Benefits and Costs of Electric Vehicles for the Public Finances: Integrated Valuation Model and Application to France

Benefits and Costs of Electric Vehicles for the Public Finances: Integrated Valuation Model and Application to France


F Leurent, E Windisch, LVMT - Univesite Paris-Est, FR


The application of an input-output model delivers an exhaustive economic analysis of the effect of EVs on the public budget.


The upcoming launch and uptake of electric vehicles has financial impact on the public budget of a given country. Replacing a combustion engine vehicle by an electric vehicle entails fiscal effects - not only due to announced supportive economic policy measures but also due to industrial factors that reflect changes in the manufacturing of a vehicle and in the provision of products and services throughout the vehicle's operating life.

Studies on the economic impact of electric vehicles have been serving as decision aid in the process of policy making. However, existing analyses have so far either only focused on the 'obvious', direct financial impacts resulting from policy measures, or have taken a socio-economic welfare approach incorporating environmental costs and benefits of the introduction of electric vehicles under certain demand scenarios. However, mentioned industrial factors have, to our knowledge, been left aside so far.

The objective of this study is to deliver an exhaustive economic analysis taking all direct and indirect financial impacts of the introduction of electric vehicles on the public budget into account. Direct impacts refer to financial transfers due to subsidies and tax breaks. Indirect impacts refer to industrial factors which entail implications for i) the employment situation and therefore for salaries, social contributions by employers and employees and unemployment benefits and ii) tax revenues on the consumption side (VAT) and the production side (whether it concerns the vehicle, its accompanying services or usages such as fuel/electricity).

The valuation method is based on an input-output model of the productive economy, combined with mechanisms of fiscal and social transfer. We postulate the existence of an activity for the Manufacture of electric vehicles, and we include this within the consumption matrix associated with production. The methodology is applied to the case of France. Scenarios that vary assumptions on whether vehicle manufacturing and usage is taking place in- or outside the country are developed and analysed on their fiscal impact on the public budget.


Association for European Transport