The impact of financial incentives on the total cost of ownership of electric light commercial vehicles in EU countries

Abstract

Many EU countries have used financial incentives to promote electric light commercial vehicles and decarbonise urban freight transport. However, the high costs of electric light commercial vehicles still pose a significant adoption barrier. This paper evaluates the impact of financial incentives on the total cost of ownership of electric light commercial vehicles in the European Union and their role in achieving the cost-competitiveness of electric vehicles. A pairwise comparison is performed for three weight categories of electric and diesel vehicles in twelve countries. Our analysis shows that financial incentives have a high impact on the total cost of ownership and have proven necessary to achieve electric vehicles' cost-competitiveness in most cases. However, in specific cases, financial incentives may no longer be needed as the cost of electric vehicles' ownership would have been lower than diesel vehicles even without them. This paper demonstrates the importance of adjusting government incentives to avoid unnecessary funding allocations while promoting the decarbonisation of light commercial vehicles, particularly as the number of incentives does not directly correlate with electric vehicles penetration.