Abstract:

This study examines the policy and market drivers behind the rapid development of the electric vehicle market in China, by far the largest one in the world. The analysis shows that central and local subsidies accounted for over half of the electric vehicles sold during the data period. Investment in charging infrastructure is much more cost-effective than consumer purchase subsidies. In addition, the policy that merely provided electric vehicles a distinctively license plate was strikingly effective. These findings demonstrate the varying efficacy across policy instruments and highlight the critical role of government in promoting fuel-saving technologies.