Electric car subsidies are more successful in rich regions

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The subsidies for the purchase of electric vehicles to speed up the transition of the Spanish automobile fleet have more impact on the richest provinces and barely impact on those with lower per capita income. This is extracted from a study carried out by economists from the Bank of Spain who have evaluated the impact of the MOVES II plan on car registration in the different provinces from June to the end of 2020.

The economists Brindusa Anghel, Iván Auciello and Aitor Lacuesta have published the study “Heterogeneity in the impact of the incentive program for the purchase of electric vehicles in Spain“, where they conclude that the implementation of this state subsidy plan has increased enrollment of new electric vehicles by “at least one percentage point” in Asturias, Madrid, Catalonia, Balearic Islands and Navarra. All of them except the Asturian principality -where it rose by more than 2 points- are part of the regions with the highest per capita income in Spain.

On the opposite side are those regions with less purchasing power, where the authors they have found no evidence that the plan is working. In this way, in Andalusia, Aragon, Castile-La Mancha, Galicia, the Basque Country and La Rioja have identified a “statistically null” average impact. The authors also question that the increase in registrations – which went from 0.25% in 2017 to 7.6% in 2022 – is due to the success of MOVES and not to a “natural tendency to buy more electric vehicles”.

Given the conditions of the electric market, the average price of this type of car is much higher than diesel or gasoline. In fact, the price of a pre-owned second-hand rose to 39,001 euros, something that the ElectricarVO report prepared by Ganvam and coche.net attributes to the fact that they are cars with less than three years of life, to the high demand and the low supply. The price band for new electric cars does not fall below 25,000 euros, depending on factors such as autonomy, interior capacity or brand.

The MOVES plan, of incentives for efficient and sustainable mobility, allows reduce the cost of acquiring new electric vehicles or low emissions in order to promote the renewal of the car park in Spain, which is getting older and older. This program already accumulates three different editions and in each one funds have been substantially increased, from the 45 million of the first plan to the 400 million expandable of the third, currently in force. The program that has been studied is the second, endowed with 100 million.

This type of incentive, of a monetary or fiscal nature, is common in European countries, the United States or Canada, although scientific evidence diverges on the real usefulness of this type of incentive. As the authors of this study emphasize, although it has not been shown that the measure favors the richest households, the collection of studies that they have located do agree that this type of subsidy they are not progressive.

Source: lainformacion.com

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