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Research in Transportation Economics 50 (2015) 51e62

Contents lists available at ScienceDirect

Research in Transportation Economics


journal homepage: www.elsevier.com/locate/retrec

Benets and costs of electric vehicles for the public nances: An


integrated valuation model based on inputeoutput analysis, with
application to France
Fabien Leurent*, Elisabeth Windisch
Ecole des Ponts ParisTech, Laboratoire Ville Mobilit
e Transport, IFSTTAR, Universit
e Paris-Est Marne la Vall
ee, France

a r t i c l e i n f o a b s t r a c t

Article history: The development of electro-mobility, with electric vehicles (EVs) replacing conventional vehicles (CVs),
Available online 8 July 2015 raises issues relating to the environment, energy and industry. Within a given country, it would have an
economic impact in many areas, in particular on governments. Our objective is to quantify the respective
JEL classication: impacts on the public nances of an electrically powered or petrol fuelled private car.
E160 In order to do this, we establish an integrated method of valuation, covering both manufacture and use of
H230
the vehicle, with location of these two stages within or outside the country concerned. From a depth
Q58
perspective, it incorporates the economic proceeds from the different activities and what they consume, and
H59
L62
from a breadth perspective it incorporates the scal effects (VAT, fuel and energy taxes, tax on production,
etc.) and the effects on social accounts (social contributions, unemployment benets). The valuation method
Keywords: is based on an inputeoutput model of the productive economy within a country, combined with mecha-
Inputeoutput analysis nisms of scal and social transfer. We hypothesize an additional type of activity for the Manufacture of
Taxation electric vehicles, and we model it within the intersectorial matrix associated with production.
Social transfers
Application of the method to France reveals rst that the impact of a vehicle on the public nances is
Life-cycle analysis
substantial: manufacture contributes approximately the purchase price excluding VAT, and usage adds
an amount of the same order of magnitude. The vast majority of the revenues (approximately 70%) arise
from the social contributions associated with production, including the opportunity value of employ-
ment; VAT accounts for almost 20%, tax on production around 5%, and energy taxes 9% for a CV vehicle or
1% for an EV. Then, four cases for substitution of EV to CV are set up and assessed, depending on the
places either domestic or foreign in which the vehicle is manufactured and used, respectively. In the base
case, where the vehicle is both manufactured and used inside the country, substituting an EV to a CV
would be nancially neutral for public nances e at least before any purchase incentive bonus. The
export case, where an EV is substituted to a CV in domestic production but then exported and hence used
outside the country, yields an additional revenue of about V8000 to the domestic public nances
(without bonus); the import case has an opposite effect. Lastly, the twofold substitution of an imported
EV to a domestically manufactured CV for domestic use would entail a loss of about V20,000 (without
bonus). Therefore, for France the purchase incentive bonus can be justied mainly by the stakes of energy
independence and domestic industry at the national scale or of environmental quality at the urban scale.
2015 Elsevier Ltd. All rights reserved.

1. Introduction

1.1. Background

Plans for the industrial development and distribution of electric


vehicles (EVs) have recently come to the forefront of transport
policies both in developed countries1 and in fast developing
* Corresponding author. Ecole des Ponts ParisTech, Laboratoire Ville Mobilite 
Transport, 6-8 avenue Blaise Pascal, Champs sur Marne, 77455 Marne la Valle e
Cedex, France.
1
E-mail addresses: fabien.leurent@enpc.fr (F. Leurent), elisabeth.windisch@gmail. United States, Japan, Germany, France, United Kingdom, Italy, Spain, Denmark,
com (E. Windisch). etc.

http://dx.doi.org/10.1016/j.retrec.2015.06.006
0739-8859/ 2015 Elsevier Ltd. All rights reserved.
52 F. Leurent, E. Windisch / Research in Transportation Economics 50 (2015) 51e62

