Fiscal policies and car choices in Italy and Norway: A scenario analysis based on a stated-preference survey

Norwegian and Italian car drivers make very different car choices. This paper investigates the influence of fiscal policies on car buyers’ choices, using data collected from a stated preference survey conducted in 2021. After estimating a joint random parameter logit model, we simulated the market shares of five car powertrains under three scenarios: “Italian car buyers face the same net purchase car prices and fuel\electricity costs as the Norwegian car drivers and vice versa”, “Italy adopts the Norwegian registration tax”, and “Both Italy and Norway adopt a social cost internalizing registration tax”. The results indicate that Italian car users are reluctant to switch to battery electric cars (BEVs). They would choose BEVs more frequently in the three scenarios envisaged but without reaching the corresponding Norwegian levels. If Italy would adopt the Norwegian registration tax system, BEVs’ market share would gain 5.4 percentage points relative to the baseline scenario, while under the social cost internalizing scenario, BEVs’ market share would improve by 3.4 and PHEVs’ one by 0.2 percentage points. On the contrary, Norwegians are BEV-oriented and would comparatively preserve a high BEV share. In the social cost internalization scenario, the BEV share relative to the baseline scenario would decrease by 7.2 percentage points, petrol cars would gain 1.2, HEVs 2.9, PHEVs 3.4, and diesel cars would lose 0.3 percentage points. In general, there seems to be a lock-in or path dependence effect that limits BEV penetration in Italy and prevents the decline of the BEV share in Norway.