The move to electric mobility is often presented as a national endeavour, yet our latest research shows that the real catalyst sits much closer to home. In this article, Dr Mengfei Jiang, Lecturer in Finance at the University of Edinburgh Business School, reflects on evidence from 132 Chinese cities that reveals why municipal subsidies, not provincial or national incentives, most effectively accelerate electric vehicle (EV) adoption.
What we learned from China’s cities
In our study, I worked with Visiting PhD Candidate Xiaoming Hu and Professor Xiang Zhang from the Beijing Institute of Technology to compare how different types of local subsidies affect EV adoption. We looked at three common approaches: subsidies offered by city governments, provincial governments, and both levels working together. The results were striking. When a city increased its share of the subsidy by 10 per cent, it led to around 1,000 more EVs being sold, significantly more than similar increases at the provincial level or in joint schemes.
Why? City governments sit closest to the market. They understand local driving patterns, income levels and charging infrastructure gaps so that they can fine-tune incentives quickly. Critically, purchasers trust the council tax bill they pay yearly more than a distant fund they may never see. When a city says, “We’ll rebate part of your purchase”, consumers appear to believe it, and they act.
Size matters, but so does certainty
In some Chinese cities, subsidies can cover up to half the cost of a new electric vehicle, which would be difficult to match in the UK. But the key takeaway isn’t the size of the discount. What matters is trust. Our research shows that even when subsidies were paid out after the original deadline, people still went ahead with their purchases, as long as they believed the money would come. In short, buyers respond to reliable, well-communicated promises, even if the payment takes a little longer.
For policymakers, the message is clear: lock in a multi-year budget line and communicate it widely. The stop–start rhythm that has characterised some UK grant schemes risks chilling demand precisely when the sector needs momentum.
Infrastructure and subsidies work hand in hand
Interviewing city officials and industry colleagues confirmed another insight: drivers weigh the hassle factor of charging at least as heavily as the purchase price. Municipalities that paired rebates with visible investment in fast charging hubs delivered faster adoption. My team is now testing whether station subsidies produce a bigger indirect boost to EV sales than a direct grant of the same value. Early indications suggest a complementary effect. Households are more likely to claim rebates when they see charge points on their commute.
Three actions for UK cities
For any UK local authority considering implementing a local scheme, I recommend three practical steps:
- Adopt a city-centred rebate
Fund a modest, fixed-term grant, say, £3,000 per vehicle, paid directly by the council at the point of registration. Keep the paperwork short and target households replacing an older diesel or petrol car. A transparent, local pot is easier to monitor than a patchwork of dealer claims. - Tie the subsidy to a charging roll out plan
Announce new public chargers alongside the rebate, positioned on streets in high-density neighbourhoods, retail parks and key routes around cities so buyers can picture daily life with an EV. Evidence from China shows that visibility builds confidence long before the first charge. - Signal longevity
Publish a three-year schedule detailing how many grants will be available each quarter and commit to honouring applications even if budgets slip. Better to pay a claimant six months late than cancel mid-stream and erode trust for years.
Which level of government should pay?
The UK experience with the Plug-in Car Grant (PiCG) demonstrates how higher-tier funding can kick-start an electric car revolution, increasing annual EV sales from under 1,000 in 2011 to nearly 100,000 in the first five months of 2022. However, our findings from China suggest that giving more control to local authorities leads to the strongest results. Westminster and Holyrood therefore face a strategic decision: they can keep control of transport decarbonisation funding centrally, or they can devolve some of it to cities, allowing local leaders to design tailored schemes, within national limits, and assess what works best.
Looking ahead
The EV market is global, but purchasing decisions are undeniably local. Our analysis suggests that empowering cities to tailor incentives, coordinate charging infrastructure and maintain a stable policy signal could unlock adoption rates far faster than national programmes alone. If policy makers across the UK and EU grasp that lesson, they will move us all a step closer to net zero transport.
Mengfei Jiang is our Lecturer in Finance and Programme Director MSc Climate Change, Finance & Investment.