Managing trade-offs between electric vehicle taxation and adoption

Transport contributes over 15% of global greenhouse gas (GHG) emissions, and decarbonizing this sector requires massively increasing battery-electric vehicle (BEV) sales worldwide. However, a rapid shift away from internal combustion engine (ICE) cars puts governments’ transport revenues at risk because these revenues consist largely of fuel taxes.

A new external page research paper led by Bessie Noll, senior researcher at EPG, has developed a techno-economic adoption model to project transitional effects of three BEV taxation options under two taxation timings in five countries. The results suggest the importance of context-specific policies. In countries with low transport tax revenues and an accelerated transition toward BEVs, neither the intervention type nor timing matter greatly. Conversely, in jurisdictions with higher revenue exposure, slower transition speeds, or both, policymakers may need to temporarily forego revenue to avoid delaying the transition.

The paper, published in Cell Reports Sustainability, was co-authored with Professors Tobias Schmidt and external page Florian Egli (Technical University of Munich).