Abstract
To reverse the trend of rising CO2 emissions in the European Union’s (EU) transportation sector, several European governments have introduced programs that promote electric vehicles (EVs). One frequently cited impediment to their uptake is insufficient charging infrastructure. Drawing on panel data from Germany, this paper estimates the relationship between public charging infrastructure and the uptake of EVs. We specify models with fixed effects and instrumental variables to gauge the robustness of our findings in the face of alternative channels through which endogeneity bias may emerge. We find that charging infrastructure has a statistically significant and positive impact on EV uptake, with the magnitude of the estimate increasing with population density. The evidence further suggests that although the incidence of charging points in Germany far exceeds the EU’s recommended minimum ratio of one point to ten EVs, inadequate infrastructure coverage remains a binding constraint on EV uptake. We use the model estimates to illustrate the relative cost effectiveness of normal and fast chargers by region, which supports a geographically differentiated targeting of subsidies for charging infrastructure.
Highlights
The European Union’s (EU) progress in reducing CO2 emissions has long been impeded by the transportation sector
We find that charging infrastructure has a statistically significant and positive impact on electric vehicles (EVs) uptake, with the magnitude of the estimate increasing with population density
We further undertake a systematic analysis that tests for heterogeneity in the effect of charging points according to regional socioeconomic conditions, finding that the estimate increases with population density and fuel prices. These results indicate that the disappointing uptake of EVs in Germany since the implementation of the subsidy could be accelerated by an increase in charging infrastructure, if it is regionally targeted to reflect the differential effects across rural and urban areas
Summary
The European Union’s (EU) progress in reducing CO2 emissions has long been impeded by the transportation sector. Transportation is the only sector in the EU in which CO2 emissions are on the rise, increasing by 28% between 1990 and 2017 (EEA, 2019). To buck this trend, several European governments have turned to the promotion of electric vehicles (EVs). In Germany, the government has set a ambitious goal of registering one million EVs by the end of 2020, encouraged in part by a subsidy for EV purchases that was introduced in 2016. Total funding for the subsidy has been set at e1.2 billion, but progress has been sluggish. As of December 2018, there were only about 83,000 battery-electric (BEV) and 67,000 plug-in hybrids (PHEV) registered (KBA, 2019a), forcing Chancellor Merkel to concede that the goal would not be reached and igniting a debate about the reasons for the shortfall
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