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Government analysis, assessment and research activities
Report: Electric and gas vehicles need cost-efficient support measures

Government Communications DepartmentMinistry of Transport and Communications 11.2.2019 10.28 | Published in English on 12.2.2019 at 13.02
Press release 82/2019

The high purchase prices of electric vehicles and challenges of charging in housing companies are currently slowing down the development of the electric vehicle market and public charging infrastructure and the natural growth of the electric vehicle base. A cost-efficient way to accelerate the market would be to introduce more electric vehicles to the vehicle base, but this will require effective promotion measures in the next few years.

The goal set a year ago in the national energy and climate strategy, 250,000 electric vehicles or plug-in hybrids and 50,000 gas vehicles by 2030, seems possible to reach even with the current measures according to the recently completed “Sähkö- ja kaasuautojen kustannustehokkaat edistämistoimet - GASELLI” (Cost-efficient measures to promote electric and gas vehicles) project.

The project surveyed the alternatives of accelerating the development by modelling changes in the car base in scenarios prepared with a system dynamic model. The model was used for surveying the impacts of different promotion measures, and the cost efficiency of the measures with regard to the development of the market share of electric vehicles and plug-in hybrids was reviewed based on the results. Steering measures with effects on electric vehicles surveyed with the model included influencing the purchase price (car tax and purchase subsidy), road tax, promoting charging at home, promoting company cars and communications and marketing.

“According to the modelling, adopting additional promotion measures would make it possible to reach an electric vehicle and plug-in hybrid base that is significantly, at least two times, larger than the goal by 2030,” says Project Manager Mikko Pihlatie at VTT Technical Research Centre of Finland.

The availability and price of gas vehicles are not currently obstacles to their purchase. With regard to gas vehicles, the most important thing is to continue to expand the refuelling infrastructure. In areas where gas is available, there is no reason to postpone the purchase of a gas vehicle, as they are currently ready solutions for the cost-efficient reduction of emissions.

The biggest obstacles to the increase in the market share of electric vehicles are the high purchase prices, currently limited range of models and challenges with the implementation of at-home charging in housing companies.

“The construction of charging points in housing companies and workplaces should be made easier and encouraged, even though interest in building charging points has arisen to some extent among housing companies after the survey last spring,” says Marko Paakkinen, Senior Scientist at VTT.

At the beginning of the project, 93% of the housing companies that responded to the Finnish Real Estate Federation’s renovation barometer had not yet taken any measures with regard to the charging of electric vehicles, but in the survey conducted in autumn 2018, already one-fifth of housing companies reported that they are planning to build charging points in 2018–2021. The Housing Finance and Development Centre of Finland (ARA) currently grants subsidies to housing companies for modifications of property electrical systems required by charging points.

Diverse incentives for electric vehicles are still necessary

High purchase price is mentioned in several surveys as the biggest obstacle to purchasing an electric vehicle, including the survey conducted in this project. According to the analysis of the results of the modelling, influencing the purchase price was found to be a cost-efficient promotion measure. Fully-electric vehicles are expected to be on a par with combustion-engine vehicles in terms of purchase price around 2025, after which incentives will no longer be necessary. The best time for the use of incentives influencing price is actually right now, with the total number of vehicles still low and the price difference the greatest.

“According to the analysis performed in the project, the most cost-efficient promotion measures were influencing the purchase price of the vehicle, by way of car tax or direct purchase subsidy, for example. In addition to this, the most cost-efficient promotion measures found in the project analysis included promoting charging in terraced buildings and blocks of flats as well as communications and marketing,” Pihlatie continues.

New electric vehicle models, both fully-electric vehicles and plug-in hybrids, are being launched at an accelerating rate, and the market is developing at a rapid rate. More than 200 new electric vehicle models are expected to enter the market by 2025. Even though the model range of electric vehicles is still limited, the features of the current models would already meet the needs of most households. Communications and marketing are effective ways to promote the demand for existing electric vehicle models.

Incentives for companies

An effective way to increase the market of second-hand electric and gas vehicles would be to incentivise low-emission options in the procurement of company cars; this might take place through the taxational value of car benefits, for example. Charging electric vehicles at workplaces should also be promoted to make it possible to purchase second-hand electric vehicles as commuting cars in particular, as well as to turn electric vehicles into resources in the smart grid in the future. Encouraging charging should be remembered in plug-in hybrids acquired under unlimited car benefit; with free fuel, the user of the car might not be tempted to acquire a home charging station at their own cost. With regard to these cars, a home charging station could be considered a standard accessory to the car.

The publication was prepared as part of implementing the government plan for analysis, assessment and research for 2018.

Report (in Finnish)

For more information, please contact:

Project Manager Mikko Pihlatie, VTT Technical Research Centre of Finland, tel. +358 400 430 395, mikko.pihlatie(at)vtt.fi, 

Senior Scientist Marko Paakkinen, VTT, tel. +358 40 183 0255, marko.paakkinen(at)vtt.fi