The Influence of Government Policy on the Production of Electric Cars


Technological trends in the transportation sector can mitigate the environmental challenges witnessed today. The rate of greenhouse gas emissions from vehicles is reaching crisis points. Electric cars can play a significant role in dealing with environmental challenges. However, the market penetration of Electric Vehicles remains a challenge. The problem is the absence of effective policies to operationalize the system. Besides, the relationship between key stakeholders, such as the government, manufacturers, and potential consumers is flawed. Approaches such as cost reductions, tax exemptions, admittance to high-end lanes, and free parking for EVs can significantly promote adoption levels, but the state governments have remained non-committal. Therefore, this study investigates the effectiveness of policies in promoting the adoption of EVs in the U.S. market. It applies the Institutional Analysis and Development (IAD) framework to analyze the relationship between the policies and stakeholders to ascertain how they affect adoption levels. The research applies secondary explorative techniques to review and analyze findings from existing literature.

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Various concerns about climate change and the state of the ozone layer continue to influence global discussions on the environment. Environmental conservation is at the epicenter of major international considerations given the rate of its depletion (Silvia & Krause, 2016). Therefore, to manage the challenges of energy, emission of greenhouse gas (GHG) into the environment, and transport problems, the U.S. government encourages a transition from traditional diesel or petrol operated to Electric Vehicles (Silvia & Krause, 2016). However, challenges still exist, especially with the intention of President Donald Trump to reverse all commitments made under the Obama administration (Aldy, 2017). According to Trump, the Paris commitment is not binding, and thus, his administration will vacate the commitment (Aldy, 2017). Such approaches complicate the gains and put the policy frameworks in a dilemma. Policymakers, environmental experts, Electric Vehicle (EV) engineers, government departments, and legislative arms of Congress and Senate have tried to provide an enabling environment by increasing the number of charging points and providing incentives, such as discounts for EVs. The approach is a significant model that attempts to manage the diverse effects of environmental degradation as well as mitigate the escalating energy needs. However, challenges, such as a barrier to consumer adoption, particularly high EV costs, limited charging infrastructure, and the uncertainty of technology, among other aspects, have impeded the attainment of this objective (Silvia & Krause, 2016; Egbue & Long, 2012). Silvia and Krause (2016) illustrate that public policy can be utilized to remove obstacles that affect the adoption of EVs.

Among the notable attempts, was the Federal Government’s plan to ensure that a million plug-in vehicles would be operational by 2015 (Carle, Krause, Lane, & Graham, 2013). Carley et al. (2013) aver that since the establishment of this national goal in 2009, supporting companies have developed policy frameworks to expedite its attainment. States, such as California and New York implemented improved zero-emission vehicle (ZEV) policies that encourage vehicle manufacturers to offer EVs for sale. In addition, other nations in Europe and other parts of the world such as South Korea, Japan, and China are adopting similar trends to develop pro-plug-in vehicle policies (Carley et al., 2013). Although several concerns continue to be raised regarding the state of emission of GHG from the transportation sector, effective policy frameworks to bolster mitigation approaches are yet to achieve success, hence the need for well-researched public policy to encourage the utilization of EVs in the United States’ road networks.

Background and Significance of the Study

GHG emission has escalated to unprecedented levels. According to Egbue and Long (2012), the transport sector alone contributed to almost 14% of GHG emissions, while the trend is estimated to grow to 50% by 2030. She, Sun, Ma, and Xie (2017) confirm that the transportation sector has increased energy consumption and significantly augmented the national carbon dioxide emission levels to 8.4% In addition: “Growth in the emerging economies necessitates the doubling to an international fleet of light-duty vehicles (LDV), which is likely to raise the global demand for fuel by 2050” (Jochem, Gomez Vilchez, Ensslen, Schauble, & Fichtner, 2018). However, Jochem et al. (2018) demonstrate that if LDV still applies the conservative Drivetrain technology, achieving the objectives to mitigate GHG emissions to acceptable targets of two degrees as per the Intergovernmental Panel on Climate Change (IPCC) of 2014 is not achievable. Therefore, managing GHG emissions from motor vehicles should resolve the current environmental challenges related to global warming.

