Will Current Electric Vehicle Policy Lead to Cost-Effective Electrification of Passenger Car Transport?

Abstract

Encouraged by the falling cost of batteries, electric vehicle (EV) policy today focuses on accelerating electrification of passenger cars, paying comparatively little attention to the cost of the particular type of EVs and charging infrastructure deployed. This chapter first discusses the strong influence that EV policy design has on the development of particular EV types. It then illustrates recent research conducted by the authors, showing that EV policy with a strong bias towards long-range battery electric vehicles (BEVs) risks leading to higher overall costs in the medium term. The costs could possibly exceed the ability of governments to sustain the necessary incentives and of automotive original equipment manufacturers to internally subsidise EVs until battery cost drops sufficiently. While the research does not fully explore the latter issue and its potential to stall the EV transition, it does show that the incremental cost of different EV and infrastructure mixes over the whole passenger car fleet can differ quite substantially and that promoting a balanced mix of BEVs and plug-in hybrid electric vehicles (PHEVs) may set the electrification of passenger cars on a lower-risk, lower-cost path. Examining EV policy in the UK and in California, we find that it is generally not incompatible with achieving balanced mixes of BEVs and PHEVs; however, it could be better designed if it paid more attention to cost and technology development risk.