Increasing Electromobility in Finland : A study into electric vehicle incentive policies

To combat the effects of climate change by reducing carbon dioxide emissions released into the atmosphere, battery electric vehicles (BEVs) are currently seen as the upcoming technology to replace traditional internal combustion engine vehicles. Vehicle manufacturers are increasing BEVs in their lineups at an unprecedented rate, partly due to the changing values of consumers, and partly due to the strict emission demands imposed by regulatory bodies. These new BEVs however are at the moment not selling as well as desired due to various reasons, such as their relatively high purchase prices and consumers’ uncertainties regarding other attributes like charging times and range. To increase sales, governments have begun imposing various incentive policies to increase BEV attractiveness. These incentives have been found to positively affect electric vehicle adoption in many countries around Europe. This brings us to Finland. At the end of 2017 Finland had a BEV market share of just 0.42%, which accounts to only about half of the European average. The aim of this research was to find out the underlying reasons behind the alarmingly low sales numbers, and to present solutions on how to adjust incentive policies in order to increase BEV adoption rates in Finland. The theoretical background of the study utilizes the diffusion of innovations theory to explain how innovations, such as electric cars, are adopted by consumers and what factors affect the diffusion process. In addition to this, an overview of the various regulations and incentive policies relating to electric vehicles is presented. The research itself was conducted as a qualitative one and carried out in the form of a series of interviews with industry experts, each from different fields relating to electric vehicles, in order to gain a thorough cross-section of the subject. The findings of the research suggest that the absence of proper incentive policies, a general lack of willingness to divert more efforts into supporting BEV adoption, as well as a level of uncertainty towards the technology are among the main factors behind the low BEV adoption figures of Finland. Suggestions towards policy change are presented as a conclusion. Among the most important actions needed to be undertaken to increase BEV adoption in Finland are increasing the size of a purchase incentive, an exemption for BEVs from registration and ownership tax, and expanding incentive policies to cover not only private, but also company cars