Electric Vehicles have significant benefits for the environment. According to Yuksel and Michalek (2015), GHG emissions and petroleum needs can be addressed by adopting Battery Electric Vehicles (BEVs). The authors also discuss the barriers to the adoption of BEVs that affect consumer willingness to embrace the technology. Although Yuksel and Michalek (2015) seek to address the battery as one of the significant challenges of the BEVs, their approach to demystifying the perception of EVs can develop effective public policy relevant to the industry. The authors illustrate that temperatures determine Bevs’ battery efficiency. In this case, cooler temperatures reduce the efficiency levels compared to normal or hot weather. However, Egbue and Long (2012) provide a broader perspective on the various differentiations manufacturers employ in the EV industry. According to the authors, alternative fuel vehicle (AFV) differs from conventional vehicles (CVs) since they are designed to operate as an alternative to diesel or petrol source of fuel. Notably, other plug-in hybrid electric vehicles (PHEV) have smaller combustion engines with an enhanced battery capacity able to power operations of between 20 and 60 miles (Egbue & Long, 2012). Technology has delivered various options in attempts to satisfy the demand of the environment and the consumer interest, such as financial implications, social class, and sustainability.

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The most challenging aspect in the implementation of EVs is the result of ineffective policy frameworks. Initiating discussion on public models of transport and their effect on the environment is a significant approach to managing environmental concerns. Boussauw and Vanoutrive (2017) agree that the past quarter century discussions on public transport and environmental concerns have led to sustainable and green transport policies. For example, according to Egbue and Long (2012), one of the critical determinants of the viability of EVs is the cost of the battery, which retails between $800 to $1000/kWh. Implementing such public interest policies will achieve significant gains for the environment, which translates into better lives for the American people.

Statement of the Research Problem

Carbon emissions have serious consequences for the environment. The U.S. Environmental protection states that carbon dioxide emissions contribute to 80% of greenhouse gasses in the U.S. (Hearst Seattle Media par 1). Carbon emission increases global temperature, which affects weather patterns. Other notable effects are changes in crop seasons and the threats to coastal and marine life due to an increase in sea levels. According to Hearst Seattle Media, atmospheric carbon dioxide continues to warm the globe increasing the demand for water while shrinking its sources (par 2). Water is an essential commodity in both human lives and the production of food and energy resources.

Climate change effect rainfall trends in certain areas, which can increase sedimentation and other pollutants into drinking water resources (Hearst Seattle Media par 2). Increased carbon emission augment temperatures and diminish precipitation, which affects the patterns of crops leading to low production.  According to Hearst Seattle Media, significant variations have been noted in rice, tomatoes, maize, and sunflowers production in California’s central valley (par 3). The rise of sea levels on Gulf coasts and mid-Atlantic has increased to above 20 centimeters in over 50 years after remaining stable for the last 2000 years (Hearst Seattle Media par 3). The challenges witnessed have severe repercussions on human and aqua lives. As such, it is essential to take action to manage escalating emission levels. Based on the above challenges, and given that the transportation sector is considered as the highest GHG emitters, EVs have been identified as the best remedy. However, the adoption of EV technology in the market has several limitations as addressed in this paper.

Given the above impacts on the environment, Onat et al. (2017) explain that the implementation of alternative vehicle models has failed due to inadequate technology assessments and ineffective government policies to support the EV sector. The battery-charging infrastructure is a significant deterrent to this technology (Shareef et al., 2016; Egbue & Long, 2012). Additionally, the high cost of technology also remains a challenge. Therefore, policy intervention to motivate manufacturers and potential customers to adopt EVS should be enhanced.

Aims and Objectives of the Study

  1. To investigate the influence of the government in promoting efficient policy for the adoption of EVs
  2. To establish the availability of supporting infrastructural that would support the operations and sustenance of EVs and how the current preparedness affects its adoption levels, especially while making a purchase decision.
  3. To ascertain the extent to which the application of the IAD framework manages the institutional coordination of stakeholders and policies to handle challenges with a significant focus on the transportation sector.  