countries (China). The reason for this is the reduced environmental the use of the vehicle, whether domestic or external, also needs to
impact of such vehicles compared with internal combustion engine be spatially dened.
vehicles (CVs for Conventional Vehicles): at global level, fewer We provide generally applicable principles and a methodology
greenhouse gas emissions if the electricity comes from low carbon of nancial valuation, and we apply them to the specic case of the
sources, and at local level reductions in trafc pollution and noise private car in France, taking the year 2007 as our baseline.
for improved quality of life. In a recent paper (Leurent & Windisch,
2011), we showed that national policies to promote the use of 1.3. Method: vertical economic valuation
electric vehicles are uniform in terms of the environmental claims
they make and their scenarios for the diffusion of the electric car, We evaluate the replacement of a CV by an EV over their whole
entailing a three stages process: rst, mass orders for large corpo- life-cycle, considering rst the manufacture and then the use of the
rate eets, then an extension to taxi eets and public transport vehicle and the associated consumption. Usage is quantied by
services (e.g. shared car systems), and nally a general diffusion to vehicle type (segment B) and annual mileage, which determine the
private households. There are some differences between national attractiveness of the EV for a candidate owner (Windisch, 2011). We
policies depending on their specic industrial and energy priorities, evaluate the industrial aspects for each type of vehicle using an
which affect the composition of the policy as a particular package of inputeoutput model for production in the country. This model de-
instruments focussing on supply (R&D, industrial support) and scribes production, external trade and consumption for each type of
those focussing on demand (subsidies for ownership and use, activity. For consumption, we make a distinction between nal de-
rollout of a battery charging infrastructure); the procurement mand by households and public bodies, nal demand by companies
consortium is a hybrid approach which aims to generate economies for capital goods (capital and depreciation) and intermediate con-
of scale on the supply side and reduce prices on the demand side. sumption arising from production, specied for each production ac-
Handful of existing economic studies of electro-mobility deal tivity. We adapt the inputeoutput model to the composition and
with costs to the user, as a means of deciding which target group to specic consumption requirements of an EV. We also use the pro-
concentrate on in supportive policies.2 As far as we know, there has duction accounts and employment statistics for each type of activity,
been no analysis so far of the overall effects on public nances. In in order to evaluate the scal effects and those on social accounts.
order to shift from the economic impact on the user to that on the Our evaluation is therefore situated within the general frame-
public nances, we have to consider the economic impacts on the work of economic and social activity, incorporating direct and in-
other parties concerned e in particular transport providers in a direct economic effects. We go beyond the conventional framework
broad sense (including car-makers and their suppliers as well as the of transport economics (e.g. Quinet, 1998), which focuses exclu-
providers of car-related services) and central government. sively on transport services, by including industrial aspects and
social transfers: the major effect is to revisit the notion of cost to a
consumer, by identifying the part of this cost that constitutes rev-
1.2. Objective
enue for a supplier and is therefore no dead loss per se in a wider
system. Furthermore, our evaluation is sensitive to location: the
Our objective is to evaluate the nancial consequences, for the
public authority is an actor located within a geographical space,
public nances, of replacing an internal combustion vehicle (CV)
which determines its situation with respect to social, economic,
with an electric vehicle (EV). These nancial consequences are of
industrial and energy factors.
different kinds: a specic policy to promote electric cars is only the
tip of the iceberg; we want to show the hidden part, which includes
1.4. Related work in IeO analysis
industrial and scal factors as well as social transfers. Industrial
factors are here taken in their broad sense, referring to the various
The inputeoutput (IeO) model of an intersectorial economy was
activities involved in production, in particular manufacturing and
crafted by Leontief to analyze the structure of the American econ-
energy production, both in the construction of a vehicle and in the
omy (Leontief, 1936). It was then extended to multiple regions by
provision of products and services throughout its operating life.
Isard (1951) in order to include the regional location of economic
The industrial aspects have economic and social implications for
activities and the interregional trade. IeO analysis has become a
employment, and therefore for salaries, for social contributions by
basic tool in national accountancy to depict the intersectorial
employers and employees and for workers' incomes. We include
linkages and the particular contribution of each activity sector to
these social accounts, along with unemployment benets, in the
the economy of a nation or a region (e.g. Eurostat, 1999; Gregoir,
accounts of the government that sustains them. Moreover, the
2008). As the outreach of an IeO table is essentially descriptive
value added by economic production is taxable and generates tax
and static, IeO models have been replaced in many macroeconomic
revenues, both on the consumption side (VAT) and on the pro-
studies by more sophisticated models involving prices adjustments,
duction side (various taxes on production). Finally, energy (in
microeconomic behaviours and time lags in order to assess sce-
particular fuel, but also electricity) is subject to specic taxes,
narios of industrial development and economic regulation: for
similar in nature to public subsidies for electric vehicles, although
instance the Mesange model for France (Klein & Simon, 2010). Yet
the direction of the nancial transfers is the opposite.
IeO analysis is still used to perform rst-round estimation of the
Obviously, all these effects relate to a particular country, with its
macroeconomic effects of a sectorial policy (e.g. the multiplier ef-
own system of production and economic, social and scal ar-
fects of tourism expenditures on a regional economy in Frechtling &
rangements at any given time, and also its own local pattern of
Horva th, 1999) or of catastrophic events such as an earthquake
vehicle use. Slightly less obvious but equally real, in geographical
(Kim, Ham, & Boyce, 2002) or the Katrina landfall in Louisiana
terms the territory denes a domestic authority, by contrast with
(Hallegatte, 2008): see (Wiedmann et al., 2007) for an overview of
the space beyond. Location is important: in principle, local pro-
principles. Furthermore, in recent years IeO tables have been used
duction is more favourable to domestic governments than imports;
in environmental economics in combination with models of envi-
ronmental impacts in order to assess the land appropriation
2
Cf. BCG (2009), CGDD (2011), CE Delft (2011), Deutsche Bank (2009), Draper,
(ecological footprint, Hubacek & Giljum, 2003) or the carbon
Rodriguez, Kaminsky, Sidhu, and Tenderich (2009), Deutsche Bank (2011), ESMT footprint (Minx et al., 2009) of the multiregional and intersectorial
(2011), Nemry and Brons (2011). structure of the economy.
F. Leurent, E. Windisch / Research in Transportation Economics 50 (2015) 51e62 53

To the best of our knowledge, IeO analysis has not yet been used annum, or that of the vehicle owner, who spreads the purchase over
to evaluate the economic effects of substituting EVs to CVs. Up to the life-cycle of the vehicle and thinks in terms of annual operating
now, such substitution has been subjected to two streams of eval- costs. We choose to work with the vehicle sales ow, counting all
uation. The rst stream pertains to demand studies, in which the the costs associated with manufacture in a single year and allo-
decision to hold and use an EV or a CV is modelled as a discrete cating all the running costs over the lifespan of the vehicle to that
choice of individual motorization on the basis of a utility function year.4 When thinking in terms of a stock of vehicles owned and
(ESMT, 2011; Massiani, 2012) or a Total Cost of Ownership used, the above values need to be divided by the lifespan in years.
(Windisch, 2011). The second stream is the CosteBenet Assess- We postulate that the total cost of ownership and usage for the
ment (COBA) of EV-supportive transport policies in a given country. user is sufciently alike between EV and CV for the difference to
For instance, the benets and costs not only to the vehicle user but have no more than a negligible impact on the decision to buy, on
also to the environment and the public nances have been evalu- the annual mileage covered by the user and on the length of
ated by the French Ministry of transportation (CGDD, 2011). Their ownership and therefore the economic lifespan of the vehicle.
approach is typical from COBA in transport economics since it in- In formal terms, dY tJ dYjt : j2J is the annual consumption
cludes the evaluation of the emissions of pollutants and of green- vector associated with one vehicle of type t 2 {C, E}, for the set J of
house gases on the basis of damage costs, along with some scal production activities j. Notation d refers to the unit basis of the
effects for the public purse: fuel tax revenues and the purchase value in Y and it indicates that the associated numerical value
incentive bonus for EVs. However, they did not take into account comes from marginal analysis of aggregate value ows.
industrial effects or social transfers. This leaves room for our
contribution, which integrates these features and stands as a 2.2. Inputeoutput model of production
comprehensive approach concerning the nancial effects on the
public purse of the substitution of an EV to a CV. The main activities associated with production include car
construction, the manufacture of electrical equipment, metal
1.5. Paper structure products, textiles, the supply of car-related services and consum-
ables, etc. We will identify the relevant items in the next section:
The rest of the paper is structured into three main parts and a for methodological purposes, we simply need to specify a set of
conclusion. First, we describe the evaluation method, setting out activity types, J.
the principles e in particular the differentiation of manufacture and By activity type j, let Xj be the value produced annually within
usage e and specifying an accounting model for the different ef- the study area, Ij the value of imports, Ej the value of exports, Kj the
fects (Section 2). Then we describe in detail our sources and as- intermediate product consumption required by the various activ-
sumptions, for each type of vehicle, for metropolitan France in 2007 ities, and Yj the nal demand of domestic households and public
(Section 3). We can then set up and evaluate cases for the location institutions (and rms in the case of capital goods). The values of
where manufacture and usage take place, identifying the main domestic production and import, on the supply side, should bal-
value ows related to industrial linkages as well as scal and social ance those of the nal domestic demand, exports and domestic
accounts (Section 4). In conclusion, we comment on the scope and intermediary consumption, on the demand side. The money ows
limitations of our method, and suggest further avenues of research for the activity over a nancial year within the geographical area
(Section 5). are linked in a nancial balance as follows:

