EU climate policy: ‘Incentivizing EVs is not enough’

More and more experts warn that European countries struggle to persuade people to switch from ICE cars to EVs. Europe sells ten times more electric cars today than it did six years ago (source: IEA), but its fleet is cleaning up too slowly to meet the agreed climate goals.

“What we have learned is that it’s not enough just to incentivize electric vehicle purchase and ownership,” says Julia Poliscanova, Senior Director at Transport & Environment in the newspaper The Guardian. “You also have to disincentivize the purchase of conventional cars simultaneously,” she adds. In other words, you need not only the carrot but also the stick.

Price tag and other hurdles

There are different reasons for this. First, potential customers are put off by the high price of electric cars. Even if the cost of the EV later is far less, with a total cost of ownership (TCO) that is the same or even lower than that of a comparative ICE car, they’re difficult to convince.

Other reasons are the so-called range anxiety and the fear that the charging infrastructure isn’t following. Organizations like the European Car Manufacturers Association ACEA are reminding us of this all the time, and it seems that the overall deployment of a suitable network is gaining steam. But even now, just seven of the 27 EU members offer incentives for charging infrastructure, according to ACEA.

To help counter these fears, countries across Europe offered and still offer incentives or tax cuts. According to ACEA, 21 of the 27 EU members offer tax breaks, and 20 of them have incentives to help with the purchase of an electric vehicle.

In France, for example, the state offers a € 5 000 bonus and exempts electric vehicles from penalties on weight. It has also announced plans for a social leasing scheme to rent an electric car for € 100 per month “for those who need it most”.

The French government is very careful in implementing green policies that raise costs for poorer households too much. Remember the “yellow vest” movement in 2018. “It’s not perfect, but what the French are doing is definitely going in the right direction,” said Poliscanova.

“The scheme has still to be worked out, but the political signal has already encouraged some French carmakers to move towards smaller and cheaper electric cars instead of heavy and expensive ones,” she added.

Tax the purchasing

“It’s not sustainable to put out subsidies as high as we did in the past,” says Christian Hochfeld, head of Agora Verkehrswende, a clean transport thinktank in Germany, “and it’s also not socially fair because everyone in Germany, every taxpayer, pays for this transition, even if they don’t have a car.”

Germany is Europe’s biggest car market. While it taxes car ownership and provides an exemption for electric vehicles, it does not tax car acquisition, the point at which consumers decide whether to buy the vehicle.

“It would be fairer to tax vehicles at the point of purchase and subsidize electric vehicles through that,” suggests Hochfeld. “Why should a nurse pay for the electric vehicle of a dentist who’s able to buy a big SUV with subsidies? That’s not fair. But if the lawyer buying a combustion engine car would pay for the dentist who buys an electric vehicle? I would say that’s OK,” he adds.

A number of policies

“To boost the uptake of electric cars, the number of different policies matters as well as the quality,” says Gracia Brückmann, an energy researcher at the University of Bern, also in the Guardian.

In Norway, for instance, the leading European country where EV purchasing is considered, 9 in 10 new cars sold are electric or hybrid. The government provided a range of incentives for electric vehicles as early as the 1990s, which it later phased out.

As well as tax breaks, the government offered free parking, access to ferries, and the right to drive in bus lanes, among others. “This helps governments find the right fit for each person,” says Brückmann. “The more policies you have in place, the lower your car fleet’s total emissions gets over time.”