The Research Question

The study focuses on understanding the mobility, transport systems, and environment of the major cities in the U.S. Hence, the study should answer the question: “Does government policy and other related factors, such as manufacturers’ interest and enabling EV infrastructure increase adoption of electric cars in the major cities and states of the U.S.”

The objective of the study is to investigate the effectiveness of public policies in implementing the desired changes in the transport sector to achieve environmental sustainability. To ground the study within its broad objectives as elucidated above, it tests a set of hypotheses and analyzes their influence in the transport sector. Principally, the study seeks to understand the propensity of public policies on transport sustainability, to influence or limit consumers’ decisions to purchase or use EVs and determine how such policies resonate with manufacturers’ interests.

Framework and Hypotheses


The study will apply the Institutional Analysis and Development (IAD) framework for its empirical research. The framework will organize the abilities of scholars and policymakers concerned with how systems of governance operate when solving problems

Therefore, the theory is appropriate for this study. Accordingly, the study will utilize IAD to explicate the relationship between the consumers as the decision makers who purchase the EVs and the enabling policy frameworks from manufacturers and regulators. In addition, the study will investigate what influences the process of decision-making that leads to the adoption of EVs.


H1: The government subsidy affects sales of EVs

H2: The availability of EV charging stations affects the operation of EVs, and hence impacts purchase decisions.

H3: The benefit of public parking charges for EVs encourages consumers to purchase EVs

H4: Highway toll-free reduction policy affects sales of EV

Literature Review

Electric vehicles have several advantages for consumers, manufacturers, and the environment. First and foremost, they help alleviate environmental challenges such as carbon dioxide (CO2) emissions (Shareef, Islam, and Mohamed 2016). The authors aver that the internal combustion engine (ICE) is a major source of CO2 emissions to the environment. A Copenhagen environmental conference reported the escalation of global temperatures of 2 degrees centigrade due to delays in implementing policies that can reduce carbon footprints (Shareef, Islam, and Mohamed 2016). Given that conventional petroleum or diesel-operated vehicles have such significant effects on the environment, alternative transportation technology has a higher potential to achieve environmental sustainability. Consumers should also benefit from policies that aid the environment. Manufacturers can take advantage of consumer support by developing products that respond to the current environmental needs.

Since EV technology is a solution to emissions and pollution witnessed in the transport sector, countries might develop progressive public policies that will influence the adoption of EV technology. Boussauw and Vanoutrive (2017) present seven scenarios of questionable policy frameworks developed to achieve sustainable mobility. Policymakers and technology experts approach both social and technical concerns separately in regard to technological advancement in EVs (Egbue & Long, 2012). For example, the city of Hasselt implemented a subsidy on bus transport by providing free bus rides for passengers to manage emission levels from cars. However, analysis of the success of the project to reduce emission levels revealed a failure to achieve the objectives since a majority of those who utilized the free rides was those who traditionally used paid bus transport for their daily movements.

The approach failed to motivate the individual who utilized their cars for transport  (Boussauw & Vanoutrive, 2017). According to Egbue and Long (2012), social barriers also pose a significant challenge just as technical barriers do when developing EVs in the consumer market. The authors aver that consumers resist emerging technologies that are considered either unapproved or unfamiliar. Other barriers to the adoption of EVs include the limitation of battery performance and the high cost of the battery (Egbue & Long, 2012). In addition, other challenges include low-risk tolerance and inadequate knowledge about the technology. Such assumptions have implications and affect the effectiveness of the policies developed since they bring failures in the EVs sector.

