Beggars’ Banquet: The 1,001 Demands Supporting the Rise of Electric Vehicles
11.22.24 | Blog | By: Philippe Marchand
Electric vehicle (EV) sales continue to grow, yet EVs still struggle to displace internal combustion engine vehicles (ICEVs). Across the entire value chain, fossil fuel-based activities are consistently cheaper than their low-carbon counterparts. This is due to both technical reasons—nature has already concentrated energy into materials that are relatively easy to extract—and historical ones, as energy production and distribution networks have been optimized since the Industrial Revolution. In our capitalist and consumer-driven society, transitioning to low-carbon systems requires regulation and financial support to emerge at the pace needed.
EV adoption exemplifies this reality. Are EV models more expensive than their ICEV equivalents? Governments step in with cash incentives to lower purchase prices. Is electricity distribution infrastructure less ubiquitous than traditional fuel stations? Taxpayer-funded subsidies drive the installation of charging points along major roads. In some cases, EVs even receive priority for urban access or parking, as seen in Scandinavian countries. Meanwhile, workers displaced by the shift in automotive manufacturing face similar challenges as those left behind by decades of globalization-driven deindustrialization in the West. These individuals are often expected to accept their hardships as a sacrifice for future generations rather than benefiting communities still grappling with extreme poverty in the Global South. Whether this moral appeal resonates will be reflected in future election outcomes.
Recently, a comment on LinkedIn suggested electricity for EV charging should be tax-free, citing affordability concerns. “Electricity is too expensive to charge EVs, it should be tax-free.”
However, road fuels such as gasoline and diesel have long been heavily taxed, either to encourage conservation (during the oil shocks of the 1970s) or to replenish government coffers. More recently, taxes have been used to incentivize lower-carbon vehicles. In Europe, for instance, pump prices are, on average, double what oil companies charge at the refinery gate, as excise duties and VAT account for about 100% of the untaxed fuel price. The figure below provides a breakdown of gasoline prices in the EU.
Breakdown of Automotive Gasoline Prices in the EU
Source: Graphic by Fuels Europe, data from European Commission
The level of fuel taxation varies significantly across countries. Taxes on gasoline in the Netherlands, France, and Italy are roughly double those in Hungary or Poland, reflecting the localized nature of tax policies. Despite these differences, road fuel taxes consistently represent a vital revenue source for governments.
Electricity, by contrast, tells a different story.
In 2024, taxes (including excise duties and VAT) accounted for 32% of the average electricity price for European households. As with road fuels, taxation levels vary widely. Poland and Denmark see tax rates nearing 100%, while Germany sits at 37%, and France at 27%. The Netherlands even shows negative taxation due to subsidies. This is shown in the figure below.
Electricity Prices for Household Consumers, First Half of 2024 (€/kWh)
Importantly, electricity prices are more influenced by energy sources than by tax levels. For example, Polish electricity costs are half those in Germany despite higher taxation, largely because electricity generation depends heavily on local factors. In contrast, road fuel prices are shaped by the global commodity market for crude oil.
Even with these complexities, a complete transition from ICEVs to EVs would generate significantly less tax revenue compared to fossil fuel taxation. This prospect poses a major fiscal challenge for governments. Suggesting tax-free electricity for EV charging raises further questions: Why stop at EVs? Why not extend this to heating homes, or manufacturing steel and cement—activities that could also reduce carbon footprints through electrification? The result would be an even more severe financial headache.
Governments have a duty to lead the fight against climate change and mitigate its impacts. However, this responsibility must not translate into unfairly favoring specific low-carbon pathways. Policies must be guided by balanced strategies informed by unbiased, science-based information, ensuring priorities are properly and equitably defined. Policymakers should resist catering to narrow interests that advocate for one solution over others.
Philippe Marchand is a Bioenergy Steering Committee Member of the European Technology and Innovation Platform (ETIP).