2. Methodology: principles and valuation model Ij Xj Kj Yj Ej : (1)

Intermediate consumption arises from the volumes Xi of the


Step-by-step, we describe the derivation of costs and revenues
various activities. We assume a linear dependence with technical
stemming from the manufacture and use of a car (i.e. life-cycle costs
coefcient aji to express the amount of activity j that is consumed in
for each car, Section 2.1), the inputeoutput model of economic
the production of a unit value of activity i. So it holds that:
production (Section 2.2), the taxation model for the activity, for
trading and for energy (Section 2.3), together with the social model X
Kj Kji and Kji aji Xi : (2)
(Section 2.4), before going over the valuation formulas (Section
i2J
2.5).
The matrix of technical coefcients, denoted A [aji: j, i 2 J],
2.1. Calculation by vehicle and by life-cycle captures the linkages between the sectorial activities. In matrix
form, therefore, the full set of the accounting balances between the
In order to evaluate the economic effects of a type of vehicle e activities and including domestic production along with foreign
EV or CV e we calculate the unit costs and revenues for the trade is expressed as follows:
manufacture and then use of a car. This means that our calculation
is marginalist and does not depend on the size of the vehicle stock, IJ XJ A$XJ Y J EJ : (3)
nor the annual volume of vehicle sales.
Assuming that nal demand and foreign trade are known, do-
We distinguish two essential phases in the life-cycle of a car:
mestic production XJ is deduced from them by using Eq. (3) in the
rst, the manufacturing phase, and second the use of the vehicle by
following way, where U is the identity matrix:
its owner during its operating lifespan e without taking into ac-
count vehicle transfers between successive users.3 We use an  
XJ U  A1 $ YJ EJ  IJ : (4)
annual basis for both manufacture and usage over the whole life-
cycle: two perspectives are possible in this respect, either that of
the manufacturer, who counts the vehicles built and sold per
4
We therefore assume a rolling system. The purchase year should be seen more
as a Renewal event which, in terms of a total eet under ownership, is spread out in
3
In this article, we ignore the disassembly phase of a vehicle because for each the same way as the usage phase. So there is no need to include any kind of interest
vehicle it is minor compared to the construction phase. rate.
54 F. Leurent, E. Windisch / Research in Transportation Economics 50 (2015) 51e62

Replacing a CV with an EV entails a change from YJ to dF dR  s: (7)


Y 0J YJ dYEJ  dYIJ . From the variation in its causes YJ, the ac-
counting model can be used to draw the consequences regarding XJ, 2.4. The model of social transfers
which becomes X0J XJ dXJ . By linearity of Eq. (4), an elemental
variation dY J dY EJ  dYIJ entails an elemental variation dXJ in do- In a broad sense, the social transfers between the economic
mestic production: agents include return on investment, labour remuneration
(including salaries and social contributions), together with unem-
dXJ U  A1 $dYJ : (5) ployment benets. Out of them, the social contributions and un-
employment benets are directly related to the public nances and
So far, this is a standard national accounting procedure must be included in our evaluation.
(Eurostat, 1999). However, it is not enough to take account of a Let us begin by expressing the value added per activity, Vj, as a
change in production and the associated technologies. Making function of production Xj and of the intermediate consumptions
electric vehicles is a different industrial activity from making in- that constitute an input into that production, the Kij:
ternal combustion vehicles, because of both the differences in the 0 1
quantities of input used from among the different sectors and also X X
the industrial combination of these inputs. To reect this specicity, Vj Xj  Kj where Kj Kij @ aij AXj : (8)
we model an additional type of activity, with its own notation j* and i2J i2J

specic technical coefcients both for output from the different In matrix form, if the unit row vector by type of activity is
sectors (ai j for each i 2 J) and for input (aj i for each i 2 J), yielding expressed uJ [1: j 2 J], the product uJ$A* is a row vector
an adapted matrix of technical coefcients, hereafter denoted as A . P
aij : j2J. These elements are used as diagonal terms in the
In formal terms, J should strictly speaking be adjusted to i2J
J  Jfj g, the vectors VJ to V*J* etc. However we shall avoid to add square matrix diag[uJ$A*] whose non-diagonal terms are zero. Let
stars to the indices, variables and matrices in the model formulas, us posit B U  diag[uJ$A*] to summarize the linear relationship
since it is easy to trace out the adaptation from the application between the added value vector and the production vector.
either to a CV (no adaptation) or to an EV (with adaptation). Formally,

KJ U  B$XJ and VJ B$XJ : (9)


2.3. Model of scal effects
Then, still by activity type, let us assume that the number of
A country's government is able to nd as many taxation sources people employed hj is proportional to the value added, with an
as there are types of activity and economic processes For our inverse factor of individual productivity rj (i.e. the average indi-
problem, we differentiate between general taxes on consumption vidual salary charged):
(VAT) written as a vector TY to allow for rate variation across ac- 
hj Vj rj : (10)
tivities, taxes on production TX, import taxes TI and export taxes TE.
It is assumed here that each tax is proportional to the volume of We then express the average wage per employee as
the activity, with a specic coefcient. To stick to the French case, wj w(i) (s) (i) (s)
j wj , where wj is the net wage and wj the employee's
tax on production corresponds to various specic levies, including and employer's social contributions. For each activity, the social
the Territorial Economic Contribution5 and corporation tax. We j hj Vjwj /rj.
contributions are w(s) (s)
assume that overall the production tax is proportional to Gross j /rj: j 2 J], multiplied
The row vector of sectorial coefcients [w(s)
Operating Surplus (GOS, value added minus labour costs), if this is a on the right by matrix B, gives us the vector of sectorial coefcients
positive gure. In addition, we rst consider GOS proportionally to for social contributions:
added value, and then link it to nal demand. One proportionality
h . i
leading to another, for each activity its nal domestic demand Yj is s
W J wj rj : j2J $B: (11)
taken as the tax base for tax TXj .
In addition, we consider specic taxes on energy sources, From this stems the variation in social contributions associated
expressed TC with an index C for Carbon, because in France this with a variation in production dXJ:
notably includes the domestic tax on petroleum products (now
TICPE, formerly TIPP). We link them proportionally and specically dS WJ $dXJ : (12)
to each activity, to nal demand, including consumption and spe-
cic energy sources. If the government pays unemployment benet at a net rate of zj
To synthesize, exogenous variations (dYJ, dIJ, dEJ) induce per unemployed worker in activity j, then the variation in
endogenous variations dXJ and cause tax revenues to vary by an employment arising from a variation in production entails the
amount dR as follows: saving of such unemployment benets for the public nances.
Thus, the variation in social transfers associated with employment
 