Policy attempts in EV technology are implemented from various perspectives. For example, Yuksel, Tamayao, Hendrickson, Azevedo, and Michalek (2016) aver that the policy framework on EVs from the federal government viewpoint is uniform; however, states have domesticated various variances such as tax breaks on EV purchases, subsidized charging, and admittance to high occupancy lanes for owners of EVs. For instance, “Oregon, New Jersey, California, Connecticut, Maryland, and Rhode Island, including Massachusetts, Maine, and Vermont” have all corresponded to the California Zero Emission Vehicles (ZEV)” (Clean Air Act under section 177). Such policies focus on improving the adoption of EVs as a sustainable model of transportation.

Some European countries and Canada have developed effective policy frameworks supporting EVs. She et al. (2017) examine the efficiency of the EVs industry in Europe and North America. Notably, the authors trace the success of EVs infiltration in the markets to the implementation of incentives and privileges such as purchase tax relief and reduced costs that encouraged the adoption of such vehicles as implemented in Hamilton, Canada. Based on the above findings, it was evident that public policy on mobility, access to EVs vehicles, development of an effective and enabling infrastructure for green vehicles, and the implementation of an incentive program to influence both manufacturers and consumers of EVs have contributed to the current challenging situation. Policy attempts for EV adoption in Belgium have faced significant public scrutiny and branded as biased toward wealthy citizens. According to Boussauw and Vanoutrive (2017), such policies include:


Policy Act Contradiction
  • Assisting adopters of EVs through fiscal and financial incentives, such as discounts and tax relief among others.
  • Implementing a ban on high-emission vehicles and subsidizing clean-emission cars.
  • Taxing fuel consumption based on the kilometers traveled.
  • Low-income groups are the majority who use older cars while EVs are for the elite.
  • Relatively poor people use old vehicles which happen to be high emitters.
  • Poor regions experience long commutes from the cities.

Source: (Boussauw & Vanoutrive, 2017)


Therefore, it is important that a review of public policies on EVs and all its subsections is done to identify the questionable commitments and policy frameworks currently implemented, such as the Belgium situation, for further re-analysis and adjustment.

The EVs technology faces challenges, especially policy support to both manufacturers and potential individual consumers. Notable problems with EVs are related to limitations and contradictions in the enabling policy frameworks, such as costs, taxation, and charging systems. The cost of EVs is relatively high, compared to ordinary diesel or petrol-propelled vehicles. Additionally, the battery lifeline is also limited considering high retail costs and the restricted driving range based on charging strength (Carley et al., 2013). The above aspects may affect the customers’ willingness to purchase or lease EVs. However, Carley et al. (2013) reveal that recharging time was among the least customer concern. For example, Egbue and Long (2012) establish that the preliminary cost of an EV is higher compared to gasoline-powered vehicles. The authors add that when discussions are held about battery capability and range perspectives of an EV, the costs escalate further. Whereas battery frameworks of the technology are a technical factor, price, and driving ranges can be managed through effective policies such as incentives to manufacturers and potential customers to promote the development and adoption of the technology. Therefore, policymakers should collaborate with manufacturers and customers to develop policies that enhance the adoption of EVs.

Policies alone are not enough. Attention has to be paid to involving stakeholders, managing expectations, and encouraging the participation of end users (Lammers and Hoppe (2019). The authors’ recommendation exemplifies the need for a collective and holistic approach in public policy formulation that applies to the EV scenarios in the U.S. states. For instance, it also confirms that the limitation of a collective approach in the Netherlands led to poor policy decisions. Such flaws within policy development and implementation process lead to significant failure or non-adoption of sustainable energy frameworks such as EVs.

Electric charging stations are a challenge to the adoption of EV technology. She et al. (2017) note that EVs face infrastructural barriers such as charging facilities, which is a requisite requirement and a significant obstacle to the adoption of EVs in urban areas. Carley et al. (2013) reveal that although more participants reported having seen PEV ads, only a significant number of respondents (11.94%) had seen charging stations (p. 41).

A second problem is battery efficiency, which is dependent on temperatures (Yuksel and Michalek 2015). Available energy and discharge capability also decrease in cold temperatures. Such factors have significant effects on EV adoption rates. Yuksel et al. (2016) agree that temperatures have a substantial impact on the efficiency of EVs, especially in applications such as ventilation, heating, and air conditioning.

