Market Demand for Electric Vehicles under Technology Improvements and Tax Relief

ABSTRACT

This study aims to find ways to promote the demand for and acceptance of electric vehicles (EVs) by studying the impacts of two policies: tax relief and technology improvements. We find a balanced relationship between the two policies, causing low-carbon awareness to have the same effect on EV demand. Outside of equilibrium, greater low-carbon awareness, rather than price discounts or improved technology, can help improve demand. Furthermore, higher production inputs improve the EV technology level, but changes in the ratio of technology to cost affect customers’ willingness to pay for EV products. Thus, technology and low-carbon awareness affect EV demand.

KEY WORDS:

• electric vehicles
• low-carbon awareness
• tax relief
• technology improvement

Acknowledgments

The authors are grateful for the generous comments and guidance provided by many experts.

Notes

1. Tax relief is reflected through price discounts. For example, the Chinese state administration of taxation announced that, as of January 1, 2017, the purchase tax rate on certain types of passenger cars has been reduced from the original 10% to 7.5%.

Additional information

Funding

This research is supported by the Natural Sciences Foundation (NSF) of China [Grant Nos. 71671001, 71771002] and the Natural Science Foundation of Anhui Province of China [Grant Nos. 1808085MG214].