When is the electric vehicle market self-sustaining? Evidence from Norway

Nicolas Koch, Nolan Ritter, Alexander Rohlf, Francesco Scarazzato

Publication: Working/Discussion PaperWU Working Paper

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Abstract

This paper investigates whether the world’s most mature electric vehicle (EV) market in Norway has overcome critical mass constraints and can achieve sustainable long-term equilibria without subsidies. We estimate a structural model that allows for multiple equilibria emerging from the interdependence between EV demand and charging station supply. We first estimate the resulting indirect network effects using an instrumental variable approach. Then, we simulate long-term market outcomes for each of the 422 Norwegian municipalities. We find that almost 20% of all municipalities faced critical mass constraints in the earliest stage of the market. Half of them are effectively trapped in a zero-adoption equilibrium. However, in the maturing market, all municipalities have passed critical mass. Overall, about 60% of the Norwegian population now lives in municipalities with a high-adoption equilibrium,
even if subsidies were removed. This suggests that critical mass constraints do no longer justify the provision of subsidies.
Original languageEnglish
Place of PublicationVienna
PublisherWU Vienna University of Economics and Business
Publication statusPublished - 1 Dec 2021

Publication series

NameDepartment of Economics Working Paper Series
No.317

WU Working Paper Series

  • Department of Economics Working Paper Series

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