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The impact of purchase subsidy termination on electric vehicle adoption: a synthetic control approach

Author

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  • Creutzburg, Carsten
  • Doerr, Leo M.

Abstract

This study provides the first real-world evidence on the effects of an unanticipated termination of Battery electric vehicle (BEV) purchase subsidies in Germany, one of the world’s largest BEV markets. We exploit the abrupt, court-mandated termination of Germany’s subsidy program in December 2023 as a natural experiment and analyze the causal impact of this exogenous policy shock by applying the Synthetic Control Method to monthly BEV registration data from January 2018 to March 2025. Our estimates suggest that the German BEV market declined by approximately 45% as a direct result of the subsidy termination, corresponding to 140,000 BEV registrations that were forgone in 2024 alone. Our findings underscore the critical role of financial incentives in promoting BEV adoption, while also highlighting the importance of clear communication and predictable policy timelines, as abrupt changes pose substantial risks to market stability, decarbonization targets, and government credibility.

Suggested Citation

  • Creutzburg, Carsten & Doerr, Leo M., 2026. "The impact of purchase subsidy termination on electric vehicle adoption: a synthetic control approach," Transportation Research Part A: Policy and Practice, Elsevier, vol. 211(C).
    • Handle: RePEc:eee:transa:v:211:y:2026:i:c:s096585642600176x
    DOI: 10.1016/j.tra.2026.105035
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    Keywords

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    JEL classification:

    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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