How to face the challenges caused by the abolishment of subsidies for electric vehicles in China?

• Published in: Energy (Oxford) 2019-01, Vol.166, p.359-372
• Main Authors: Wang, Ning, Tang, Linhao, Zhang, Wenjian, Guo, Jiahui
• Format: Article
• Language: English
• Subjects: Abrogation of subsidies; Economic policy; Electric vehicles; Impact strength; Incentives; Markets; Policies; Policy effectiveness; Promotion; Subsidies; System dynamics; Taxation; Turbulence
• ISSN: 0360-5442; 1873-6785
• DOI: 10.1016/j.energy.2018.10.006

In the early stage of electric vehicles' (EVs) promotion, policy incentives play an important role, especially subsidy schemes. However, subsidy schemes will be repealed soon, which may cause EV market turbulence. This paper develops a system dynamics model of China's EV adoption, running up to 2030, to analyze the effectiveness of EV policies. Our results show that the abrogation of EV subsidy schemes results in a sharp decline of EV market share by 42% in China. Purchase restriction rescission, New Energy Vehicle (NEV) mandate policy and driving restriction rescission have obvious positive effect on EV promotion while parking fee exemption, road tolls exemption, insurance charge exemption and Vehicle and Vessel (V&V) tax exemption have little impact. Furthermore, EV policies are classified into three policy mixes according to their operability and effectiveness: first recommended policy mix, secondarily recommended policy mix, peripheral policy mix. Our results do help to offer suggestions for the EV-related policy reformation after 2020. •The abrogation of subsidies will cause a sharp decline of electric vehicle sales.•Transportation policies have a positive influence on electric vehicle acceptance.•Some financial incentives have little impact on electric vehicle acceptance.•Future policies after subsidy abrogation are classified into three mixes.