Subsidizing residents or companies? An equilibrium-based analysis of subsidy strategies for EV charging facilities

Abstract

This study examines the charging location choice behavior of residents in relation to employer-provided charging facilities and investigates the impact of different government subsidy strategies for charging facility construction on urban spatial structure and traffic-related air pollution. Using a monocentric two-zone city model, we analyze the residential distribution and travel mode choice of urban residents under various subsidy strategies from the perspective of social planners. The government can optimize urban resource allocation through transport infrastructure investments and implementation of emission taxes to maximize the so-called residents’ utility. We observe that despite the distorting effect of employer-provided charging facilities on travel mode choice, residents still experience an enhanced utility due to the positive environmental impact resulting from reduced pollution levels associated with electric vehicles (EVs) compared to gasoline vehicles (GVs). We provide numerical evidence to show that government subsidies, whether directed towards companies or residents, can effectively enhance the adoption of EVs and improve utility. In low-density cities, it is advisable for the government to encourage and subsidize residents in building charging facilities. Conversely, in high-density cities, prioritizing subsidies for companies would be more beneficial in improving utility and expanding the coverage of charging facilities. Furthermore, in cities where resident environmental awareness is relatively low, it is recommended that the government increase subsidies to promote EV adoption.