issues is the sum of social security contributions plus unemploy-
dR TY TX TC $dY J TI $dIJ TE $dEJ : (6)
ment benet amounts to:
Finally, the tax element needs to incorporate specic policies h . i
s
relating to car ownership and usage, let us say a value of s by car dS W
J $dXJ ; where W
J wj zj rj : j2J $B:
over its lifespan: in particular a subsidy for the purchase of an (13)
electric vehicle, or local exemptions from car parking fees, or the
free supply of electricity on the public highway Then the mar- 2.5. Synthesis of methodology
ginal amount, denoted dF, of scal revenue satises that
For the government, the balance of revenues net of expenditure
for an exogenous variation (dYJ, dIJ, dEJ) in nal domestic demand
5
In French, the Cotisation Economique Territoriale is levied on rms by local and in foreign trade involves both the scal side (dF) and the social
authorities on the basis of their oor area of settlement and number of employees. side (dS) as follows:
F. Leurent, E. Windisch / Research in Transportation Economics 50 (2015) 51e62 55

dB dF dS dR  s dS: (14) 3.1. Car production and its intermediate consumption


To put values on the terms, we need rst to establish the
The French new car market continues to be primarily supplied
different proportionality coefcients that characterize the terri-
by carmakers of French origin, but vehicles imported by those
tory's production system and socio-economic circuit (in the
carmakers and their foreign competitors account for more than 40%
matrices A and W as well in the tax rates), then deduce the varia-
of the market (CCFA, 2011). In the 2007 national accounts, French
tion in production that arises from exogenous variations.
production in Car Manufacturing was V67 billion, imports V38
Formula (14) sums up the model. This is linear by nature, so that
billion and exports V47 billion, all exclusive of tax. The breakdown
it can be applied to any number of private vehicles that may be
of domestic demand was 60% for households and public in-
affected by the shift from the CV to the EV within a given territory.
stitutions, and 40% for businesses. Final household demand reects
The model features can be depicted in a block-diagram (Fig. 1).
the number of private cars sold and the average unit price recorded
We have limited the sequence of impacts by ignoring the effects
in recent years (approximately 2.3 million cars per year and
on household demand of a variation in income (from capital or
V16,000 per car excluding VAT).
from work), and the effects of the spatial distribution of households
By relating intermediate consumption in the activity of Car
(if the residential zone is outside the employment zone, then the
Manufacturing to its production value, we obtained the technical
ripple effects of consumption occur outside). We also ignore the
coefcients for this activity, which reect the typical composition of
income tax levied on individuals, apart from social contributions
a CV e though admittedly the large majority of the components are
based on salary. In principle, the effects on household consumption
produced domestically.6 The main items are shown in Table 1 and
should be very small, since our comparison is based on two prod-
covered below:
ucts that are equivalent in terms of total cost of ownership. The
effects on worker revenues are less clear, especially if there is a shift
- Automobile construction, probably the engine: 30%.
in employment between the main activities concerned (cars, elec-
- Metallurgy and metal processing: 12%.
trical equipment, energy).
- Automotive equipment manufacture: 9%.
- Chemicals, rubber, plastics: 7%.
3. Data and assumptions - Financial, real estate and rental activities: 7%.
- Machinery: 5%.
As of the end of 2011, we have annual statistics up to 2010 for the - Business services, including research and development: 6%.
production accounts for each industrial sector in France, as well as - Electrical and electronic equipment and components: 4%.
for the number of people employed, salaries and social contribu- - Other intermediate consumption: 10%.
tions (Insee, 2011). We also have an economic and social chart for - Value added: only 10%.
38 activity groups in base year 2009, in which car manufacturing is
part of Transport Equipment Manufacturing, along with the rail and This breakdown relates to intermediate consumption [aij: i 2 J]
aerospace industries. A more detailed chart, identifying car in activity j e Automobile Construction e and to its added value.
manufacturing, is available in base 2007 and is our main source for On the output side of this activity, intermediate consumption Kji
the inputeoutput model. is low compared with production Xi in activities i, because a car is a
Within this model, we have situated nal demand for the nished product which companies acquire as capital goods, not as a
manufacture (Section 3.1) and use of a car (Section 3.2); in the good consumable in their own production processes.
process, we have modelled the construction of an electric car as an Let us move onto the modelling of an EV. We treat the vehicle
activity, deduced from recent information from the carmakers body and the battery as separate entities. Our assumptions about
Renault and Nissan. We have kept base 2007 to evaluate the vehicle composition are set out in Table 1, with distinctions be-
physical effects and social effects in terms of volume of activity, but tween car body, battery and charging terminal (cf. Table A1):
have as far as possible used 2011 values for the shift from volumes
to values (Section 3.3).  Per car body, we have assigned EV values taken from their CV
counterparts for most ttings, but reduced by V1000 excluding
tax for self-provision (electric motor easier to build).
Vehicle owners: Purchase incentive
 For the battery, we have counted V10,000 excluding tax under
households, firms bonus Electrical and electronic equipment and components.7 This
value is an estimate based on two pieces of evidence: rst, the
Equipment investment: car, Use of equipment monthly price of battery location for the Renault Zoe for a given
battery, charging terminal over its lifespan
mileage, in relation to the battery lifespan; second, the differ-
Battery Insurance, ence in market price between the Nissan Leaf EV and its closest
Car buying Maintenance Energy CV counterpart, the Nissan Almera.
buying Charging terminal consumption  Concerning the charging terminal, it is evaluated as two nal
buying and installation
expenses related rst to the equipment purchase, valued at
Car-makers Electrical equipment Service Energy V500 under Electrical and electronic equipment and compo-
Providers providers providers nents, and second to its installation, valued at V300 under

Consumption Energy
General economy, intersectoral linkages, taxes
taxes employment of workers

Social contributions of Production


6
employers and employees taxes Which is increasingly less the case of France, although the foreign trade bal-
ances for the activities concerned are fairly balanced.
Public purse 7
Our decision to allocate the manufacture of the battery to this activity, rather
than to vehicle construction, is a deliberate one intended to take better account of
likely intermediate consumption. Based on a sensitivity test, it appears that this
Fig. 1. Diagram of value ows. decision has a minimal impact on case evaluation.
56 F. Leurent, E. Windisch / Research in Transportation Economics 50 (2015) 51e62

Table 1 Table 2
Intermediate consumption to produce one vehicle e CV vs EV. Use of a car: annual costs exclusive of tax.

