The Political Economy of Electric Vehicle Adoption: Policy Stability, Pricing Dynamics, and Infrastructure Variables

This paper examines the interplay between government interventions—primarily fiscal policies such as tax incentives and purchase subsidies—and how the Total Cost of Ownership (TCO) and strategic pricing policies are utilized to accelerate consumer uptake of electric vehicles (EVs). Adopting a global perspective on the automotive manufacturing industry, this study addresses the primary challenges facing mass-level EV adoption, focusing on the substantial upfront retail pricing premium compared to conventional Internal Combustion Engine Vehicles (ICEVs). By synthesizing international empirical data and TCO frameworks, the paper analyses the structural efficacy of financial interventions in closing this price gap, alongside their direct effects on manufacturer pricing behaviours and consumer purchasing decisions. The literature review confirms that while EVs offer lower lifetime operating and maintenance costs, the high upfront manufacturing cost of batteries remains a primary economic hurdle. Furthermore, the analysis reveals that the market efficacy of these fiscal measures is frequently compromised by economic "pass-through" effects, where automotive vendors absorb public subsidies rather than transferring full savings to consumers. The study also demonstrates that long-term policy stability and duration predictability outweigh the absolute monetary volume of short-term incentives, as abrupt policy reversals can severely stall market growth. Additionally, the findings suggest that consumer confidence in EV technology and awareness of long-term cost savings play an important role in shaping purchasing decisions. Crucially, the long-term effectiveness of these pricing architectures relies heavily on critical complementary assets, namely public charging infrastructure availability, and regional energy variables such as domestic fuel subsidies and electricity tariffs.

Electric Vehicle (EV) Adoption, Total Cost of Ownership (TCO), Fiscal Policy and Subsidies

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