Designing Better Policies for a Cleaner Air: The Case of Electric Vehicles in Europe

Lately climate change has become a major concern for policymakers. In fighting climate change both European and national authorities have adopted the concept of circular economy, which emphasize the importance of adoption of low and zero-emission cars—electric or otherwise—on a large scale in order to decrease the quantity of greenhouse gases (GHG) emissions. Past research shows that the rate of adoption of electric vehicles depends on the purchasing power of people and on the charging infrastructure available. However, existing data show that countries with lower purchasing power and a less developed charging infrastructure such as Portugal can have a better adoption rate than countries with a higher purchasing power and more charging points. The research goal of this paper is to explain this market anomaly by analyzing the way 19 European countries have design their motor tax policy between 2016 and 2018. The research question this paper tries to answer is: “Does the way public policymakers design the environmental component of the motor tax policy has an impact on the people’s preference for adopting electric vehicles?” In order to respond to current research question, our methodological approach was to use statistical modelling of panel data with dummy variable. Present analysis shows that countries that include any form of the environmental component in their policy design have a better adoption rate than countries which make no reference to emissions. Furthermore, the developed multiple regression model indicates that the most efficient form the environmental component can take is the one that uses the electric vehicles as a reference point.