Activity Internal combustion Electric vehicle CV EV


vehicle
Maintenance (V) 800 500
V HT % V HT % Insurance (V) 440 330
Mileage (km) 15,000 15,000
Electric vehicle construction 0 0.0% 3350 14.2%
Energy per 100 km 5 l diesel 18 kWh
Farming, agri-food industry 9 0.1% 9 0.0%
Price per unit of energy (V) 0.7 0.093
Consumer goods 433 3.0% 433 1.8%
Energy cost (V) 525 251
Manufacture of IC vehicle 4350 29.8% 0 0.0%
Total cost of use (V) 1765 1081
Automotive equipment 1341 9.2% 1341 5.7%
Ship, aircraft rail construction 8 0.1% 8 0.0%
Machinery 770 5.3% 770 3.3%
Electrical and electronic 321 2.2% 10,321 43.7% simply in an inputeoutput model, on a nal demand basis. We
equipment
Mineral products 170 1.2% 170 0.7%
specify this for an electric or internal combustion vehicle, for a
Textiles 174 1.2% 174 0.7% technical and economic lifespan of 10 years with annual mileage of
Wood and paper 42 0.3% 42 0.2% 15,000 km. It should be recalled that the average age of a vehicle in
Chemicals, rubber, plastics 1084 7.4% 1084 4.6% France's automobile stock has increased from 7 to more than 8
Metals and metalworking 1742 11.9% 1742 7.4%
years, while annual mileage, which rose in the 1990s, fell from
Electrical and electronic 271 1.9% 271 1.1%
components 14,000 km in 2000 to 13,000 km in 2007 (CCFA, 2011). The pa-
Fuels 84 0.6% 84 0.4% rameters chosen describe conditions favourable to electric vehicles,
Water, gas, electricity 87 0.6% 87 0.4% i.e. sufcient daily travel to amortize the cost of the battery, but not
Construction 18 0.1% 18 0.1% too much to exceed battery range: we assume 15,000 km a year for
Car dealing and repair 9 0.1% 9 0.0%
200 or 220 working days with a commuting distance of 30 or
Wholesale and intermediate 99 0.7% 99 0.4%
trade 40 km. Over 10 years, 150,000 km is compatible with 1000 recharge
Transport 50 0.3% 50 0.2% cycles (standard technical lifetime) for a battery with a range of
Financial, real estate, rental 1105 7.6% 1105 4.7% 160 km, which meets the targets stated by the carmakers (CAS,
activities
2011).
Services to companies 823 5.6% 823 3.5%
Services to individuals 34 0.2% 34 0.1% Let us reiterate our accounting convention laid out in Section
Education, health, social care 92 0.6% 92 0.4% 2.1: we aggregate all of the expenses related to a given vehicle over
Administration 2 0.0% 2 0.0% its lifespan and attribute them to a single year, typically that of
Added value 1481 10.1% 1481 6.3% vehicle acquisition. For this year we need to count the acquisition
cost plus the use of the vehicle over its entire life cycle. In all, usage
Total 14,600 100.0% 23,600 100.0%
cost exceeds acquisition cost by a factor of around 1.4 for a CV
(excluding road toll or parking costs).
Services to individuals; thus the terminal costs V800
Use related consumption consists primarily of fuel or electricity,
(excluding tax) to the nal consumer.
plus service, maintenance and insurance (Windisch, 2011).
Table 2 gives economic consumption, excluding tax, per vehicle
Table 1 stems from the breakdown of the French national IeO
type for a total mileage of 150,000 km over 10 years. Our standard
table as of 2007 (Insee, 2011) with respect to an ad-hoc categori-
CV is a segment B diesel car, with above average annual mileage:
zation of our own in order to focus on vehicle production, vehicle
the model is inspired by the Renault Clio, with average fuel con-
use and their intermediate consumptions. The activity of
sumption of 5 l of diesel per 100 km. The main inspiration for the EV
manufacturing internal combustion cars is depicted by the column
model is the Renault Zoe, assuming consumption of 15.5 kWh per
vector of its intermediary consumptions of all activities in the
100 km travelled8 and losses of 15% during recharging. Energy
matrix of technical coefcients. We renormalized the values in the
consumption is valued exclusive of tax at V0.70 per litre of diesel
associated column in order to impose a total equal to the purchase
and V0.09 per kWh for electricity. We valued maintenance at V800
price (excluding tax) of our baseline CV e a Renault Clio 3 Diesel car.
per year for the CV and V500 per year for the EV, exclusive of tax.
Then, on this per vehicle basis, along with the aforementioned
Insurance is rated at V440 per year for the CV and V330 per year for
assumptions the same added value was assumed for an EV as for a
the EV, based on recent insurance quotes,9 again exclusive of VAT.
CV. So the total value of the hypothesized activity of Manufacturing
These yearly values were accumulated over the car lifespan of 10
EVs, including battery but excluding charging terminal, represents
years so as to constitute the nal expenses related to the phase of
the purchase price (excluding tax) of the counterpart EV e a
car use. Together with those related to the phase of car equipment
Renault Zoe car: about V23,600. This is a notional rather than an
(cf. Section 3.1), they provide the basis to build the vectors dYIJ and
effective market price since the car-maker has its own marketing
dYEJ as dened in Section 2.2.
and commercial strategies, notably so to amortize its investments
into R&D and production equipment over a number of vehicles that
is not known in advance in the early stages of supply to the market. 3.3. Fiscal and social accounts effects
After dividing the components of the EV vector by its total, we got
the additional column j* of activity EV Construction, in technical With regard to tax, for each activity we specify a VAT rate of
coefcient matrix A*. In addition, the matrix row associated to this 19.6% in general and a tax on production (cf. Section 2.3) based on
activity was specied as zero apart from the diagonal self-provision production at the ratio recorded for the activity in 2007. In addition,
term (engines, chassis). we included a domestic tax on the consumption of energy products

3.2. Use of a car


8
I.e. a range of 110 km if the battery has a capacity of 18 kWh.
The standard running of a car entails the consumption of goods 9
Likely based on the following inference: that the range constraint will reduce
and services: in principle, this consumption can be described some risks of accident.
F. Leurent, E. Windisch / Research in Transportation Economics 50 (2015) 51e62 57

Table 3
Taxes and social transfers based on production.

