Bonus Slopus: Examining the Effect of Removing Bonus Incentives for Electric Vehicles on Adoption

Sammanfattning: In the global battle against climate change, the pursuit of sustainable transportation, particularly through the adoption of electric vehicles (EVs), has become a central focus. This thesis investigates the specific case of Sweden and delves into the repercussions of removing the climate bonus subsidy for EVs, exploring its immediate and potential long-term impacts on the market. The paper contextualizes the significance of EVs in climate change mitigation, emphasizing their transformative role in the transportation sector. As Sweden has a prominent leadership role in EV adoption, the study aims to provide valuable insights into the consequences of subsidy removal in this unique context. Employing a Difference-in-Difference design and drawing on a dataset spanning from May 2021 to October 2023, the study compares the share of newly registered passenger EVs in Sweden compared to a counterfactual scenario using Danish market trends. The results indicate a statistically significant decrease in the share of EV registrations post-subsidy removal, supporting the hypothesis that the climate bonus removal adversely affected EV demand. However, the failure of the parallel trends assumption calls into question the internal validity of the results, although comparability and direction purposes maintain their importance. The Swedish case is particularly intriguing due to its historical policy measures, a robust EV market, and its signaling effects on global EV adoption. The study not only aligns with theoretical expectations but also contributes to existing literature by offering nuanced insights into Sweden's unique EV landscape. The findings emphasize the crucial role of subsidies in influencing consumer behavior and shaping the trajectory of EV adoption.