National EV Policies around the World

While a small percentage of overall global car sales, the growth in electric vehicle (EV) sales in the last six years has been astounding, and some proponents and policymakers are intent on this trend continuing as a way to combat air pollution and reduce GHG emissions in line with Paris Agreement targets. In the case of China, some EU member states and the U.S., another driver for these vehicles is supporting their domestic auto industries and encouraging their growth and pursuit of new markets.

In summary, the EV fleet is growing but still only makes up 0.2% of the passenger car fleet. But this could change quickly. One way it can change? Policy. Governments in both developed and emerging economies appear to be rallying around electrification in passenger cars, but also other transport modes such as buses, two- and three-wheelers and even rickshaws.

Policies, decreasing battery technology costs (which presumably drives down vehicle costs) and consumer interest could accelerate EV uptake globally and many in the oil and investment banking industries, as well as NGOs, expect that to happen with the market taking off sometime in the 2030 timeframe (depending on the analysis). But it could go in the other direction as well, especially if EV costs do not reach parity with internal combustion engine vehicles (ICEVs) quickly enough. As a general matter, I believe the key guideposts for members to watch are:

1. Policy developments (both targets/mandates for EVs and/or charging infrastructure);
2. Battery technology costs and whether they decline to a level that puts an EV in parity with a conventional ICEV, which a number of analysts (including me) would put at about US$75-100 kWh (see post Mar. 25, 2019);
3. Infrastructure growth and development;
4. Increasing consumer interest and acceptance, especially as the auto industry prepares to offer many different EV model types for consumers to choose from in the next few years in key markets such as China, North America and the EU.

This report focuses on national policies being set or contemplated around the world to support EV uptake. A previous post (see link above) focused on battery technology costs. Future posts will focus individually on infrastructure and consumer reactions/interest and market development in EVs globally. Countries are moving quickly to set EV policies that tend to focus on:

• National targets for EVs;
• Various types of fiscal policies for EV;
• Tightening fuel economy standards;
• Banning or phasing out ICEVs (which may be coupled with national EV targets);
• Other types of policies that are preferential toward EVs.

This report reviews existing EV policies that have been set, highlights new developments for some countries over the last year and reviews the status of car bans. Accompanying this report is a spreadsheet, adapted from UN data, that attempts to summarize EV policies around the world.

Key Points

• In the last year, countries have moved quickly to set policies to encourage EVs for the passenger car fleet, but also for heavy-duty vehicles (mainly buses), two- and three-wheelers and even for e-rickshaws and tuk-tuks!
• More than 45 countries have set or are setting national targets for EVs the majority of which appear to enter into force around the 2030 timeframe.
• Countries are setting targets, not mandates, to send a clear signal to the auto industry.
• Developed economies, particularly in Europe, are linking CO2 to fiscal incentives. Some, such as France and Italy, employ “bonus-malus” schemes.
• Over 75 countries have set some kind of fiscal policy or policies to encourage EV uptake that might include: tax incentives for vehicle purchase, tax reductions/VAT exemptions, import duty reduction or elimination, subsidies and other related policies.
• 11 countries plan to ban ICEVs as another policy pathway toward encouraging EV uptake.
• What about the U.S., which is hardly mentioned in this report? My view is that the EV market in the U.S. will develop slowly, so slowly, that I project just 10% EVs in new LDV sales by 2040. Why? Because while the rest of the world is tracking toward decarbonization, the U.S., under the Trump Administration, is tracking toward deregulation. That will impact the market for decades to come.