Activity Car manufacture Automobile Metals Fuels Electricity, Car dealers, Services to
equipment gas, water repair individuals

Production Xj (MV pre-tax, Y2007) 67,310 27,662 97,453 58,477 78,675 46,248 179,886
Value added Vj (MV pre-tax, Y2007) 6828 5933 29,315 6068 27,350 27,675 95,147
Full-time jobs (1000s) 179 65 464 38 133 461 2325
Productivity rj (VK/year) 29.0 70.1 39.6 42.0 77.5 34.1 26.9
Social contributions wjs (VK/year) 13.1 31.5 17.8 18.9 34.9 15.3 12.1
Unemployment benet, zj (VK/year) 8.0 19.3 10.9 11.6 21.3 9.4 7.4

(TICPE10) of V0.45 per litre of diesel on car fuel (MFDD, 2011a, production levels outside France are rising fast, reecting interna-
MFDD, 2011c), as well as specic taxes on electricity at a rate of 14% tional growth in the automobile market.16
on the amount before tax plus VAT (MFDD, 2011b). Transposition to another country would require all the as-
As regards the social aspects, in each activity we considered the sumptions to be adjusted: production structure and intermediate
employer's and employee's social contributions proportional to intersectorial consumption coefcients, balance sheet and pro-
salary, for a total of 45% (cf. Urssaf, 2011): by concatenation we duction account structures for each activity, tax and social contri-
establish a proportional relation with production. In addition, we bution rates, salaries and unemployment benets, energy prices,
set unemployment benet at a xed amount of 50% of the average and even specic taxes on automotive equipment (very high for a
net salary: this simplied method of valuation fairly accurately CV in Denmark, for example).
reects the amounts stipulated under industrial agreements
(Urssaf, 2011).
Table 3 summarizes the social effects that concern us, for the 4. Set up of cases and their assessment
main groups of production activities. Its rst three lines indicate the
value of production, that of the added value and the number of The two previous sections laid out the valuation model and the
workers, respectively. The other lines give the productivity rj, social assumptions applied to the French domestic situation. We can now
contributions w(s)
j and unemployment benets zj, on an individual use them to test a range of cases. We will rst set up a baseline case
basis. The inequalities between the groups' individual indicators by specifying the elements that pertain respectively to the manu-
arise from the fact that the link between jobs and activities is not facture of a vehicle for each type of vehicle e CV or EV e and to the
very precise. use of a vehicle (Section 4.1). Then we will set up and evaluate
different cases in which Manufacture and Usage take place inside or
outside the country (Section 4.2). After discussing all the results in
terms of intersectorial policy and equity between taxpayers and
3.4. Comments users (Section 4.3), we will comment on the method of valuation in
the light of the quantitative results (Section 4.4).
We used several sources of information: French ministries,
Urssaf,11 CAS,12 Insee,13 CCFA,14 information published by car-
makers, plus certain assumptions of our own which we felt were 4.1. Elements and evaluation under domestic manufacture and use
plausible, in particular regarding the price of an EV and the price
breakdown between car body, battery and charging terminal. On A case is a combination of manufacturing elements (code M) or
this subject, the policy of the carmakers seems to be to reduce the usage elements (code U), per vehicle type. The case results are
price of the individual battery, and at the same time to raise the obtained rst for one vehicle type, then in a comparative way for
price of the vehicle body, probably for a combination of commercial the difference between the two types. As our valuation method is
and economic reasons. The manufacturers also have latitude in linear, all that is needed is to combine the results of the individual
whether they pass their R&D investment on electric vehicles to elements to nd the result of a case. Four elements are of funda-
consumers in the short or long term. mental importance: the domestic manufacture of a CV (code CM, C
The 2007 baseline is likely to become obsolete in the near for Conventional and M for manufacture) and its usage (code CU),
future: more recent economic statistics show that car production in the domestic manufacture of an EV (code EM) and its usage (code
France fell by 30% between 2007 and 2009 e it would need to in- EU). Each element, code ab, is characterized by an elementary
crease by 40% to return to its 2007 level.15 At the same time, French vector of end consumption per activity, dYab, established in Section
carmakers have increased their worldwide volumes: their 3, from which we deduce sectorial production dXab using formula
(4) provided in Section 2, then the scal and social accounts effects.
In the annex, Table A1 gives the consumption for each element
10
Taxe Inte rieure de Consommation des Produits Energe tiques: this term
(vectors dY), whilst Table A2 species the associated production
replaced TIPP in January 2011.
11 (vectors dX). Worth noting are:
French Organizations for the payment of social security and family benet
contributions (Unions de Recouvrement des Cotisations de Se curite
 Sociale et
d'Allocations Familiales).
12 gique).
Centre for Strategic Analysis (Centre d'Analyse Strate 16
In addition, we would point out several oddities in the presentation of the new
13
National Institute for Statistics and Economic Studies (Institut national de la car market in France. For one thing, the presentation talks about the number of
tudes e
statistique et des e conomiques). vehicles, not the values, although the price of higher range cars is 3 or 5 times
14
Committee of French Car Manufacturers (Comite  des Constructeurs Franais higher than that of lower range cars! For another, the numbers are given based on
d'Automobiles). the carmaker's nationality of origin rather than the place of manufacture. However,
15
This means that suppliers, and therefore indirect employment, are severely in 2010, French auto manufacturers produced two thirds of their cars abroad,
affected. Direct employment in car manufacturing has largely been maintained in whereas some foreign manufacturers produce certain models in France (Toyota,
the short term, but this would seem to threaten protability and the situation is Smart). The paradox is that the former manufacture middle or higher range cars in
unlikely to last. France, whereas the latter build small cars.
58 F. Leurent, E. Windisch / Research in Transportation Economics 50 (2015) 51e62

Table 4
Impact on public nances of the case elements (V per car).

Internal combustion vehicle Electric vehicle

Manufacture Usage Manufacture Usage

Final expenditure 14,600 17,650 24,400 10,814


VAT 2862 4121 4782 2119
Energy surcharge 3375 420
Tax on production 1002 1031 1648 618
Gross social contributions 6576 7968 11,486 4840
Saving on unemployment benets 4018 4869 7019 2958
Net social contributions 10,594 12,837 18,505 7798

