. 176(C), pages 309-319.
    15. Choi, Hyunhong & Shin, Jungwoo & Woo, JongRoul, 2018. "Effect of electricity generation mix on battery electric vehicle adoption and its environmental impact," Energy Policy, Elsevier, vol. 121(C), pages 13-24.
    16. Almeida Neves, Sónia & Cardoso Marques, António & Alberto Fuinhas, José, 2019. "Technological progress and other factors behind the adoption of electric vehicles: Empirical evidence for EU countries," Research in Transportation Economics, Elsevier, vol. 74(C), pages 28-39.
    17. Bhandari, Vivek & Sun, Kaiyang & Homans, Frances, 2018. "The profitability of vehicle to grid for system participants - A case study from the Electricity Reliability Council of Texas," Energy, Elsevier, vol. 153(C), pages 278-286.
    18. Kester, Johannes & Noel, Lance & Zarazua de Rubens, Gerardo & Sovacool, Benjamin K., 2018. "Policy mechanisms to accelerate electric vehicle adoption: A qualitative review from the Nordic region," Renewable and Sustainable Energy Reviews, Elsevier, vol. 94(C), pages 719-731.

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