Toward Sustainability: The Role of Tax Policies in Enhancing the Cost-Competitiveness of Electric Vehicles in Jordan

Abstract

The total cost of ownership (TCO) of electric vehicles (EVs) is significantly influenced by several economic factors which play a critical role in shaping their cost competitiveness, including tax policies. The primary objective of this analysis is to evaluate whether (EVs) can be competitive with internal combustion engine vehicles (ICEVs) for everyday use over a multi-year period. Therefore, the TCO of passenger EVs was compared with that of ICEVs across three categories: affordable, mid-range, and luxury. This allowed us to show how tax laws affect EVs’ TCO and adoption rates. The analysis of the Jordanian regulatory structure showed that specific incentives, like lower sale taxes and customs duty applicable to EVs, successfully offset the higher initial costs of EVs, making them cost-competitive, especially in the affordable and mid-range categories. These results not only demonstrate the effectiveness of such policies in Jordan but also support national sustainability objectives by encouraging eco-friendly modes of transportation. The results provide a valuable framework for other developing countries, particularly in the Middle East, to accelerate EV adoption and transition toward cleaner mobility solutions.