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Exploring the development of electric vehicles under policy incentives: A scenario-based system dynamics model

Liu, Dunnan, Xiao, Bowen
Energy policy 2018 v.120 pp. 8-23
automobiles, carbon markets, dynamic models, electric vehicles, energy, issues and policy, pollution, transportation industry, China
Recently, the energy scarcity and environmental pollution have greatly promoted rapid development of the electric vehicles (EV) industry. In this context, we established a scenario analysis using system dynamics model to analyze the development of EV in China under policy incentives. Four scenarios were set in this paper: scenario 1 (Without any policy), scenario 2 (Only direct policy), scenario 3 (Only indirect policy), scenario 4 (Both direct & indirect policy). It is shown that the EV industry was in preliminary stage in 2010. After a period of development, in 2040, the total amount of EVs will reach 4.03, 8.61, 4.2 and 8.85 million in scenario 1–4. The results indicate that China's EV market penetration is mainly dominated by state policies, especially the financial supports. Reducing the governments’ financial supports for EVs will put EV manufacturers at a cost disadvantage in the automobile markets. In addition, because of our emerging carbon market and low average carbon price, participating in carbon trading market cannot promote a rapid growth by stimulating investment passion. In all, cutting the financial supports is not a good option, because the large-scale market penetration still requires the clear and strong policy incentives.