A study by the EHU-University of the Basque Country indicates that it is mostly higher-income households that benefit from government grants for purchasing EVs
A joint study by the EHU-University of the Basque Country and the BC3 research centre reveals that EVs are concentrated in households with high incomes, higher levels of education and located in urban areas, which highlights a social divide in accessing them. The study concludes that current government grant schemes do not address this inequality, and proposes linking grants to income levels.
Road transport poses a major challenge in the fight against climate change. Not only is it one of the sectors that emits the most greenhouse gases, but it is also the only one in which emissions are continuing to rise. In this context, the electrification of the vehicle parc has become one of the key strategies for decarbonising mobility. However, Spain has one of the oldest vehicle parcs in Europe and, although the target is to reach 5.5 million EVs by 2030, currently there are barely 600,000, according to figures from the DGT (Spanish Directorate-General for Traffic).
In view of this situation, a study by the EHU researcher Mercè Amich analysed the factors influencing the purchase of EVs at national level, as well as the effectiveness of the MOVES schemes, the main grant programmes designed to encourage the purchase of EVs.
“We need to understand what is going on, because, at the current rate, the targets are not going to be met. In other parts of Europe, electric vehicle uptake is indeed proving successful. You don’t need to go all the way to Northern European countries. Portugal, for example, is doing it much better. What we found in our study is that most electric vehicles are located in urban areas, in households with high incomes and a higher level of education. There is a significant social divide when it comes to acquiring electric vehicles, and current grant schemes are contributing to this inequality. Unless access to these technologies is made more widely available, climate targets are not going be met,” explained Amich.
According to the study, the factors that most influence the purchase of EVs are income, educational achievement and place of residence. “The higher one’s income is, the more property one owns. It is in households with incomes well above the average that there are the most electric vehicles. Most electric vehicle owners have a university degree and live in large cities, particularly in Barcelona and Madrid,” explained Amich.
The findings are novel, as they analyse, for the first time, real data on EV ownership. Until 2021, the information available was limited to surveys on preferences and did not reflect the population’s actual behaviour. That is why this research provides the first in-depth analysis of what is actually going on.
Socially and environmentally ineffective grants
Regarding the effectiveness of the MOVES grant schemes run by the Ministry for Ecological Transition, the EHU study concludes that these schemes are not achieving their purpose adequately. By analysing property data alongside the regional distribution of financial support, the research team saw that government resources are neither reaching those who most need EVs, nor driving an effective renewal of the vehicle parc.
“We do not have any data detailing whether owners of electric vehicles took advantage of the MOVES Schemes. But as there are so few of them on the market, we can be fairly certain that the data are linked. So if we match the information, we can see that the grants are being given to people who could afford an electric vehicle without them. This means that they are failing to change purchasing behaviour, which is precisely the aim of this type of public policy,” said Amich.
What is more, the findings suggest that many users are not replacing their internal combustion engine vehicles, but are instead adding electric vehicles to their arrays of vehicles, thus reducing the environmental impact of the grants.
Proposals for improving grant scheme design
The research includes recommendations to address the social and environmental inefficiencies of the grant schemes. For example, to promote more equitable access to EVs, the study proposes introducing an income threshold to be eligible for financial support, thereby ensuring that the grants reach those who need them most. “Right now, a wealthy individual in Madrid looking to buy a Tesla receives the same level of support as someone who does not have as much money.” A great deal of public money is being spent on subsidising rather exclusive, expensive vehicles for very small sections of the population who most likely already have the financial means to make the investment. “There should be an income cap, as is the case with other types of support,” said Amich.
From an environmental perspective, reviewing the requirement for older internal combustion engine vehicles to be sent to the scrapyard should be reviewed, so that electric vehicles do in fact replace the most polluting cars. This criterion had been included in some calls for proposals under the MOVES Schemes, but was subsequently withdrawn.
Further information
The article is the outcome of collaboration between the EHU’s Faculty of Economics and Business and the BC3, the Basque Centre for Climate Change. Mercè Amich works in both institutions. Since completing her Master's in Economics: Empirical Applications and Policies, she has been writing up her thesis on the decarbonisation of society under the auspices of the Doctoral Programme in Quantitative Finance and Economics. Her supervisor is Petr Mariel, researcher and lecturer in the Department of Quantitative Methods, who is also one of the authors of the article.