Scandinavian Working Papers in Economics

Umeå Economic Studies,
Umeå University, Department of Economics

No 1032: Electric vehicle demand and electricity prices shocks

Mattias Vesterberg ()
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Mattias Vesterberg: Department of Economics, Umeå University, Postal: Department of Economics, Umeå University, S 901 87 Umeå, Sweden

Abstract: This study estimates the causal impact of the recent years’ high electricity prices on electric vehicle (EV) adoption. Utilizing Swedish registry data and leveraging regional discontinuities in electricity prices, I demonstrate that higher electricity prices reduce EV demand, but also the demand for combustion-engine vehicles. Additionally, the response to electricity prices varies across different types of EVs and socio-economic groups. Based on these findings, I explore a counterfactual policy that reduces electricity prices for EV buyers, and show that under plausible assumptions, this policy is less cost-effective in boosting EV demand compared to subsidies for EV purchases or charging infrastructure.

Keywords: Electrification; Transportation; Regression discontinuity

JEL-codes: D12; Q41; R41

Language: English

58 pages, March 7, 2025

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