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On the economics and the future prospects of battery electric vehicles

Amela Ajanovic and Reinhard Haas

Greenhouse Gases: Science and Technology, 2020, vol. 10, issue 6, 1151-1164

Abstract: Currently, the electrification of passenger cars is seen as one of the key strategies for heading toward a sustainable transport system. Of special interest are battery electric vehicles (BEVs), which can enable significant emission reductions if electricity used is produced from renewable energy sources. However, mainly due to their high investment costs (retail purchase price) of BEVs, they are currently not economically competitive with conventional fossil‐fueled vehicles without different supporting policy measures. This paper analyzes current costs and future prospects for BEVs compared to conventional petrol cars looking at the total costs of ownership. Furthermore, the future prospects are investigated considering technological learning for BEVs, CO2 taxes for fuels, and various other policy framework conditions such as rebates for the purchase of the BEVs. The major conclusions are as follows: (i) to improve the economics of BEVs, a very important aspect is the introduction of CO2‐based fuel taxes; (ii) regarding economics, the second important aspect is the reduction of the investment costs of the BEVs due to technological learning, especially of the battery; (iii) in addition, the introduction of CO2‐based registration taxes for the purchase of passenger cars makes sense; (iv) subsidies or rebates for the purchase of a BEV maybe a measure successful in the short term and helpful to stimulate technological learning; (v) by far, the highest uncertainty regarding the future prospects of BEVs is how fast technological learning will take place, especially for the battery, and how the future development of batteries will be. © 2020 The Authors. Greenhouse Gases: Science and Technology published by Society of Chemical Industry and John Wiley & Sons, Ltd.

Date: 2020
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