Assessing the effectiveness of financial incentives on electric vehicle adoption in Europe: Multi-period difference-in-difference approach

• Electric vehicles adoption is crucial for emissions mitigation in transport sector. • Difference-in-difference analysis realized on 30 European countries from 2012 to 2021. • Purchase incentives can contribute to electric vehicles adoption over the years. • Ownership incentives are not effective in electric vehicles adoption. • The impact of financial incentive policies is heterogeneous between countries. Electric vehicles (EVs) are considered a promising alternative to achieve a cleaner transportation sector. In the last decade, European countries have implemented financial incentive policies to boost EV adoption. This paper estimates the impacts of these policies on EV adoption in Europe using data from 30 countries from 2012 to 2021 and a multi-period difference-in-differences approach. Our results reveal that purchase incentive policies are associated with increased registrations of battery electric vehicles and plug-in hybrid vehicles, and that the effect holds over time. However, the magnitude and duration of these effects are more significant for battery electric vehicles. Ownership incentive policies do not contribute to EV registrations for either type. Further, the results suggest that policy impacts vary between countries with different levels of gross domestic product per capita and renewable energy consumption. These results contribute to the literature on evaluating financial incentive policies for EV adoption, enabling improved decision making by policymakers.