Air quality improved by new energy vehicles penetration

Abstract

Governments worldwide are actively promoting new energy vehicles (NEVs) to combat air pollution. However, there remains limited direct empirical evidence on the effect of NEV adoption on air quality. We address this gap by examining city-level monthly data on passenger vehicle sales for each vehicle model. Our baseline estimate suggests a negative correlation between city-level NEV penetration and local CO concentration in the short term, particularly in cities where NEVs are highly popular. By capitalizing on the temporary surge in NEV demand just before a subsidy reduction, we validate this correlation as likely causal. Our event study estimate indicates that doubling NEV sales could reduce CO concentration by 10.26%. However, following the implementation of reduced NEV subsidies, both NEV sales and CO concentration revert to pre-event levels. These trends are more pronounced in cities with greater NEV acceptance, during working hours, and in areas with high road density. Overall, our findings offer quantitative evidence for the beneficial impact of NEVs in mitigating air pollution.

Keywords: new energy vehicles, air pollution, subsidy phase-out