Vehicle electrification policy study: Task 4 — Complementary policies

Transforming the passenger and light-duty vehicle fleet into one more heavily reliant on electric vehicles will demand collaboration among government, industry, other stakeholders, and the public—no simple venture to manage at any time. To help chart a course, in 2010 the International Council on Clean Transportation undertook a study of public policies aimed at advancing vehicle electrification.

The Vehicle Electrification Policy Study focuses on the California Zero Emission Vehicle (ZEV) program, which since 2001 has required major automakers to market increasing numbers of BEVs or FCEVs in California. But it places the California program in a global context, so the analysis and findings will be of use in other jurisdictions as well.

The study is organized around five tasks, with the results of each task presented in a separate policy report. This document reports ICCT analysis and findings regarding Task 4, Complementary Policies. Complementary policies in this context are nonregulatory policies that are intended to support the successful deployment of electric vehicles.

In general, it appears that policies and programs are in place to adequately support the planned initial deployments of BEVs. There will be many challenges, but the pent-up demand from electric vehicle enthusiasts and the ample support from governments and manufacturers appear to be sufficient to carry through the “first wave” of electric vehicle deployment, roughly the next 3 years. It is far from clear, however, that the same can be said for the “second wave” of deployment, roughly 2014 through 2018. It is ICCT’s view that policy attention, particularly in California, should focus on how best to support this upcoming second wave.

The electric vehicle–targeted incentive and other programs currently in place can be grouped into three categories according to their intended result: to support and encourage the manufacturing of electric vehicles and key components such as batteries, to increase customer demand for electric vehicles, or to encourage the installation of electric vehicle infrastructure. Electric vehicle deployment is just getting under way, and the various incentives and subsidies being provided have not been in operation long enough to evaluate their results. Nonetheless, some observations can be made regarding the incentive programs currently in place:

• Policies to encourage the introduction of ZEVs must come to grips with a fundamental tradeoff: What is the appropriate balance of research and development versus deployment, and to what extent should this balance change over time?
• The institutional, organizational, and industrial frameworks for a BEV charging infrastructure and a FCEV hydrogen refueling infrastructure are completely different. Despite the lack of a common institutional framework, there are a number of issues that cut across both infrastructure efforts, notably the extent to which the provision of electric drive vehicle infrastructure should be subsidized by other energy users and/or taxpayers.
• Given the high cost of today’s electric vehicles, analysts have predicted that the initial buyers of electric vehicles will have higher than average incomes. This has led to concerns in some quarters that subsidies for electric vehicles are inequitable.
• The ongoing economic downturn will continue to put pressure on subsidy programs for the foreseeable future. One key question is whether vehicle costs will decline rapidly enough to offset the loss of subsidies, such that the net cost to the consumer remains the same or declines.

The many existing policies and incentive programs provide a strong base of support for most aspects of the coming initial vehicle rollouts, but there are still areas of concern. FCEVs face important challenges both for vehicle technology and fueling infrastructure. More important, however, is a need for careful planning and mutual commitment among disparate parties to ensure a coordinated rollout of vehicles and stations. Another key question being faced around the world is how fast to install public infrastructure.

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