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Financial incentives for efficient vehicles

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Complete with results
Geo-spatial type
Network corridors
Project Acronym
SVI 2001/519
STRIA Roadmaps
Transport electrification (ELT)
Transport mode
Multimodal icon
Transport policies
Societal/Economic issues
Transport sectors
Passenger transport,
Freight transport


Background & Policy context

The Association of European Automobile Manufacturers have signed a binding agreement with the EC to reduce the average specific CO2-emision of new cars sold in Europe from 186 g/km in 1998 to 140 g/km till 2008.

Automobile manufacturers of Asia have taken over the same agreement. This goal is to be attained by technological improvements. Regarding the recent developments, this aim is ambitious.

Therefore, further communicative and financial measures from the political point of view will also be discussed.

Financial incentives might be regarded as subsidies and therefore might be seen to represent delicate interventions in the free market.

The Swiss canton of Ticino has a promotional programme for efficient vehicles, which will run for four years (VEL2). Within this programme, subsidising of the purchase price of vehicles with low CO2-emision is included. In the context of the project 'NewRide', the cities Basle and Zurich make financial contributions to the purchase of electric two-wheelers. 

In this research project, a comprehensive impact analysis of such financial incentives for efficient vehicles was conducted. This includes a systematic overview of the possible promotional methods of energy efficient vehicles by financial incentives, as well as a comparison of the effects of Swiss projects and from projects abroad.


In mid-2001, the Ticino canton started a promotional programme for efficient vehicles, called 'VEL2'. In the context of the project 'NewRide', the cities Basle and Zurich are promoting electric two-wheelers by giving financial incentives. On these examples, an impact analysis of financial incentives for efficient vehicles was carried out in this research project. Further approaches, such as tax reduction for efficient cars in the Lucerne canton were also included.

The following subordinate questions (topics) are answered (covered) in this project:

a) A systematic overview of possible approaches for financial incentives within the sector of vehicles

b) An impact analysis of financial incentives in VEL2 and NewRide: What has been triggered by the financial incentives? What does the cost-benefit analysis look like? Are there unwanted side effects? Should the measures be recommended to other cantons/cities?

c) A comparison with other approaches: The analysis includes a systematic overview of the possible promotional methods of energy efficient vehicles by financial incentives, as well as a comparison of the effects of Swiss projects and from projects abroad.

The study aimed to offer an overview of the effects of financial incentives depending on other promotional measures, on external conditions, as well as on a comparison with different ap-proaches and a compilation of cost and benefit.


The research project was based on the following methods: 

  • Literature research
  • Desk research
  • Interviews with involved stakeholders of the two programmes and experts
  • Population survey in the areas of the two programmes
  • In-depth survey with car salesmen, car dealers and importers
  • Survey among buyers of efficient vehicles
  • Quantitative analyses of the survey results
  • Model calculations of the CO2 reduction effects and cost-benefit calculations.


Parent Programmes
Institution Type
Private foundation
Institution Name
Association of Transportation Engineers
Type of funding
Public (national/regional/local)


The aim of the research project was to undertake a comprehensive analysis of the effect of financial incentives for efficient vehicles, using as its basis the support projects 'VEL2' and 'NewRide'. These support projects were able to demonstrate that the financial incentives had a significant effect, and also that the effects were not present to the same extent for all the vehicle categories for which incentives were provided. It should be noted that financial incentives are only effective within the context of continuous communication measures.

The share of the supported petrol-driven and diesel-powered vehicle models could be more than doubled. The financial incentives showed a very strong effect in the sector of electrically-powered vehicles. However, the high financial contributions and the rather low levels of transport mileage of this type of vehicles led to a poor cost-benefit ratio concerning energy savings. The level of supply of these vehicle categories has been stagnant for around a decade now. Government support for these vehicles needs to be reconsidered against this background.

An exception is the E-bikes: Their availability has substantially improved in recent years and sales have continued to increase.

Efficient vehicles can be financially supported with the aim of achieving different specific goals. Therefore it is not possible to make a general statement on the desirability of this type of financial support.

With regard to the main focus investigated in this research project, the effects on CO2 emissions, financial support for efficient diesel, petrol or hybrid-powered cars shows particularly promising success.

Policy implications

  1. Financial incentives can be important measures to promote efficient vehicles.
  2. Financial incentives are only effective if they are accompanied by continuous communication measures.
  3. Financial incentives are also a suitable measure for campaign marketing, to draw the target audience's attention to efficient vehicles.
  4. Approaches for supoprting market entry of new technologies can be combined with approaches for supporting establisted products and technologies.
  5. Financial inventives by means of subsidies are cost-intensive for the state.
  6. Too high purchase subsidies are problematic since they can lead to overhasty buying decisions.
  7. To reach energy policy goals, additional measures are needed.


Lead Organisation
EU Contribution
Partner Organisations
EU Contribution


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