Abstract
An important barrier to electric vehicle (EV) sales is their high purchase price compared to internal combustion engine (ICE) vehicles. We conducted total cost of ownership (TCO) calculations to study how costs and sales of EVs relate to each other and to examine the role of fiscal incentives in reducing TCO and increasing EV sales. We composed EV-ICE vehicle pairs that allowed cross-segment and cross-country comparison in eight European countries. Actual car prices were used to calculate the incentives for each model in each country. We found a negative TCO-sales relationship that differs across car segments. Compared to their ICE vehicle pair, big EVs have lower TCO, higher sales, and seem to be less price responsive than small EVs. Three country groups can be distinguished according to the level of fiscal incentives and their impact on TCO and EV sales. In Norway, incentives led to the lowest TCO for the EVs. In the Netherlands, France, and UK the TCO of EVs is close to the TCO of the ICE pairs. In the other countries the TCO of EVs exceeds that of the ICE vehicles. We found that exemptions from flat taxes favour big EVs, while lump-sum subsidies favour small EVs.
Highlights
The transport sector is one of the main contributors to anthropogenic climate change worldwide, accounting for 23% of global energyrelated greenhouse gas (GHG) emissions (IEA, 2015b)
We note that: (i) all EVs are more expensive than their internal combustion engine (ICE) pairs; (ii) bigger EVs seem to be relatively cheaper than their ICE pairs; and (iii) the price difference between EVs and their corresponding ICE pairs is higher for plug-in hybrids than battery electric vehicles
Our second observation is that smaller EVs are relatively more expensive than big EVs, compared to their ICE vehicle pairs
Summary
The transport sector is one of the main contributors to anthropogenic climate change worldwide, accounting for 23% of global energyrelated greenhouse gas (GHG) emissions (IEA, 2015b). Transport has the second biggest share, after energy industries, accounting for almost a quarter of total emissions. In contrast to other sectors in the EU, GHG emissions constantly grew in the transport sector from 1990 to 2007. The share and growth patterns of transport emissions justify and prompt policy actions. It aims to promote electromobility to achieve a more sustainable transport sector compatible with a lower than 2 degree global warming pathway. To achieve this goal, electric vehicles have to represent 35% of global vehicle sales by 2030, according to the action plan
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