The Covid-19 crisis is characterized by many uncertainties, from the ability of governments and companies to redouble their transportation electrification efforts to the behavioral changes that can be expected from the current crisis, including from low oil prices and seizure measures. As cities gradually emerge from lockdowns, some are imposing temporary restrictions on the pace and occupancy of public transport, increasing the risk of a spike in vehicular traffic. Therefore, many cities, particularly in Europe, are developing policies to rethink the use of urban space and to promote walking and cycling. As part of the economic recovery efforts, there is a need to focus on promoting clean transportation at the national and local levels.
Automobile manufacturing is an important sector of economic activity in many of the world’s largest economies, and it employs millions of people across the entire supply chain. He was severely affected during the Covid-19 crisis; Practically all major auto manufacturers have stopped production lines for some time. Governments need to carefully consider appropriate policy responses. It is reasonable to expect stimulus packages to seek to boost the economy in countries with significant auto-manufacturing capacity by including measures to support the auto industry, at least given its importance to the labor market. While such measures will inevitably help boost electric vehicle sales as well, targeted measures to support electric vehicle sales in particular will be needed to ensure that road transport electrification remains on track toward the putative goals.
In China, policy makers were quick to identify the auto market as a primary target for economic stimulus. Among other measures, the central government has encouraged cities to loosen vehicle permit quotas, at least temporarily, while complementing them with strengthening measures for targeted new energy vehicles. In the European Union, at the time of writing, existing policies and regulations were being maintained and countries such as France and Germany announced increased support measures towards electric vehicles for the remainder of 2020.
The experience of the auto industry’s stimulus measures has been mixed. Cash-for-old car programs can be an effective method if they are designed to support the uptake of more efficient cars (such as hybrids) and electric cars. However, in previous stimulus packages, these considerations were not always adequately addressed and sales of SUVs and diesel cars were boosted, driving up global demand for oil and air pollution. Auto industry subsidies can also be linked to ambitious fuel economy regulations, which in the past led to innovation and helped start key parts of the electric car industry today. Other targeted and direct support measures, such as charging infrastructure, or through favorable low-interest loans and/or public co-financing, towards corporate fleets for bulk purchases of electric cars, buses and trucks, can support continued growth in electric vehicle sales. In countries where fossil fuel subsidies prevail, the low oil price environment is an important opportunity to phase out price subsidies, which are detrimental to pursuing energy efficiency efforts in general and to create a context that supports the electrification of road vehicles in particular.