The effect of changing registration taxes on electric vehicle adoption in Denmark

Large-scale deployment of battery electric vehicles (BEVs) is strategically important for the transition toward a low-carbon economy. Denmark has traditionally stimulated BEV diffusion through a registration tax exemption that was lifted in 2016 and partially reintroduced in 2018. Exploiting car registration and detailed population data covering the period 2013-2019 and using Bayesian additive regression trees, this paper provides new evidence on (i) the effects of the changes in the registration tax on the adoption of BEVs in Denmark, (ii) the socioeconomic factors that influence BEV adoption, and (iii) the presence of freerider effects. The results suggest that the number of BEVs would have been higher had the tax exemption remained. Moreover, we detect heterogenous treatment effects that are larger the more likely a socioeconomic group is to purchase a BEV. Consequently, we expect that there are substantial freerider effects in the promotion of BEVs via the tax system.