Abstract
There is growing consensus that diffusion of electric vehicles (EVs) is a highly effective way to decarbonize the road transport sector. However, consumers would not opt for EVs over internal combustion engine vehicles (ICEVs) without additional fiscal incentives. Thus, the objective of this report is to consider the importance of fiscal incentives for EV diffusion, observing market changes in response to changing government policies in Denmark, the Netherlands, the United Kingdom, and China. The results indicate that fiscal incentives are essential to facilitate the transition from ICEVs to EVs because EVs are not price competitive against ICEVs. However, fiscal incentives are dependent on the economic situation, and how long the fiscal incentives will continue is uncertain. Therefore, without a drastic decline in battery costs via technological innovations, a complete transition from ICEVs to EVs will be extremely difficult.
