Powering Up a Slow Charging Market: How Do Government Subsidies Affect Charging Station Supply?

TL;DR

This study demonstrates that government subsidies significantly increase charging station supply in California, addressing market failure and promoting electric vehicle adoption through empirical analysis.

Contribution

It provides empirical evidence that subsidies effectively boost charging station deployment, filling a gap in research on policy impact in this market.

Findings

Subsidies lead to a 36% increase in charging stations after two years.

Government intervention can correct market failure in EV infrastructure.

Empirical analysis uses data from 57 California counties.

Abstract

Electric vehicle adoption is considered to be a promising pathway for addressing climate change. However, the market for charging stations suffers from a market failure: a lack of EV sales disincentives charging station production, which in turn inhibits mass EV adoption. Charging station subsidies are often discussed as policy levers that can stimulate charging station supply and correct this market failure. Nonetheless, there is limited research examining the extent such subsidies are successful in promoting charging station supply. Using annual data on electric vehicle sales, charging station counts, and subsidy amounts from 57 California counties and a staggered difference-in-differences methodology, I find that charging station subsidies are highly effective: counties that adopt subsidies experience a 36% increase in charging station supply 2 years following subsidy adoption. This finding suggests that governmental intervention can help correct the market failure in the charging station market.