Fiscally regressive subsidies and the spatial diffusion of electric vehicles in French cities

Marie Holzer and Marco Percoco

Transportation Research Part A: Policy and Practice, 2026, vol. 211, issue C

Abstract: This paper investigates the equity implications of the 2018 policy change regarding France’s electric vehicle (EV) subsidies, focusing on its differential impact across French municipalities (i.e., communes) with varying income levels. Using a synthetic event study and a synthetic difference-in-differences approach, a significant and disproportionately lower rate of EV fleet growth is identified in communes with higher shares of non-taxable (i.e., lower-income) households. Although the nominal subsidy reduction for new EV purchases was the same (€1,500), the proportional financial burden was larger for lower-income households, thus inhibiting EV uptake in communes with larger shares of non-taxable households. Robustness checks—including placebo tests, alternative treatment definitions, and the exclusion of outlier years and regions—support the validity of the causal inference. Additionally, the results show that the €1,000 additional benefit for non-taxable households on secondhand vehicles did not sufficiently offset the impact of the reduction in new EVs. These findings underscore the regressive effects of uniform subsidy cuts across communes with different income levels, which may hinder lower-income households from participating equally in the clean energy transition. This work contributes to the literature on environmental equity of financial incentive policies and offers policy-relevant insights for designing socially inclusive decarbonization strategies amid declining public subsidies across Europe.

Keywords: Electric Vehicle Adoption; France; Subsidy Change; Inequality; Synthetic Event Study; Synthetic Difference-in-Differences (search for similar items in EconPapers)
Date: 2026
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0965856426002429
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:transa:v:211:y:2026:i:c:s0965856426002429

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/supportfaq.cws_home/regional
https://shop.elsevie ... _01_ooc_1&version=01

DOI: 10.1016/j.tra.2026.105101

Access Statistics for this article

Transportation Research Part A: Policy and Practice is currently edited by John (J.M.) Rose

More articles in Transportation Research Part A: Policy and Practice from Elsevier
Bibliographic data for series maintained by Catherine Liu ().