Total 14,457 21,364 24,936 10,956


Total net of EV bonus 14,457 21,364 18,956 10,956

 The substantial size of the values involved, both for production proportionally small amount, around V1000 per element, i.e. 5
and for the public nances (Table 4). This reects the large ripple or 6%.
effect of manufacture, with a multiplier factor of around 4, On the tax side, the proceeds from one CV would be V12.4K as
whereas usage represents a multiplier of 3 for the CV and 2.5 for compared with V9.5K for an EV before bonus, and V3.5K after
the EV. bonus. These gures esh out the results of CAS (2011) by including
 For a single CV, the total productive effect from manufacture and tax on production on both the manufacturing and usage sides.
from usage are similar, around V56K and V51K respectively,
excluding tax. The sectorial distribution is very different,
focused on car construction and its inputs on the one hand, and 4.2. Denition and analysis of cases
on fuels, trade and insurance services on the other.
 For a single EV, manufacture has a much greater total productive We shall now come to comparative analysis, by making com-
effect than usage: the ratio between them is almost 4:1. The parison in two respects rst between CV and EV, second between
sectorial distribution differs markedly, for the same reasons as the cases. In the baseline case, the manufacture and use of the
with a CV, except that the Electricity Production activity replaces vehicle take place within the territory under consideration.
the Fuels activity. Replacing a CV with an EV would be fairly equivalent to the public
 Between CV and EV, the sum of the respective productive effects nances, provided that the vehicle is manufactured and used
(M U) is quite similar, around V107K and V116K respectively, within the country. The very slight difference is negligible with
i.e. within 10%. The underlying reason is that we chose a type of respect to both the larger values involved and the limited accuracy
usage in which the two vehicle types represent fairly similar of our model (e.g. the assumption of no distortion in household
costs for a user, and this similarity carries over to production, consumption). A tax bonus of V5000 before VAT would reduce the
without being excessively affected either by the production nancial proceeds from an EV by 16%, taking them markedly below
system or by the tax regime. those from a CV.
Aside from the base case, let us establish the following alter-
The nancial proceeds for the government are given in Table 4. native cases:
They are substantial: over the life cycle of a vehicle, the nancial
proceeds amount to V36K both for a CV and an EV, with a tiny 1) Import: for a vehicle manufactured outside the territory but
difference excluding purchase incentive bonus. The proceeds from used inside it.
manufacture are almost equivalent to the vehicle's selling price 2) Export: the vehicle is manufactured within the territory but is
before tax, while the proceeds from usage amount to 2/3 or 3/4 of not used there.
the overall cost excluding tax e indeed a very large share. 3) Twofold substitution: replacing a domestically produced CV
Within the nancial proceeds, the effects related to social ac- with an imported EV, which amounts to a twofold substitution
counts are very substantial and paramount: 65% for the CV and 73% of not only vehicle type but also of manufacture location.
for the EV, let's say 70% for the sake of clarity. This provides
retrospective justication for stating and evaluating them. Their In the Import case, the tax treatment of consumption is the same
distribution between manufacture and usage varies according to as in the base case. However, the tax on production in the
vehicle type: 45e55% for a CV compared with 71e29% for an EV. manufacturing phase is lost to the territory (under our simplifying
Broken down by item, the savings on unemployment benets postulate of no dependence between the domestic and foreign
represent around 38% of social contributions paid to the govern- productions), as are the effects of manufacture on social accounts.
ment: we incorporated them into the accounts to reect labour In this case, the EV loses its main revenue-generating elements. The
market conditions, which are currently difcult in France.17 nancial loss to the domestic government is in excess of V8K per
VAT has an important role, representing 19% of proceeds. Energy vehicle before bonus, and V14K after bonus e indeed quite large
taxes produce 9% of the proceeds for a CV, but only 1% for an EV. values as compared to the vehicle purchase price.
Finally, taxes on production represent a not insignicant, though The Export case contributes neither VAT (on manufacture or
use), nor benets on the side of social accounts, nor energy taxes
during use (ignoring the supply of spare parts). Its effects are
17
This inclusion is particularly important for a job retained on the margin of restricted to the manufacturing phase, and in this respect an EV is
production, directly linked with business volumes. Since our model is linear,
applying an assumption to the margin means that it applies to the entire volume of
almost twice as productive as a CV, provided that no bonus is
activity. As each of our comparative cases is differential, this should not generate applied at export, i.e. that the bonus is only allocated for domestic
distortions. use of the vehicle.
F. Leurent, E. Windisch / Research in Transportation Economics 50 (2015) 51e62 59

Table 5
Evaluation by case (V per car).

E-C, domestic Import Export Twofold substitution

Net nal domestic spending 2964 4916 9800 16,654


VAT 81 81 0 81
Energy surcharge 2955 2955 0 2955
Taxes on production 234 413 647 1415
Gross social contributions 1782 3128 4910 9703
Unemployment benet 1089 1911 3001 5930
Net social contributions 2872 5039 7911 15,633

Total 70 8487 8557 20,083


Total net of EV bonus 5910 14,467 3557 26,063

However, the worst case is the Twofold substitution, in other the CV in the usage phase, under our assumptions regarding
words replacing a domestically produced CV with an imported EV, mileage and unit consumption, only represents the equivalent of 21
where a foreign-based carmaker offers a domestic consumer an tonnes of CO2 for the energy mix of electricity production in
attractive vehicle that persuades them to switch type. Indeed, prior France.19 The cost to the government of saving one tonne of CO2 by
to bonus and for the manufacturing phase, an imported EV would replacing a CV with an EV, in the baseline case, would be almost
attract nancial revenues of V5K (VAT), whereas a domestically V300 after bonus; in the Import case, V400 before bonus and V700
produced CV brings in V14.5K, making a loss of V9.5K. Including after; in the worst-case case, V950 before bonus and V1200 after.
usage, the loss would rise to V20K prior to bonus, and V26K with All these costs are much higher than the costs of reduction in other
bonus e more than the vehicle selling price. sectors, in the short and medium term.
Out of all the cases, substitution for export is the most benecial It is therefore worth asking whether a nationwide tax bonus is
to the domestic public nances, whereas replacing a domestically appropriate as an economic instrument. The climate benet is
manufactured CV with an imported EV is the most damaging. In the insufcient, at least in the short and medium term. The same is true
intermediate position, the baseline case with manufacture and for energy factors, which are also part of the carbon economy. Local
usage occurring domestically is fairly neutral prior to bonus, but environmental priorities e improving air quality and reducing
markedly negative with bonus. Substitution for import is unfav- noise e should rather be tackled by local methods, obviously
ourable, though less so than the twofold substitution (Table 5). including a local bonus for using vehicles in town centres. As
regards encouraging local manufacture and maintaining domestic
4.3. Discussion employment, these would certainly benet from a bonus on pur-
chases, yet on a nonexclusive basis and at the risk of international
The nancial outcome is very sensitive to the place where the competition since the bonus applies to any vehicle wherever it is
vehicle is manufactured and used. The domestic authority needs to made. So to the national government the main pragmatic purpose
adjust its policy nely, to reect inherent national conditions in associated to a purchase incentive bonus is the strategic stake of
terms of industry as well as of energy sources and their location. energy independence, which is relevant both to foreign trade and
The outcome of the baseline case is fairly neutral to electric to very long-term risk management: the bonus is a very high price
vehicles: the loss on fuel surcharges would be more than offset by to pay for these under current conditions Ultimately, the bonus
the gains in social contributions.18 To bring in these gains, the in- would seem primarily to be an instrument of coordination,
dustrial operators need to keep industrial employment within the providing an incentive for consumers and reducing risks for car-
country and increase it in proportion with activity. This kind of makers. It is important to the public nances that it should be
cooperation to national employment is less easy for governments applied only to vehicles that are used and manufactured
to control than taxes on energy: herein lies a signicant risk in the domestically.
implementation of a policy in favour of electric vehicles. In summary, this discussion is about fairness between the
Other specic tax arrangements can distort the results. In taxpayer represented by government and the car user exposed to
France, notably, fuel used by taxis is exempt from specic taxes (up specic policies. It is also about geographical fairness between
to an annual quota), which would improve the nancial outcome of places where the use of EVs might develop, and places which would
the baseline case before bonus, and would similarly improve the fund the public subsidies for this development through taxation.
outcome of the import case. And it is also about fairness between the industrial operators in
The results of the different cases cover a very wide scope, from different sectors, as potential beneciaries of public subsidies.
the highly negative to the broadly positive: in other words, the It is worth noting here that the methodology could be used to
development of electric vehicles is a risky undertaking for the evaluate Hybrid Vehicles (HVs) and Plug-in Hybrid Vehicles (PHVs)
public nances of a country, depending on its industrial as well as battery EVs, since they can be analyzed as vehicle types
competitiveness. intermediate between Internal combustion engine, on one hand,
The bonus for purchasing an EV constitutes a government and battery EVs, on the other hand. Their technology lies some-
incentive, which reverses the outcome of the baseline case from where between the two extremes, and so would be their valuation
slightly positive to markedly negative. It is difcult to justify on the based on a linear model.
grounds of the long-term goal of protecting the climate by reducing
greenhouse gas emissions, because the advantage of the EV over

