Impact of fiscal incentives in the consumption of low emission vehicles

Abstract

Due to the high emissions produced by the transportation sector, one of the most implemented policies worldwide is the economic incentive to purchase electric and hybrid vehicles. The adoption of these policies in developing countries is scarce or null and there are no studies that investigate the impact of economic incentives in the potential demand for low emission vehicles. This paper covers this gap. Using data from a stated preference experiment in Santiago of Chile, specifically built to collect individuals’ preferences for incentives to low emission vehicles, a mixed logit model was estimated and results used to compute willingness to pay. In parallel, a contingent evaluation experiment was conducted to elicit individuals’ willingness to pay under two specific policies, involving different ways to provide fiscal incentives. Results shows that individuals are more sensitive to autonomy and incentives in the case of electric vehicles in relation to conventional/hybrid type. Likewise, results show that for an exemption from VAT payment and any type of sales and purchase tax, 72% of individuals would be willing to purchase an electric vehicle, and 76% of individuals would be willing to purchase a hybrid vehicle, waiting for an adequate incentive policy for it