Do policy incentives drive electric vehicle adoption? Evidence from China

The emerging electric vehicle (EV) industry has received enormous support from global governments for its advantages in energy conservation and carbon emission reduction. This paper focuses on the development of the EV industry in China and empirically examines the impact of the government's incentives on EV adoption in both the public and private domains using data from 61 cities spanning 2009-2018. EV-supportive policies, including financial incentives and convenience measures, are discussed, and a variable instrumental strategy is applied to solve the endogenous problem of charging facilities. The results reveal that in the public domain, financial subsidies can effectively promote the use of electric buses; however, the adoption of commercial EVs is mainly stimulated by charging facility construction and increasing fuel prices. Meanwhile, in the private domain, convenience measures, such as charging station construction and non-purchase limitations, contribute to increasing the demand for EVs, while the effect of financial incentives is not as significant as we expected.