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The Role of Government in the Market for Electric Vehicles: Evidence from China

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  • Shanjun Li
  • Xianglei Zhu
  • Yiding Ma
  • Fan Zhang
  • Hui Zhou
Abstract
Governments in many countries have offered various incentives to promote the diffusion of electric vehicles (EVs). This study examines the effectiveness of various policy measures that underlie the rapid development of the EV market in China, by far the world's largest such market. The analysis is based on detailed data on EV sales, local and central government incentive programs, and charging stations in 150 cities from 2015 to 2018. The empirical framework addresses the potential endogeneity of key variables, such as local policies and charging infrastructure, by using a city‐border‐regression design and instrumental variable approach. We find that consumer subsidies for vehicle purchases accounted for more than half of EV sales in China. Nevertheless, investments in charging infrastructure were much more cost‐effective than consumer subsidies. An inexpensive policy that merely provided EVs with a distinctive, green license plate was strikingly effective. These findings demonstrate the varying efficacy of different policy instruments and highlight the critical role of the government in promoting clean technologies.

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  • Shanjun Li & Xianglei Zhu & Yiding Ma & Fan Zhang & Hui Zhou, 2022. "The Role of Government in the Market for Electric Vehicles: Evidence from China," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 41(2), pages 450-485, March.
    • Handle: RePEc:wly:jpamgt:v:41:y:2022:i:2:p:450-485
    DOI: 10.1002/pam.22362
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    Cited by:

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    3. Burra, Lavan T. & Sommer, Stephan & Vance, Colin, 2023. "Free-Ridership in Subsidies for Company- and Private Electric Vehicles," Ruhr Economic Papers 1015, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    4. Li, Shanjun & Wang, Binglin & Zhou, Hui, 2024. "Decarbonizing passenger transportation in developing countries: Lessons and perspectives1," Regional Science and Urban Economics, Elsevier, vol. 107(C).
    5. Vongdala Noudeng & Nguyen Van Quan & Tran Dang Xuan, 2022. "A Future Perspective on Waste Management of Lithium-Ion Batteries for Electric Vehicles in Lao PDR: Current Status and Challenges," IJERPH, MDPI, vol. 19(23), pages 1-22, December.
    6. Burra, Lavan T. & Sommer, Stephan & Vance, Colin, 2023. "Policy Complementarities in the Promotion of Electric Vehicles," Ruhr Economic Papers 1014, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
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    8. Xue Wang & Suwei Feng & Tianyi Tang, 2023. "Acceptability toward Policy Mix: Impact of Low-Carbon Travel Intention, Fairness, and Effectiveness," Sustainability, MDPI, vol. 15(20), pages 1-22, October.
    9. Jiang, Zhangsheng & Xu, Chenghao, 2023. "Policy incentives, government subsidies, and technological innovation in new energy vehicle enterprises: Evidence from China," Energy Policy, Elsevier, vol. 177(C).
    10. Burra, Lavan T. & Sommer, Stephan & Vance, Colin, 2024. "Free-ridership in subsidies for company- and private electric vehicles," Energy Economics, Elsevier, vol. 131(C).
    11. Alberini, Anna & Vance, Colin, 2023. "Competing forces in the German new car market: How do they affect diesel, PHEV, and BEV sales?," Ruhr Economic Papers 1047, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.

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