Promotion Policies, Electric Vehicle Expansion, and Social Inequality: Evidence from China

• In Event: Double-Edged Swords? Trying to Decrease Carbon from Transportation

Abstract

As China accelerates its transition toward clean mobility, the rapid expansion of electric vehicles (EVs) has prompted renewed attention to the distributional impacts of green development (Ermagun & Tian, 2024; Nazari-Heris et al., 2022). While EV promotion policies are primarily designed to advance environmental and industrial goals, their potential to influence social inequality at the macro level remains understudied (Fleming, 2018). This paper investigates whether and how local EV promotion policies reduce regional disparities by promoting access to affordable electric mobility and improving household economic burdens. We leverage a unique dataset of over 1,048,576 individual-level EV registration records from the national Department of Motor Vehicles, which includes detailed information on vehicle type, price, usage (commercial vs. private), and purchaser identity. Focusing on the sales of low-end EVs—vehicles priced below a locally determined affordability threshold—we treat this variable as a key mediator in the causal chain between promotion policy interventions and broader inequality measures.

We construct a panel dataset of Chinese cities from 2015 to 2023 to capture social inequality outcomes. We draw on three commonly used distributional metrics: the Gini coefficient, the Theil index, and the Engel coefficient (Chen et al., 2010; Conceicao & Ferreira, 2000; Cramer, 1964). These indicators allow us to measure changes in income distribution, consumption disparity, and living standards, respectively. Policy variables include local-level instruments such as financial subsidies, vehicle licensing priorities, and urban traffic restrictions, which vary in scope and intensity across cities. Our empirical framework evaluates how different combinations of policy tools influence social inequality, both directly and through their effect on the diffusion of affordable EVs. Findings suggest that cities adopting comprehensive promotion packages—combining price-based subsidies with institutional and regulatory support—experience significant reductions in inequality metrics over time. Specifically, we find that a one standard deviation increase in low-end EV penetration is associated with a 1.2-point decrease in the Gini coefficient, alongside comparable improvements in Theil and Engel indices. In contrast, restrictive policies lacking affordability elements tend to have regressive or neutral effects.

This study contributes to the literature on green policy and social equity by shifting the focus from technological adoption to its societal-level redistributive consequences. By treating low-end EV uptake as a mediating mechanism, we demonstrate how, when thoughtfully designed, climate-related industrial policy can function as a lever for inclusive development. Our findings have substantial implications for policymakers: fostering clean mobility is not just a matter of environmental urgency but a strategic tool to reduce economic inequality, provided that local policies actively prioritize affordability, access, and structural integration into household livelihoods.

Authors

• Zhengsheng YU, Hong Kong University of Science and Technology (Guangzhou)
  Presenting Author

• Tianle Liu, Harbin Institute of Technology (Shenzhen)
  Non-Presenting Co-Author

• Chengze Lu, The Hong Kong University of Science and Technology (Guangzhou)
  Non-Presenting Co-Author