A new International Energy Agency analysis finds that governments account for nearly one-fifth of global spending on electric vehicle purchases.
Why it matters: "The ability of governments to stabilize and then reduce their share of total EV spending will be a key test of the sustainability of the EV market in coming years," 2 analysts write in the Oct. 10 commentary.
- "Unless government incentives adjust as the market increases, considerable pressure will be placed on public budgets," they add.
The big picture: Governments accounted for roughly 18% of total EV spending last year — a tally that includes both direct support and tax incentives.
- That's roughly the same level as 2017, but the share generally rose between 2012 and 2017 and "could very well rise again in [the] future."
Threat level: They note the EV market is growing at "whirlwind speed" even though they remain a tiny share of overall sales.
- "But because it relies on government payments that cannot rise indefinitely, this growth raises risks and uncertainty even as battery costs come down," it states.
The intrigue: Government support is falling in 2 key markets, and the early signs show that it's affecting sales.
- In China, the world's largest EV market, a cut in subsidies this year has eaten into sales.
- In the U.S., sales growth has also slowed as consumer tax credits are phased down.