Dynamics between electric vehicle uptake and green development: Understanding the role of local government competition

Abstract

Electric vehicles (EVs) play a pivotal role in advancing transport electrification, a crucial step towards achieving a net-zero emission economy and facilitating decarbonization. This study presents groundbreaking evidence to systematically explore the impact of EV uptake on green development in China, using 35 national centre cities from 2010 to 2019. The empirical outcomes uncover that EV uptake contributes significantly to green development, irrespective of the procedures applied. Further analyses demonstrate that local governments' tax and revenue competition significantly inhibit green development, confirming the “race to bottom” effect. This competition, when coupled with increasing EV adoption, results in pronounced negative externalities for sustainable development mainly via the overcrowding effect. Reinforcing these findings, the panel vector autoregressive model provides further empirical validation. This study not only underscores the benefits of EVs but also highlights the nuanced challenges posed by local government dynamics in the quest for sustainability.