Promoting electric vehicle adoption: Who should invest in charging infrastructure?

Abstract

Electric mobility has emerged as a key initiative for the policymakers and the governments to mitigate the carbon footprint of the transportation sector. However, the adoption of electric vehicles (EVs) is slow, primarily due to the scarcity of adequate charging facilities. The intriguing factor in terms of developing charging infrastructure is related to which entity should invest in developing the same. Herein, we study a vehicle supply chain and formulated four different modes of developing charging infrastructures for EVs when: (a) EV manufacturer invests in setting up the charging infrastructure with a government subsidy to EV consumers, namely the Model M, (b) EV manufacturer invests in setting up the charging infrastructure, namely the Model R (c) Government invests in setting up charging infrastructure and also provides a subsidy to EV consumers, namely the Model MG, and (d) Government invests in setting up the charging infrastructure, namely the Model G. Our findings show that the Model MG and M are equally effective for generating the maximum EV demand and market share, thereby require maximum effort for developing the charging infrastructure. Further, social welfare is also maximum in these two cases, which is counterintuitive because government support is more in the Model MG as compared to the Model M. Hence, under a limited budget constraint, the government can provide direct subsidy to EV consumers and let EV manufacturer invests in charging infrastructure to maximize social welfare. Further, the Model MG and M have a lower overall environmental impact when GV's environmental impact is higher than a threshold. Additionally, we provide multifaceted policy recommendations for the government, along with manufacturer strategic choices under different scenarios.