19
If, for the usage phase, we count 3.1 tonnes CO2 emitted per cubic metre of
18
In fact, the two items would be almost equal if along with TICPE we included diesel consumed, and 0.085 tonnes CO2 emitted per MWh produced in France, a
the VAT that it generates. lifetime mileage of 150,000 km emits 21 tonnes more CO2 in CV than in EV.
60 F. Leurent, E. Windisch / Research in Transportation Economics 50 (2015) 51e62

4.4. Methodological comments therefore the ripple effects; thirdly, that in horizontal terms it
includes the economic effects of the different sources of taxation,
The quantitative treatment provides retrospective evidence of and the social transfers based on working activity; and fourth, that
the need for a sufciently sensitive valuation model, in other words it sets spatial limits on the public authority, by distinguishing be-
one that incorporates enough vertical and horizontal aspects. Both tween domestic and foreign territory All these strengths greatly
vehicle manufacture and use need to be taken into account, from a enrich the traditional framework of transport economics.
life-cycle analysis perspective, otherwise there is a risk of twofold The limitations relate to the inputeoutput model on which the
or even three or fourfold errors on certain items. Location within or valuation is based. Firstly, we only know the intermediate con-
outside the country must also be covered, to avoid comprehensive sumption between economic activities for trade within the country,
errors both of sign and order of magnitude. Ripple effects also need not foreign trade. Secondly, our model of a production activity for
to be included: different production activities, in particular auto- the manufacture of the EV is of our own creation, and needs to be
mobile construction, are highly interdependent, and the values compared with reality in order to improve. Despite these limita-
propagate within a complex system of production: here again, tions, our valuation method is powerful in its breadth and its depth,
there is a risk of large-scale errors. And nally, the social accounts and undoubtedly more robust than less integrated methods. In
need to be taken into account, and not only the taxation aspects, future work it will be applied to several types of cars20 and to a
again at the risk of substantial errors. range of countries and regions in order to assess different political
All these sensitivities greatly enrich the traditional framework of instruments, not only incentive bonuses but also European or na-
transport economics. At the conceptual level, they are inspired by tional standards and local measures in favour of electromobility.
economic and social analyses with a general economic equilibrium
model of transport (e.g. Bro cker, 2004). However, we only look at
the value ows, not price behaviour nor the behaviour of the mi- Acknowledgements
croeconomic actors; on the other hand, we include vehicle manu-
facture and usage, which, to the best of our knowledge, is absent This research was partly nanced by the Renault group (contract
from existing economic equilibrium models in transport Regienov 09.380 to Ecole des Ponts ParisTech), which we thank for
economics. bert for the stimulating discus-
its support: in particular Jean Gre
One limitation of our model is its linear approach. The social sions within the framework of the Sustainable Mobility Institute in
aspects are based on a number of jobs per activity, assuming pro- partnership with ParisTech. The orientation to integrate the
portionality, in other words a constant level of efciency. However, Manufacture and Usage phases of the car lifecycle stems from the
a signicant priority for any company is to look for economies of implication of the rst author in the Chair on the Eco-design of
scale, and therefore increasing efciency for all resources, including buildings and infrastructure, a partnership between ParisTech and
human. The linearity of the model entails the risk that an appli- the Vinci group. We are also grateful to our colleague Virginie
cation may overestimate the effects. Nonetheless, we believe that Boutueil for her wise remarks and careful proofreading. One
this risk is moderate for an emerging industrial activity such as EV anonymous referee provided extensive observations, together with
production, because any emerging activity requires investments many nely-tuned suggestions that were very helpful.
and therefore calls on the various activities at a more sustained rate
than in standard running mode.
Annex
Here, we reach another limitation inherent to inputeoutput
models: a transformation in the system of production is difcult to
t into the model in its rapid development phase. We postulated a
new industrial activity, with its consumption in normal running
Table A1
mode, but without its specic investments. Their omission un- Final demand per car (V excluding tax).
doubtedly leads us to underestimate the short-term economic and
Internal combustion vehicle Electric vehicle
nancial impacts, which would counterbalance the risk of over-
estimation caused by linearity. Manufacture Usage Manufacture Usage
DeltaY_CM DeltaY_CU DeltaY_EM DeltaY_EU

5. Conclusion Electric vehicle 0 0 23,600 0


manufacture
Agriculture, 0 0 0 0
From a factual perspective, we have shown that the manufac- agri-food
ture and use of an automobile has a signicant impact on the public industry
nances. The French case has several salient features: a well- Consumer good s 0 0 0 0
established car-making industry that allows local manufacture, a Car manufacture CV 14,600 0 0 0
Car equipment 0 0 0 0
surcharge on end consumption of fuel, high rates of social contri-
Ship, aircraft, rail 0 0 0 0
butions and benets. In these circumstances, the return per vehicle construction
for the public nances is fairly equivalent between the EV and the Machinery 0 0 0 0
CV, in the absence of the EV purchase bonus, which makes the Electrical and 0 0 500 0
substitution a costly burden on the public nances. As part of an electronic
equipment
export strategy, the EV is more protable to the public nances Mineral products 0 0 0 0
than the CV. The worst case is the import of a foreign manufactured Textiles 0 0 0 0
EV for domestic use, in substitution for a locally manufactured CV. Wood and paper 0 0 0 0
From a methodological perspective, our valuation model has Chemicals, rubber, 0 0 0 0
plastics
both strengths and limitations. Its strengths are rstly that it deals
with monetary values, which lend themselves to computation
easily; secondly, that in vertical terms, it takes account of the
economic activities of production, their relations through inter-
20
mediate consumption between customer and supplier, and Such as the luxury EVs of the American car-maker Tesla Motors.
F. Leurent, E. Windisch / Research in Transportation Economics 50 (2015) 51e62 61

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