Abstract:

Governments around the world, motivated by the necessities of clean air and a stable climate, actively steer their markets toward all zero-emission vehicles (ZEVs). Among the key questions for governments are what types of support for incentives, infrastructure, and other programs are needed; for how long this need continues; and how the costs compare to the benefits. These questions are about managing the costs across governments, industry, and drivers through the transition to ZEVs. This paper analyzes the costs, benefits, and associated government funding, with the transition to all passenger ZEVs. The research quantifies funding based on incentives that are aligned with declining ZEV costs and the expenditures of exemplary programs in several high-ZEV uptake markets. The relative costs, benefits, and government outlays are analyzed for the transition to all ZEVs in the light-duty vehicle markets of the United States and Germany. The authors summarize the findings and implications in four conclusions, i.e. (1) Sustained funding is critical to growing the early ZEV market, (2) The societal benefits of ZEVs far outweigh the costs, (3) Costs in the ZEV transition are transitioning to the private sector, and (4) Governments are developing smart policies to support the ZEV transition. This research, although focused on ZEV policy and market developments in North America and Europe, has much broader implications. The ZEV barriers, costs, and benefits are broadly similar elsewhere, although different markets tend to have somewhat differing vehicles, fuel prices, and infrastructure availability.