Impact of vehicle purchase tax exemption on electric vehicle sales: Evidence from China's automotive industry

Abstract

Environmental pollution and the global scarcity of fossil fuels are becoming worse. The study empirically quantifies the causal link between the rise in new energy vehicle sales and the exemption of vehicle purchase tax on such cars, using a difference-in-differences specification to exploit exogenous variation from the introduction of the car purchase tax exemption policy. This study concludes that the policy increased electric car sales by an average of 177.3% and serves as a catalyst for discussing the importance of regulations and sales.