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Driving the Market for Plug-in Vehicles – Understanding Financial Purchase Incentives


Research Report

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Suggested Citation:
Hardman, Scott, Thomas S. Turrentine, Jonn Axsen, Dahlia Garas, Suzanne Goldberg, Patrick Jochem, Sten Karlsson, Michael A. Nicholas, Patrick Plötz, Jose Pontes, Nazir Refa, Frances Sprei, Gil Tal (2017) Driving the Market for Plug-in Vehicles – Understanding Financial Purchase Incentives. Institute of Transportation Studies, University of California, Davis, Research Report UCD-ITS-RR-17-30

Plug-in electric vehicles (PEVs) are more efficient and less polluting than internal combustion engine vehicles (ICEVs). For PEVs to have the most significant impact on urban air pollution, energy consumption, and climate change they need to be deployed in large numbers. For this to happen consumers may need to be incentivized to purchase them.

This policy brief explores financial purchase incentives for plug-in hybrid electric vehicles (PHEVs) and battery electric vehicles (BEVs). Financial purchase incentives are monetary instruments used to attract buyers to PHEVs or BEVs.

PHEVs and BEVs are currently more expensive than ICEVs. Purchase incentives are used to make PHEVs and BEVs more affordable for consumers. Meanwhile costs are reduced through learning and economies of scale, eventually leading to BEV and PHEVs achieving price parity with ICEVs.

This policy brief describes the effectiveness of incentives in increasing PHEV and BEV sales. This brief explores how these incentives should be designed so that they are the most effective.

The evidence presented in this policy brief is taken from a systematic literature review.

International EV Policy Council Policy Brief