Electric Vehicle Subsidies: Cost-Effectiveness and Emission Reductions

Abstract

I design a structural model of demand for electric vehicles and the supply of a public charging infrastructure by forward-looking local planners. Using Canadian data, I study the cost-effectiveness of electric vehicle incentives in this context. Subsidizing electric vehicle purchases almost doubled adoption in Quebec but had only a small impact on network provision. I conduct a rigorous cost-benefit analysis to study the environmental performance of Quebec’s rebate program. I find that the marginal abatement cost of emissions is substantially higher than the social cost of carbon, suggesting that policymakers in Quebec over-invested on electric vehicle incentives.

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Reference

Jean-François Fournel, “Electric Vehicle Subsidies: Cost-Effectiveness and Emission Reductions”, TSE Working Paper, n. 23-1465, September 2023, revised June 2024.