Effect of the subsidy given for the purchase of electric vehicles in Finland between 2018 and 2022 to the demand of electric vehicles

Abstract

There are several policies set globally and locally in the efforts of trying to slow down global warming and its inevitable effects by reducing CO2 emissions. One big contributor of CO2 emissions is road traffic, and due to this, the European Union has implemented several policies and plans in this sector. One of the goals set by the European Union is to increase the percentage of electric vehicles in road traffic, which would reduce the CO2 emissions caused by road traffic. To achieve this goal, many policies and schemes have been implemented in all the member countries. This thesis focuses on the Pigouvian subsidy given in Finland for the purchase of electric vehicles between 2018 and 2022. The aim is to study the impact of the subsidy to the number and the percentage of new electric vehicles registered, as previous studies have not been made on the subject in Finland. The impact of the subsidy is analysed with a difference-in-differences analysis, using hybrid petrol/electric vehicles registered in Finland as a control group. Although previous studies and the theoretical framework suggest that implementation of a subsidy should have had an impact in the growth of the percentage of electric vehicles registered, the analysis shows no indication of this. The reasons why the analysis showed this result, are discussed in the conclusions part of the thesis.