Economic impacts and carbon emissions of electric vehicles roll-out towards 2025 goal of China: An integrated input-output and computable general equilibrium study

Abstract

The rapid expansion of China's vehicle fleet puts a strain on efforts to reduce carbon emissions. Despite broad consensus that switching from internal combustion engine vehicles (ICEV) to electric vehicles (EV) is an essential pathway to solving this challenge, some studies assessing individual vehicles have raised concerns over the high environmental impacts associated with the EV production phase, which may compromise the benefits derived from its use phase. To address this issue, we first develop a dynamic computable general equilibrium (CGE) model to simulate how the economy and the automotive industry will respond to the increase in EV sales. Following the production-based accounting principle, the input-output model is then integrated with CGE to estimate CO 2 emissions. Three scenarios with and without suppression of ICEV consumption are created to analyze the sustainability of the automotive industry when 20% of new vehicles sold are EVs by 2025. The results show that the increase in EV sales has a negligible impact on the overall economy. Compared to the baseline, the automotive industry's output will increase by 5.16%, 3.04%, and 1.06% in three scenarios by 2025, while sectoral CO 2 emissions will increase by 6.59%, 3.95%, and 1.49%, which indicates that the difference between EVs and ICEVs is marginal in terms of CO 2 emissions per monetary output. This finding implies that EV production is unlikely to cause a significant increase in CO 2 emissions in the near future. Further, shifting a portion of domestic automotive production from ICEVs to EVs has a small impact on the top polluting sectors when ordered by CO 2 emissions. Therefore, the sustainable development of the automotive industry will not be hindered by large-scale EV adoption.