IMPACT OF GOVERNMENT INCENTIVES ON THE BATTERY ELECTRIC VEHICLE (BEV) MARKET IN EUROPE AND FORECAST FOR UKRAINE AFTER 2026
Abstract
This article analyzes the impact of government incentives and other key factors on the development of the battery electric vehicle (BEV) market in European countries during the period 2018–2024. The study aims to quantitatively assess the dependence of BEV market share on incentive policies (financial benefits, infrastructure) and utilize these findings to forecast the dynamics of the BEV market in Ukraine following the planned abolition of customs clearance benefits (VAT and excise duty exemptions) from January 1, 2026. Econometric methods for panel data analysis (fixed effects regression) and difference-in-differences (DiD) analysis were applied based on data from ACEA, EAFO, IEA, Eurostat, and national sources. A significant positive impact of financial incentives at the point of purchase (subsidies, VAT/registration tax exemptions) and charging infrastructure density on BEV market share in Europe was established. The DiD analysis confirmed a sharp market decline after the withdrawal of incentives in Germany and Sweden. Considering the specifics of the Ukrainian market (dominance of used cars, lower purchasing power, the large scale of the abolished benefits), a significant downturn in the Ukrainian BEV market is projected for 2026, followed by stagnation. The scientific novelty lies in integrating European experience to forecast the consequences of a specific policy change in Ukraine. The practical significance involves providing a rationale for developing a strategy to support electromobility in Ukraine beyond 2025. The analysis confirms the critical role of purchase incentives and charging infrastructure density as key drivers of BEV adoption in Europe. The DiD analysis highlights the market's high sensitivity to abrupt policy changes. The forecast for Ukraine indicates a substantial negative shock due to the unique market structure and the magnitude of the incentive removal, suggesting a need for proactive policy measures to mitigate the impact and sustain the transition towards electric mobility.
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