Effectiveness of electric vehicle subsidies in China: A three-dimensional panel study

Tong Zhang, Paul Burke () and Qi Wang

Departmental Working Papers from The Australian National University, Arndt-Corden Department of Economics

Abstract: Electric vehicles (EVs) are likely to emerge as the main means of zero-emission road transport. China has used a variety of policy approaches to encourage EV adoption, including vehicle purchase subsidies. This study uses a three-dimensional dataset to estimate the effect of purchase subsidies for domestic EVs on adoption in 316 cities in China over January 2016–December 2019. An instrumental variable approach that utilizes the timing of the cancellation of local subsidies by the central government is pursued. The findings suggest that purchase subsidies for domestic EVs have led to a sizeable increase in uptake, but have discouraged uptake of imported EVs. Higher consumer awareness of the subsidies is associated with a larger proportional effect on uptake of domestically-produced vehicles. We estimate that increases in the per-vehicle subsidy rate have on average reduced carbon dioxide (CO2) emissions at a marginal subsidy cost of about 4,453 CNY (US$712) per tonne, which is high. However, other benefits, including long-run benefits from the emergence of a new clean technology sector, may be substantial.

JEL-codes: H23 H31 Q58 (search for similar items in EconPapers)
Pages: 50 pages
Date: 2024
New Economics Papers: this item is included in nep-cna, nep-ene, nep-env and nep-tre
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Journal Article: Effectiveness of electric vehicle subsidies in China: A three-dimensional panel study (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:pas:papers:2024-1

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