Powering Up a Slow Charging Market: How Do Government Subsidies Affect Charging Station Supply?

Abstract: Electric vehicle adoption is considered to be a promising pathway for addressing climate change. However, the market for charging stations suffers from a market failure: a lack of EV sales disincentives charging station production, which in turn inhibits mass EV adoption. Charging station subsidies are often discussed as policy levers that can stimulate charging station supply and correct this market failure. Nonetheless, there is limited research examining the extent such subsidies are successful in promoting charging station supply. Using annual data on electric vehicle sales, charging station counts, and subsidy amounts from 57 California counties and a staggered difference-in-differences methodology, I find that charging station subsidies are highly effective: counties that adopt subsidies experience a 36% increase in charging station supply 2 years following subsidy adoption. This finding suggests that governmental intervention can help correct the market failure in the charging station market.