Costs and Benefits of Quebec's Drive Electric Program

Abstract

This article presents a cost-benefit analysis (CBA) of the Drive Electric Program enacted by the Quebec government in 2012. This program provides direct rebates to all-electric and plug-in hybrid vehicles according to electric battery capacity. After describing the program, we identify and monetize its main costs and benefits. The costs are primarily related to the government expenses associated with the rebate itself, while the benefits include savings on gasoline purchases and oil changes, as well as reductions in the emissions of different pollutants. Because these emissions have no market price, valuing them reliably presents a challenge. For this purpose, we used values from previous relevant studies. We conduct our CBA for the year 2012 and obtain a net present value of $173,331, with an internal rate of return of 6.54 percent. Our sensitivity analysis shows our conclusion to be fairly robust to various changes in the assumptions and parameters.