Let's say you want to encourage more drivers to shift to battery-electric vehicles. What's the best way to do it?
Author
- Anilan V
Postdoctoral Researcher, Adelaide University
Globally, billions have been poured into incentives to encourage drivers to switch. The most popular approaches are rebates to cut the purchase cost and schemes to fund fast public chargers. The logic is simple: make EVs cheaper and public charging easier and consumers will follow.
But my recent research on Australian battery-electric vehicle policies suggests it's not simple. Highly visible policies subsidising the upfront cost of new battery-electric vehicles represent surprisingly bad value for money.
What shifts the dial much more are quieter policies reducing annual running costs, boosting convenience and strengthening consumer understanding. The best return on investment comes from subsidising home and workplace EV chargers. This is because of the large savings on annual operating cost and the certainty and convenience of charging cheaply at home or at workplace.
As Australian policymakers review tax exemptions on new battery EVs, it's worth taking a hard look at what actually drives uptake in an economically efficient way.
Australia's slow start
Sales of battery and plug-in hybrid EVs rose to over 13% of new vehicles last December - the highest percentage to date.
But Australia is lagging. Battery-electric vehicles globally averaged more than 20% of new car sales last year .
To understand what drives uptake efficiently, I asked a panel of Australian industry experts to shortlist top policy contenders based on a systematic review of successful global policies. I ran benefit-cost analyses of the six shortlisted policies and projected how effective they would be over 30 years.
These policies were: purchase rebates, public and private charging, education programs, incentives to cut operating costs and fuel efficiency standards.
How do these policies rank?
Of the six, two clearly stood out as boosts to uptake - private chargers and education programs. Public chargers didn't give much economic return, but are essential to giving drivers certainty.
Purchase rebates and cheaper operating costs: popular underperformers
Purchase rebates give buyers some money back to effectively make the EV cheaper. These policies aim to support early adopters who might be deterred by higher upfront costs.
The problem is, they don't work very well. My analysis shows these policies have a benefit-cost ratio of just 0.88, returning just 88 cents in benefits for every dollar spent.
Why? Freeriders . Many well-heeled people who get the rebate would likely have bought the vehicle anyway. But the policies do little to drive change with other groups.
International studies similarly show broad-based rebates are often weak in encouraging people to buy battery-electric vehicles who weren't already planning to, while benefits disproportionately flow to higher-income households.
Incentives to cut operating costs had the same poor benefit-cost ratio of 0.88. These incentives - such as exemptions from road tolls and parking discounts - are more evenly spread, as they extend to secondhand owners.
Fuel efficiency: exceptional on value, modest on uptake
At the start of 2025, the long-awaited New Vehicle Efficiency Standard came into effect, bringing Australia into line with other developed nations.
Low implementation costs give these standards the highest benefit-cost ratio of all policies assessed at almost 47.
Importantly, the policy is technology-neutral, meaning it acts to cut emissions across all vehicle technologies, including hybrids and internal combustion engines.
But while the standards are a highly cost-effective way to cut transport emissions, they won't drive mass uptake of battery-electric vehicles. They function as a foundational policy - efficient, essential but insufficient on their own.
Rebates for home and work chargers: strong boost to uptake
Incentives for home or workplace smart chargers are little discussed. But these policies had the highest total return on investment and a benefit-cost ratio of 1.86, as well as strong effects on uptake over time.
Why? Cost savings and convenience. Smart chargers let households charge cheaply at off-peak times or from rooftop solar, which also eases pressure on the grid. Owners strongly value the convenience of charging at home or work, rather than having to go to a public charger and wait for the car to charge. In the future, vehicle-to-grid technologies allowing owners to sell power to the grid will be another incentive.
The policy would be particularly effective in Australia, where off-street parking and rooftop solar are common. To date, Australia doesn't have a nationwide rebate for home chargers.
Public fast chargers: important but not economically efficient
Australian governments prefer to fund public fast chargers rather than offer rebates for home chargers. This makes some sense, as fast chargers give drivers more certainty they can recharge away from home.
It's not very efficient, with a low benefit-cost ratio of 0.88. But public charging is more equitable than purchase rebates, as these chargers give renters and people in apartments a way to charge. The chargers boost confidence in the network, even if they are used infrequently.
While public fast-charging has a borderline economic benefit, it's essential on a social and psychological front.
Public education and exposure: surprisingly effective
Information campaigns and public education are another underappreciated policy option. Test-drives and hands-on demonstrations let people new to the technology become comfortable.
Education policies tackle common information gaps and misconceptions around range, battery life, charging costs and safety.
These programs are cheap and highly effective, with a benefit-cost ratio of 3.05 and an initial boost to uptake.
Which way forward?
In earlier research , we found different policies were more effective at different stages of battery-electric vehicle adoption. This means it's important for policymakers to put the right policies in place at the right time.
Until now, Australian policymakers have focused on building the network of public chargers and giving rebates to reduce purchase prices.
But as our research shows, it's not always the shiniest, most popular policies which do the heavy lifting.
We could get far better traction with less visible but more effective policies around private chargers and education programs - and making sure purchase rebates go to people who need them.
Anilan V does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
