Prioritizing electric miles over electric vehicles will deliver greater benefits at lower cost
The high first-cost of electric vehicles (EV) is a significant barrier for EV adoption, and since EV inception, public policies supporting electric vehicles have focused on adoption by private households through subsidies for vehicle purchase (in addition to other forms of support). This paper puts forward for the first time the idea of switching subsidies away from subsidies for vehicle purchase to vehicle use through a per mile subsidy which will target high usage vehicles such as those used in ride hailing applications to provide greater economic and environmental benefits. The basic idea is this would make the fuel cost savings more salient to the decision making and lead self-selection by high mileage users who would derive more fuel cost savings. Furthermore, they show that the time is particularly ripe for this policy because of the rapid growth in miles serviced by ride-hailing apps including Lyft, Uber, and related on-demand delivery services. To reduce the total subsidy per vehicle per vehicle, policymakers could announce a schedule of subsidies that diminish with cumulative miles accrued and also cap the total per vehicle at any predetermined level. Last but not least, this policy could be implemented with low cost of monitoring given the ability to track usage and deliver subsidies through the apps. Such a policy could be done without inconveniencing or excluding private household buyers.