Managing trade-offs between electric vehicle taxation and adoption

Battery-electric vehicles (BEVs) are a key technology to decarbonize transport. However, increased BEV adoption may stress governments’ transport budgets as fossil fuel taxes decline. To maintain revenues, many countries contemplate introducing BEV taxes, but this may slow the transition. To address this conundrum, we develop a techno-economic adoption model to project transitional effects of three BEV taxation options under two taxation timings in five jurisdictions. Our findings suggest that reliance on fuel taxation for transport revenue and the projected BEV transition speed are key determinants of an appropriate taxation strategy. In jurisdictions with low transport tax revenues and an accelerated transition toward BEVs, neither the intervention type nor timing matter greatly. Conversely, in jurisdictions with higher revenue exposure, slower transition speeds, or both, policymakers may need to forego revenue temporarily to avoid delaying the transition. Our results emphasize the need for contextualized policy advice, which we discuss for all jurisdictions.