Electric vehicle adoption and transport-sector CO₂ emissions

Abstract

This study examines whether electric-vehicle (EV) adoption is associated with lower transport-sector carbon dioxide (CO₂) emissions using a balanced panel of 31 countries observed annually from 2010 to 2022. Because EV adoption most directly affects road transport rather than economy-wide emissions, transport-sector CO₂ is used as the primary channel-aligned outcome, with oil-related and total CO₂ providing complementary mechanism and comparison tests. We estimate two-way country and year fixed-effects models and evaluate the robustness of the association using second-period-lag and Bartik battery-metal shift-share instrumental variables, alternative specifications and diagnostics, falsification tests, and a staggered difference-in-differences design around major EV-policy adoption. A 1% increase in new-EV sales is associated with a 0.058% reduction in transport-sector CO₂ and a 0.041% reduction in oil-related CO₂; the corresponding lag-IV (−0.062) and Bartik-IV (−0.071) estimates are similar in magnitude. The transport-sector association is stronger than the corresponding association with total CO₂, consistent with concentration of the relationship in the sector through which EV substitution should operate. The estimated reduction is also stronger when contemporaneous internal-combustion-engine sales are high and in countries with cleaner electricity grids, with a smaller additional amplification observed among high-income countries. EV sales are additionally associated with lower transport-sector CO₂ per unit of GDP, although this estimate is only marginally significant. The difference-in-differences estimate is −0.072 for the full panel and −0.128 among early-adopting cohorts; the association is concentrated among early adopters and strengthens with time since policy adoption. Results remain broadly stable across alternative specifications, while sectoral placebo and pre-EV-period negative-control tests are broadly supportive of the proposed interpretation. Collectively, the convergence of channel-aligned outcomes, fixed-effects, instrumental-variable, heterogeneity, and policy-timing analyses provides robust evidence that greater EV adoption is associated with lower transport-sector emissions, while the observational design does not establish that EV adoption alone caused the observed reductions.