The Economic Costs of Electric Vehicles

We assess the economic costs necessary to reach an electric vehicle target in Austria. These costs include tax revenue changes and effects on government budget, private infrastructure expenditures, and effects on GDP. To
this end a discrete choice model of the consumer purchase decision between conventional, hybrid, plug-in hybrid and electric vehicles is implemented into a computable general equilibrium model in a "hard-link" fashion. The combined model features a detailed accounting of stock development, including yearly numbers of vehicle purchases and cohort depreciation. It depicts 9 households differentiated by degree of urbanization and education, and accounts for detailed consumer preferences, mode choice decisions, and includes several electricity producing technologies. We assess the influence of two policy measures on the market penetration of electric vehicles: A rise in the mineral oil tax and a penalty on the car purchase tax, which in Austria is connected to CO2 emissions. Thereby we account for the overall economic effect on GDP growth and the effect on the government’s budget. This enables us to compare the economic costs of electromobility to the connected environmental benefits. (author's abstract)