Optimal subsidizing policy to promote electric vehicles in Hong Kong

Abstract

In this paper, we propose a framework to optimize the subsidizing policy by taking into account all the lifecycle costs and the environmental benefits of electric vehicles. First, the barriers of commercialization of electric vehicles are discussed. Models are developed to estimate the damages costs of vehicular emissions. Optimal subsidizing rules are derived to maximize the saving in government expenditure. The optimization framework for Hong Kong is developed. Numerical analysis is conducted to illustrate the effectiveness of the optimal subsidizing policy. Benefits of electric and hybrid electric vehicles are compared. The hybrid electric vehicle is found to be more cost effective in Hong Kong.