Should the European union adopt electric vehicles?

Abstract

To answer the question posed in the title of this study (should the European Union adopt electric vehicles?), we must analyze the determinants of battery electric vehicles adoption in the European Union. Our study encompasses ten years of statistical data for twenty countries that are members of the European Union. After the compilation of statistical data, preliminary tests were performed, with initial results suggesting the use of a Panel Autoregressive Distributed Lag model for econometric analysis. To perform the model, the statistical software Stata 18 was used. Advantages of the Panel Autoregressive Distributed Lag model are that it allows you to capture short- and long-term impacts. Thus, our research investigates the short- and long-term dynamics that affect battery electric vehicles' penetration in European Union member countries. The economics and environmental variables analyzed are gross domestic product per capita, CO₂ emissions, the price gap between battery electric vehicles and internal combustion engine vehicles, charging infrastructure, and fuel prices. The estimation results reveal heterogeneous and asymmetric effects of economic and structural factors on battery electric vehicles adoption across the European Union. In the short run, both the price gap between battery electric vehicles and conventional cars and the availability of charging infrastructure display negative and statistically significant coefficients, suggesting that cost barriers and insufficient infrastructure continue to constrain the expansion of the electric vehicle market. In the long run, the existence of a stable equilibrium relationship is confirmed by a negative and statistically significant error correction term. Among the explanatory variables, gross domestic product per capita emerges as the principal driver positively influencing battery electric vehicles diffusion, while CO₂ emissions, the price differential, and gasoline prices exert negative impacts. Higher income levels enhance the affordability and accessibility of electric vehicles, facilitating consumer transition towards cleaner mobility. Overall, the findings suggest that the adoption of battery electric vehicles in the European Union depends on the interplay between economic capacity, policy incentives, market conditions, and technological affordability. Aligning these dimensions is fundamental to accelerating the electrification of the transport sector and achieving the European Union’s long-term decarbonisation objectives.