The fundamental problem with using subsidies for political purposes is that something that is fundamentally unsound and not viable is supported by tax-payer money in the hope that it will become viable. I take it for granted however that subsidies are nearly always misplaced, subject to and induce gross misuse and are generally counter-productive for the political objectives they have. In my experience subsidies tend to hinder rather than help the development of new technologies. They particularly reduce the pressure on the developers to reduce costs for new technologies and are too easily misused. The emphasis always becomes the maximisation of the subsidies that can be extorted rather than the proper commercialisation and deployment of the new technology.
Subsidies for electric vehicles are equally misplaced and sales in Europe demonstrate that these incentives are particularly ineffective. It is probably time to dismantle all such subsidies which only distort the market and to let the development and commercialisation of electric vehicles follow a more healthy course.
New research from JATO Dynamics finds that despite a variety of subsidy programs, electric vehicle (EV) sales in Europe remain stubbornly unresponsive to financialincentives during the first six months of 2011.
Europe has a wide range of incentives in place, but they do not appear to correlate closely with sales of electric vehicles. For example, Spain (€6,500) and Great Britain (€6,400) have almost identical subsidies, but Great Britain registered almost five times the volume of EVs (599 versus 122) during the first half of 2011. Sweden registers an almost identical volume as Spain (111) but subsidizes each vehicle by only €470.
Denmark offers tax breaks that can potentially amount to €20,588 per vehicle, but there were only 283 registrations in the first half of 2011.
“The discrepancies highlight the apparent low influence of price on purchase decisions across the region,” says Gareth Hession, vice-president for Research at JATO. “It’s reasonable to conclude that sales are more affected by other factors such as the degree of urban geography, market maturity and charging infrastructure than was previously thought.”
Total registrations were only 5,222 in the first half of 2011.