EV incentives and the Trade-Off Between Decarbonization and Reshoring

Département d'Economie et Sciences de la Décision

Intervenant:  Clément Malgouyres (CREST)

Salle T-014

Abstract :

Governments increasingly tie clean-technology subsidies to social and industrial aims, hoping to accelerate decarbonisation while nurturing domestic production. France’s 2024 reform embeds a life-cycle environmental score in its electric-vehicle (EV) purchase bonus (based on estimated emissions during the production process). It simultaneously steepens the CO2-based tax on internal combustion engine (ICE) models. We combine exhaustive registration data with information on assembly plants and battery origin to estimate how these measures reallocated demand across origins. Treated electric models experienced a marked decline. Purchases pivoted toward vehicles built in Europe and away from Asian imports. Among ICEs, the reinforced tax reduced sales of the most polluting variants. We start by estimating the price sensitivity exploiting changes around the reform in a diff-in-diffs setting. We then combine these estimates with survey-based stated preferences in order to estimate a nested-logit demand system and evaluate the trade-off between budget savings, consumer welfare, electrification of the vehicle fleet and industrial relocation.

Joint work with : Thierry Mayer & Lewin Nolden