Effectiveness and Heterogeneous Effects of Purchase Grants for Electric Vehicles

Peter Haan (), Adrián Santonja () and Aleksandar Zaklan ()
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Peter Haan: Free University Berlin, German Institute for Economic Research (DIW Berlin) and Berlin School of Economics
Adrián Santonja: German Institute for Economic Research (DIW Berlin) and University of Potsdam.
Aleksandar Zaklan: University of Rostock

Environmental & Resource Economics, 2025, vol. 88, issue 1, No 7, 185-223

Abstract: Abstract We evaluate German purchase subsidies for battery electric vehicles (BEVs) and plug-in hybrid electric vehicles (PHEVs) using data on new vehicle registrations in Germany during 2015-2022. We account for confounding time trends and interacting EU-level $$\text {CO}_{2}$$ standards using neighboring countries as a control group. We find that 40% of BEV and 25% of PHEV registrations were subsidy-induced. The program had strong distributional effects, with greater uptake in wealthier and greener counties. We estimate implied abatement costs of 870 euro per ton of $$\text {CO}_{2}$$ for BEVs and 2,470 euro for PHEVs, suggesting that policy makers should re-balance support schemes away from PHEVs.

Keywords: Decarbonizing road transport; Electric mobility; Purchase subsidies; Policy effectiveness; Distributional effects of climate policy (search for similar items in EconPapers)
JEL-codes: H23 Q54 Q58 R48 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10640-024-00929-z

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