Are Electric Vehicles Discharging Tax Revenues? The Türkiye Case

Abstract

Türkiye, in tandem with global trends, is witnessing a significant uptick in electric vehicle (EV) sales, prompting concerns about substantial impacts on traditional tax revenues derived from fuel-related products and the automotive sector. Data from the Automotive Distributors Association in Türkiye highlights a noteworthy increase in the EV market share from 0.03 percent (155 units) in 2020 to 4.8 percent (28,931 units) between January and August 2023. This study, utilizing forecasting methodologies such as the Exponential Smoothing Model and Holt’s Exponential Smoothing, projects total vehicle numbers for 2025 and 2030. Employing the Total Cost of Ownership model, encompassing registration, motor vehicle tax, fuel/charging costs, and maintenance, the research compares tax revenues from electric and internal combustion engine vehicles. The findings underscore an imminent government challenge, anticipating tax revenue losses of approximately $567.5 million for 2025 and $1.9 billion for 2030.

Keywords

• Electric Vehicles (EVs)
• Tax Revenues
• Total Cost of Ownership Model (TCO)

References

1. Bhat, F.A., Verma, A., 2023. A bibliometric analysis and review of adoption behaviour of electric vehicles. Transportation in developing economies 9, 5. https://doi.org/10.1007/s40890-022-00175-2
2. Billah, B., King, M.L., Snyder, R.D., Koehler, A.B., 2006. Exponential smoothing model selection for forecasting. International Journal of Forecasting 22, 239–247. https://doi.org/10.1016/j.ijforecast.2005.08.002
3. Bonilla, D., Arias Soberon, H., Galarza, O.U., 2022. Electric vehicle deployment & fossil fuel tax revenue in Mexico to 2050. Energy Policy 171, 113276. https://doi.org/10.1016/j.enpol.2022.113276
4. Carlsson, F., Johansson-Stenman, O., 2003. Costs and Benefits of Electric Vehicles. Journal of Transport Economics and Policy (JTEP) 37, 1–28.
5. Corradi, C., Sica, E., Morone, P., 2023. What drives electric vehicle adoption? Insights from a systematic review on European transport actors and behaviours. Energy Research & Social Science 95, 102908. https://doi.org/10.1016/j.erss.2022.102908
6. Davis, L.W., Sallee, J.M., 2020. Should Electric Vehicle Drivers Pay a Mileage Tax? Environmental and Energy Policy and the Economy 1, 65–94. https://doi.org/10.1086/706793
7. EAFO, 2023. European Alternative Fuels Observatory [WWW Document]. European Commission. URL https://alternative-fuels-observatory.ec.europa.eu/ (accessed 12.18.23).
8. EUM, 2020. EViews 11 User’s Guide I.

9. Hall, A.L., 2012. Estimating the impact on fuel tax revenues from a changing light vehicle fleet with increased advanced internal combustion engine vehicles and electric vehicles.
10. Hensher, D.A., Wei, E., Liu, W., 2021. Battery electric vehicles in cities: Measurement of some impacts on traffic and government revenue recovery. Journal of Transport Geography 94, 103121. https://doi.org/10.1016/j.jtrangeo.2021.103121
11. Hyndman, R.J., Athanasopoulos, G., 2018. Forecasting: principles and practice. OTexts.
12. IEA, 2023. Global EV Outlook 2023 – Analysis. International Energy Agency, Paris.
13. IEA, 2022. Global EV Outlook 2022 – Analysis. International Energy Agency, Paris.
14. Jia, W., Jiang, Z., Chen, T.D., Paleti, R., 2019. Evaluating Fuel Tax Revenue Impacts of Electric Vehicle Adoption in Virginia Counties: Application of a Bivariate Linear Mixed Count Model 91–110. https://doi.org/10.1061/9780784482582.009
15. Leurent, F., Windisch, E., 2015. Benefits and costs of electric vehicles for the public finances: An integrated valuation model based on input–output analysis, with application to France. Research in Transportation Economics, Electric Vehicles: Modelling Demand and Market Penetration 50, 51–62. https://doi.org/10.1016/j.retrec.2015.06.006
16. ODMD, 2023. Otomobil ve Hafif Ticari Araç Pazar Değerlendirme [WWW Document]. URL https://www.odmd.org.tr/web_2837_1/neuralnetwork.aspx?type=35 (accessed 12.18.23). OSD, 2023. Otomotiv Sanayii.
17. Parker, N., Breetz, H.L., Salon, D., Conway, M.W., Williams, J., Patterson, M., 2021. Who saves money buying electric vehicles? Heterogeneity in total cost of ownership. Transportation Research Part D: Transport and Environment 96, 102893. https://doi.org/10.1016/j.trd.2021.102893
18. Rajagopal, D., 2023. Implications of the energy transition for government revenues, energy imports and employment: The case of electric vehicles in India. Energy Policy 175, 113466. https://doi.org/10.1016/j.enpol.2023.113466
19. Rapson, D.S., Muehlegger, E., 2023. The Economics of Electric Vehicles. Review of Environmental Economics and Policy 17, 274–294. https://doi.org/10.1086/725484
20. Rezvani, Z., Jansson, J., Bodin, J., 2015. Advances in consumer electric vehicle adoption research: A review and research agenda. Transportation Research Part D: Transport and Environment 34, 122–136. https://doi.org/10.1016/j.trd.2014.10.010
21. Ricciuti, J., 2020. Impact of Lost Gas Tax Revenue Due to Sale of Electric Vehicles: Analysis and Recommendations for the 50 States. Analytics Capstones.
22. Shafiei, E., Davidsdottir, B., Fazeli, R., Leaver, J., Stefansson, H., Asgeirsson, E.I., 2018. Macroeconomic effects of fiscal incentives to promote electric vehicles in Iceland: Implications for government and consumer costs. Energy Policy 114, 431–443. https://doi.org/10.1016/j.enpol.2017.12.034
23. Singh, Virender, Singh, Vedant, Vaibhav, S., 2020. A review and simple meta-analysis of factors influencing adoption of electric vehicles. Transportation Research Part D: Transport and Environment 86, 102436. https://doi.org/10.1016/j.trd.2020.102436
24. Soltani-Sobh, A., Heaslip, K., Bosworth, R., Barnes, R., 2015. Effect of Improving Vehicle Fuel Efficiency on Fuel Tax Revenue and Greenhouse Gas Emissions. Transportation Research Record 2502, 71–79. https://doi.org/10.3141/2502-09
25. TEHAD, 2023. Turkey Electric & Hybrid Vehicle Association [WWW Document]. URL https://www.tehad.org/ (accessed 12.18.23).
26. Van Dyke, C., Gibson, B., Martin, A., Koo, J., Kreis, D., 2022. Electric Vehicles: Analysis of Revenue Issues and Charging Station Implementation Plans. University of Kentucky Transportation Center.