Comparative study on fiscal incentives for electric vehicles

The new ICCT report Driving Electrification: A global comparison of fiscal incentive policy for electric vehicles evaluates the response to fiscal support in 2013 to incentivize the purchase of plug-in electric vehicles markets around the world.

Electric Vehicle Markets

The study first explains that the electric vehicle markets in 2012 and 2013 vary significantly across the world. While EVs account for 6% of all passengers cars sold in 2013 in Norway and around 5.6% in the Netherlands, EV market shares in other European Member States  represent less than 1% of passenger cars.

The trend seems to emphasize the leadership of these two countries, with Dutch growth rate increasing by 400% between 2012 and 2013. Germany EV grew by 105% year-on-year and  Norway, Sweden, Austria and France show market share increases of 50- 100%.

Comparing Incentives for Electric Vehicles in Different Markets

ICCT secondly compares three policy incentives intended to increase sales of EVs, being either direct subsidies (defined as a one-time bonus upon purchase of an EV); Fiscal incentives (such a reduced purchase and/or annual tax for EVs); or fuel cost savings (due to electricity prices being lower than fuel prices).

Comparison of fiscal incentives is applied to two types of vehicles across numerous countries. The study identifies findings on incentives and market dynamics.

It concludes that

  • National fiscal policy is a powerful mechanism to reduce the effective total cost of ownership and entice vehicle consumers to purchase electric vehicles

The analysis demonstrates that there are large difference in the tax structure and in the level of incentives provided for EVs, but show a clear link between fiscal support and take-off of EVs purchase.

It is also possible to draw conclusion about the distribution of EVs among private vs company car customers, to which incentives tend to be higher.  This would explain why market share of EV company cars tends to be higher in Germany for instance.

  • More comprehensive study is needed for the impact of the full portfolio of policy actions to accelerate the early vehicle market.

A more comprehensive assessment of policy options to spur electric vehicle growth would investigate and help understand the importance of vehicle manufacturer policy (e.g., emission standards, electric vehicle requirements), infrastructure policy (residential equipment, public charging), and electric utility policy, along with the consumer EV fiscal policy evaluated here. A more comprehensive and rigorous assessment of these other policy action areas would help inform a longer-term policy path that is not so exclusively dependent upon large initial-year taxation incentives.


To access the full report, please click here