Cracking the Chicken-and-Egg Problem: Evidence from China’s Electric Vehicle Infrastructure Development

This project examines how policy interventions can overcome the “chicken-and-egg” problem in electric vehicle (EV) markets, where consumers hesitate to adopt EVs due to limited charging infrastructure, while firms hesitate to invest in charging networks due to low EV demand. Using comprehensive data on EV chargers, EV sales, consumer-level charging prices and quantities and subsidy policies in China from 2016–2024, the project investigates which government policies most effectively promote EV infrastructure expansion and adoption. The empirical strategy exploits staggered rollouts of provincial subsidies for EV charger providers, including construction subsidies and electricity cost subsidies, and applies difference-in-differences methods to estimate policy impacts. Preliminary results indicate that electricity cost subsidies significantly increase the number of charging stations and EV adoption, while construction subsidies show weaker effects. By identifying which policy tools most effectively stimulate network expansion, the study provides new evidence on how governments can accelerate clean technology adoption and support the transition to low-carbon transportation systems.

“We’re addressing a critical bottleneck in the clean transportation transition: consumers hesitate to adopt electric vehicles without reliable charging infrastructure, while firms hesitate to build chargers without sufficient EV demand. Using uniquely detailed data from China, we aim to uncover which government policies can break this deadlock, catalyze infrastructure investment, and accelerate EV adoption at scale.”

Koichiro Ito, Professor, Harris School of Public Policy