Theoretical Foundations

Institutional Analysis and Development (IAD)

IAD is a framework developed to support the microanalysis of a range of social challenges (McGinnis & Ostrom, 2014). The model supports systems, norms, rules, and concept strategies for any institution that seeks to implement them. McGinnis and Ostrom (2014), confirm that the “IAD framework underlines the action situation in which individuals (acting on their own or as agents of formal organizations) interact with each other and thereby jointly affect outcomes that are differentially valued by those actors” (p. 2). Hence, factors related to the institution, biophysical or social aspect improve the decisions made by agents or representatives of a firm (McGinnis & Ostrom, 2014). Notably, the specific decisions made by the various players add to the continuous processes after internal and external assessments by other observers (McGinnis & Ostrom, 2014). Therefore, IAD is a framework that supports the microanalysis of challenges within a sector and helps to realize change.

The IAD framework has provided success in various sectors. Lammers and Hoppe (2019) illustrate that its application in research on energy transitions has realized success. According to the authors, based on the seven rules linked to the IAD model, institution and administrative strategies influence the set-up of renewable energy projects. A logical framework that describes the process and systemic progression of the action illustrates the seven rules of IAD.

Further, Lammers and Hoppe (2019) demonstrate the importance of the IAD framework as a model that splits sociotechnical parameters into manageable models for understanding and managing policy applications and influence. Accordingly, the IAD framework is successful in the analysis of multifaceted polycentric organizational systems, and ideal for smart energy systems and smart grids that have similar polycentric characterizations (Lammers & Hoppe, 2019). Considering that the IAD model is effective in managing such complex energy-related issues involving various industry players, such as government, manufacturing companies, and potential EV customers, it is most suitable for analyzing the expectations of the research question.

The implementation of IAD frameworks requires rules that support the application of effective changes. As illustrated in the logical framework, the seven rules include boundary, position, scope, choice, aggregation, information, and payoff rules (Ostrom, 2011, p. 19). According to the authors, boundary rules affect the populations of participants, resources, and attributes, while position rules establish positions in the situation. The rule under the choice entails some specific actions that should be considered or not. For instance, when implementing the EVs for the U.S. case scenario, it will require understanding the position of stakeholders, such as potential customers, manufacturers, and government, including effective policies in regard to their technological capability, the strategy, and incentive from the government to influence the adoption and choice of the potential consumers. Bringing together the seven rules will provide an effective framework to analyze the pros and cons that limit the adoption of EVs and enable better approaches to the situation.

Institutional policies and regulations can enhance the adoption of EVs. Stokes and Breetz (2018) explain that there are 438 incentives for EVs in the U.S. The policies include tax rebates, reduced parking fees, subsidies for charging, registration exemptions, and admittance to high occupancy lanes among other initiatives. Lammers and Hoppe (2019) demonstrate the application of IAD frameworks in the Netherlands to provide a perspective of institutional conditions that enable or restrict decision-making systems in the adoption of smart energy systems such as EVs. From the authors’ findings, applying the IAD model helps to identify institutional factors that affect decision-making, including the understanding of how the conditions are correlated. IAD is an effective framework that supports decision-making at institutional levels and can be applied in the EVs sector to define, manage, and support stakeholders to adopt sustainable energy technology.

While applying the IAD framework, Lammers and Hoppe (2019) identified stakeholders’ into groupings each with project leaders (242). Participants were identified as both active and passive groups. For instance, the authors identified DSO Rendo as the project leader for Smarty Grid MeppelEnergie and other local government leaders while the active participants were consultants and energy suppliers. Other passive participants were universities, water boards, or company executives. The approach was utilized to manage integrated discussions for holistic analysis of the effectiveness of policy in developing operational strategies. 


