Rethinking electric vehicle subsidies, rediscovering energy efficiency

Abstract

Existing regulations regarding fuel energy intensity (MJ/km, litres/100 km, or its inverse, miles per gallon) of light-duty vehicles (LDVs: cars, SUVs, and pickup trucks) for 2025 or 2030 either fall short of the longterm technical potential, or contain numerous loopholes that undermine their effectiveness. At the same time, governments are subsidizing the purchase of electric vehicles (EVs) while the market share of SUVs and pickup trucks grows. This paper reviews the feasible fuel and/or electricity energy intensity of LDVs, and argues that the severity of impending anthropogenic global warming merits a strong policy approach that (i) prescribes significant improvements in the energy intensity of non-electric LDVs and plugin hybrid EVs (PHEVs) when running on fuel , (ii) is independent of the number of electric vehicles sold, and (iii) is accompanied by an overall limit on fleet-average CO 2 emissions that applies to all manufacturers irrespective of the average size and mass of vehicles sold. Subsidies for EVs should be scaled back or eliminated, relying instead in the near term on deep across-the–board improvements in the fuel efficiency of LDVs that will have beneficial spillover effects on the eventual energy intensity of EVs and mineral requirements following a delayed market scale-up.

Study of the retreating product subsidy policy based on technology thresholds of new energy vehicle consumers

“…Nagy, Hagspiel, and Kort found that the government should reduce the risk of subsidy withdrawal as much as possible from the perspective of social welfare (Li et al, 2020;Hagspiel et al, 2021;Nagy et al, 2021;Yang et al, 2021). Harvey et al found that the government should cut or stop electric vehicle subsidies for environmental benefits (Harvey, 2020). Deng and Tian found that avoiding excessive subsidies can prevent NEV manufacturers from defrauding the government to obtain grants (Deng and Tian, 2020).…”

Indonesia’s Incentive Policies on Electric Vehicles: The Questionable Effort From the Government

“…Hybrid vehicles, such as the Hybrid Electric Vehicle (HEV) and the Plug-In Hybrid Electric Vehicle (PHEV), can be a transitional period for Indonesia to face vehicle electrification. Bob Azam from Toyota Motor Manufacturing Indonesia stated that this hybrid car could popularize environmentally friendly vehicles and are more affordable than BEVs (Indra, 2019). Based on research conducted by the Lembaga Penyelidikan Ekonomi dan Masyarakat Universitas Indonesia, respondents are still worried about BEV's technical problems such as how to charge when the battery runs out.…”