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Summary: 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. Science for society: Transport contributes over 15% of global greenhouse gas (GHG) emissions, and decarbonizing this sector requires massively increasing battery-electric vehicle (BEV) sales worldwide. However, a rapid shift away from internal combustion engine (ICE) cars puts governments’ transport revenues at risk because these revenues consist largely of fuel taxes. Accordingly, debates on whether and how to introduce or ramp up taxation for BEVs to replace fuel taxes have started around the world. Yet such BEV taxes may slow the transition as they worsen the cost competitiveness of BEVs compared with ICE cars. Currently, structured advice for policymakers on how to navigate this challenge is lacking. Our article addresses this issue and provides new insights on how BEV taxation can be designed to minimize the negative effects on the transition to low-carbon road transport across jurisdictions. |
