Government incentives for plug-in electric vehicles

Government incentives for plug-in electric vehicles have been established around the world to support policy-driven adoption of plug-in electric vehicles. These incentives mainly take the form of purchase rebates, tax exemptions and tax credits, and additional perks that range from access to bus lanes to waivers on fees (charging, parking, tolls, etc.). The amount of the financial incentives may depend on vehicle battery size or all-electric range. Often hybrid electric vehicles are included. Some countries extend the benefits to fuel cell vehicles, and electric vehicle conversions. More recently, some governments have also established long term regulatory signals with specific target timeframes such as ZEV mandates, national or regional CO2 emissions regulations, stringent fuel economy standards, and the phase-out of internal combustion engine vehicle sales. For example, Norway set a national goal that all new car sales by 2025 should be zero emission vehicles (electric or hydrogen). Other countries have announced similar targets for the electrification of their vehicle fleet, most within a timeframe between 2030 and 2050.

Asia

China On May 21, 2022, Shanghai Municipal People's Government released and issued the "Shanghai Action Plan for Accelerating Economic Recovery and Revitalization" to promote automobile consumption. The incentive plan includes tax deduction and offers financial subsidy of CN¥ 10,000 per electrical vehicle.

The Chinese government adopted a plan in 2009 with the goal of turning the country into one of the leaders of all-electric and hybrid vehicles by 2012. The government's intention was to create a world-leading industry that would produce jobs and exports, and to reduce urban pollution and its oil dependence. However, a study found that even though local air pollution would be reduced by replacing a gasoline car with a similar-size electric car, it would reduce greenhouse gas emissions by only 19%, as China uses coal for 75% of its electricity production. The Chinese government uses the term new energy vehicles (NEVs) to designate plug-in electric vehicles, and only pure electric vehicles and plug-in hybrid electric vehicles are subject to purchase incentives. On June 1, 2010, the Chinese government announced a trial program to provide incentives up to CN¥ 60,000 (~US$9,281 in June 2011) for private purchase of new battery electric vehicles and CN¥ 50,000 (~US$7,634 in June 2011) for plug-in hybrids in five cities. The cities participating in the pilot program are Shanghai, Shenzhen, Hangzhou, Hefei and Changchun. The subsidies are paid directly to automakers rather than consumers, but the government has stated that it expected that vehicle prices will be reduced accordingly. The amount of the subsidy is to be reduced once 50,000 units are sold. In addition to the subsidy, the Chinese government is planning to introduce, beginning on January 1, 2012, an exemption from annual taxes for pure electric, fuel-cell, and plug-in hybrid vehicles. Hybrid vehicles were eligible for a 50% reduction only. In 2011, only 8,159 electric cars were sold in China despite a CN¥ 120,000 subsidy. Unsubsidized lead-acid EVs are produced without government approval at a rate of more than 30,000 per year in Shandong and requires no driving license because the top speed is less than 50 km/h. They cost CN¥ 31,600 and have been the target of criticism from major car manufacturers. A 2021 study found that China's subsidies for fuel efficient vehicles was not welfare enhancing, as "the marginal cost of the program exceeds the marginal benefit by as much as 300 percent." A mid-September joint announcement in 2013 by the National Development and Reform Commission and finance, science, and industry ministries confirmed that the central government will provide a maximum of US$9,800 toward the purchase of an all-electric passenger vehicle and up to US$81,600 for an electric bus. The subsidies are part of the government's efforts to address China's problematic air pollution. As a result of the government support and new incentives issued in 2014, production of new energy vehicles between January and August reached 31,137 units, up 328% from the same period of 2013. Domestic production during the first eight months of 2014 includes 6,621 plug-in hybrid sedans and 16,276 all-electric cars. Additionally, to further electric vehicle production, China passed measures to greatly increase the number of electric vehicles on the road. Original policy declared that companies with vehicles sales of over 30,000 vehicles must comply with new rules around NEVs. Each company was required to fulfill a number of NEV credits, as much as 8% by the year 2018. This target was later pushed to 2019, with a requirement of 12% by 2020. These credits are granted by the fuel efficiency and weight of the vehicles, so more fuel efficient vehicles count for more credits. Originally, these credits were granted according to the vehicles' range; however, the final policy provided a more continuous way of determine credits. The breakdown of credits in the original proposal are given below:

In the final policy, credits were instead given by the formula: (0.012 × electric range + 0.8) × adjustment factor. These credits were capped at 6. Additionally, these credits can be bought and sold. In February 2018, to further promote energy-efficient electric vehicles, China raised subsidies for electric vehicles meeting additional range requirements. Electric vehicle incentives for cars with at least 400 km of range increased from CN¥ 44,000 to CN¥ 50,000, while vehicles with less than 150 km of range have been removed from the list of vehicles qualifying for an incentive. Changes were also made to the incentive structure for electric buses and trucks. Buses are now required to have a range of at least 150 km and have energy consumption of less than 0.7 Wh/km·kg. Between 2009 and 2022, China spent 200 billion yuan (US$28 billion) on EV subsidies and tax breaks. China ended the max. 12,600 yuan direct subsidy for BEV customers in 2022. Until the end of 2025, tax exemption is a maximum of 30,000 yuan, reducing to a maximum of 15,000 yuan until the end of 2027.

India

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