Terminated local subsidy on electric vehicle adoption during the COVID-19 pandemic: The case of Chongqing City

Chongqing, one of the four municipalities directly under the Central Government in China, terminated local subsidies for electric vehicles (EVs) on June 26, 2019. Shortly after the termination, EV adoption in China was affected by the coronavirus disease (COVID-19) pandemic. However, little research studies on whether the terminated local subsidy has a lasting impact on EV adoption, especially during the pandemic. Using EV adoption data from Chongqing and 44 other cities in China, this study aims to fill this gap by first proposing a new method to estimate the unobservable data of the treated unit in the preintervention periods to obtain accurate results. This study then also estimates unobservable data for more conservative results. The findings show that the terminated subsidy has had a significant positive impact on EV adoption during the COVID-19 pandemic compared to the situation where a local subsidy was never provided. The results show that in Chongqing, during the first five months of the pandemic, terminated local subsidy helped reduce the loss of EV adoption by approximately 3141 units when accurately estimated, and approximately 1696 units when more conservatively estimated. These findings help to understand the role of subsidies both during implementation and after their termination.