Powering up a slow charging market: how do government subsidies affect charging station supply?

Luo, Zunian (2022): Powering up a slow charging market: how do government subsidies affect charging station supply?

Abstract

Electric vehicle adoption is considered by policymakers to be a promising pathway for addressing climate change. However, the market for charging stations suffers from a market failure: a lack of EV sales disincentivizes charging station production, which in turn inhibits mass EV adoption. Charging station subsidies are discussed as policy levers that can stimulate charging station supply to correct this market failure. Nonetheless, there is limited research examining the extent such subsidies are successful. Using annual data on electric vehicle sales, charging station counts, and subsidy amounts from 57 California counties and a staggered difference-in-differences methodology, I find that charging station subsidies are highly effective: a 1% increase in subsidies expands the supply of stations by 2.5%. This finding suggests that governmental intervention can help correct the market failure in the charging station market.

• Item Type: MPRA Paper
• Language: English
• Keywords: electric vehicles; charging stations; climate change; difference in differences
• Subjects: L - Industrial Organization > L6 - Industry Studies: Manufacturing > L62 - Automobiles ; Other Transportation Equipment ; Related Parts and Equipment; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q48 - Government Policy; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q58 - Government Policy

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