The study adopts the deductive approach for its investigations. The deductive model seeks to identify common views between the results and findings of the study and ascertain their correlations with academic models. Accordingly, the research consults various findings of published works and other recently concluded research on the topic to ascertain the level of concurrence. Möller, Vurm, and Petr (2003) aver that quantitative research focuses on gathering information that utilizes survey data, frequency distribution, and statistics to test the hypothesis. Accordingly, the authors posit that qualitative studies emphasize subjective interpretations such as peoples’ written or spoken words and discernable behavior or attitudes. Therefore, when a qualitative model is employed, inductive logic is pre-eminent to build a conceptual framework (Möller et al., 2003). Therefore,  the study will apply both qualitative and quantitative techniques in its secondary literature research.

Secondary Research

Secondary research forms the foundation of the study. It will involve an in-depth analysis of the literature based on the existing materials, such as publications from peer-reviewed articles, academic journals, books, and newspapers among other credible sources. The study utilizes data from virtual libraries, online journals, and previous surveys conducted on the adoption of EVs in the U.S., as well as those studies that answer the hypotheses. The study seeks to test the extent to which the primary and secondary data agree and record the variances, which forms part of the recommendations for future research. While the investigation is through the published works of professionals and academicians both within influential policy positions in government and motor vehicles manufacturing sectors, it compares the effectiveness and limitations of existing policies that facilitate the adoption of EVs in the U.S. market. Thus, the secondary literature review will offer the current position to help in making recommendations after comparing the outcome of the primary research.  

Sample Types

The study will apply multifaceted empirical investigation approaches. Therefore, it targets viewpoints from individuals at policy levels within organizations and the government under various reports and published works. The research analyses quantitative data within peer-reviewed studies to ascertain the agreements and the contradictions within their findings. Accordingly, the study develops interpretations of the available data to define its position on the impact of policies on the adoption of EVs in the U.S. market. The research takes a holistic approach by engaging all the potential stakeholders from the federal government departments, implementing states, EV manufacturers, and potential consumers to the adoption of EVs in the U.S. market.

Ethical Considerations

The study complies with the ethical expectations of research involving literature analysis. The study acknowledges illustrations, ideas, and recommendations from various publishers and academicians utilized in the research. However, it does not provide signed consents to publishers or academicians whose works are consulted since the information is available to the public through open access or closed at subscription levels. The study anticipates keeping the identity of the stakeholders who are mentioned adversely in the course of its investigations.

Data Analysis and Presentation

Data utilized by the study are analyzed to provide coherent information for the study. Möller et al. (2003) explain that to analyze quantitative data, they should be organized into tables or charts. The authors further aver that statistical analysis tests answer the research questions. When conducting empirical research that utilizes data sets from different samples, the findings are studied and compared based on descriptive or inferential statistics (Möller et al., 2003). Further, the authors describe descriptive statistics as a model that presents quantitative data within manageable forms, whereas inferential statistics indicates the extent to which two or more groups or ideologies differ. In addition, the study employs descriptive statistics to summarize univariate data into manageable sets, such as mean, mode, and median. The study also presents the findings in charts and tables to provide better perspectives that reveal the variances within the findings. Thus, the study applies inferential statistics, bivariate univariate, and multivariate analyses to conclude from the observations of the study based on the literature reviews from different authors. Therefore, the study applies both models to present its findings and conclusions.


As it is palpable from the above analysis, EVs have considerable benefits to consumers, manufacturers, and the sustainability of the environment. However, policies that should enhance its adoption levels do not address issues that deter the achievement of broad objectives. Notably, the state of GHG emissions from the transportation sector alone continues to escalate to unprecedented levels. It is significant that effective policy frameworks are developed using a collective approach to enhance the adoption of EVs. On the other hand, properly researched and defined public policies have the potential to encourage the utilization of EVs on U.S. road networks. In addition, the IAD framework will help to identify the gaps within policy and institutional limitations. It will also manage the interests of stakeholders and help them to attribute success to all the implementation steps. Therefore, to manage major deterrents to the adoption of EV technology, government subsidy on EV sales should be enhanced, while the number of electric charging stations should be increased, and incentives, such as free parking of EVs and admittance to high lanes should be mainstreamed in the transportation sector.



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