Influence of government financial incentives on electric car adoption: empirical evidence from India

Abstract

Purpose

Electric cars have very little market share in developing countries despite their environmental benefits. Thus, governments have started promoting electric cars by providing financial incentives to consumers. The current article aims to examine the direct and indirect effects of government financial incentives on consumer electric car adoption in India.

Design/methodology/approach

The study followed a quantitative research method that employed a self-administered survey questionnaire. Structural Equation Modelling and Multi-Group Analysis were followed for data analysis.

Findings

The study revealed that financial incentives have an indirect effect on electric car adoption intention rather than a direct effect. In addition, financial incentives were found to have a direct effect on attitude and Perceived Behavioural Control (PBC). Attitude and PBC positively influenced consumer adoption intention.

Practical implications

The insights and implications from the present study would help policymakers and marketers to formulate better incentive policies and market strategies to increase consumer acceptance of electric cars in developing countries.

Originality/value

The study contributes to the literature by analysing the underlying mechanism that links government financial incentives to electric car adoption intention. This study also explored the direct effect of financial incentives on attitude and PBC, which are less investigated in electric vehicle literature. In addition, the present article also assessed the moderating role of age in electric car adoption, which has mixed evidence in the literature, and such studies are scarce in the Indian context.

Citation

Ansab, K.V. and Kumar, S.P. (2024), "Influence of government financial incentives on electric car adoption: empirical evidence from India", South Asian Journal of Business Studies, Vol. 13 No. 2, pp. 226-243. https://doi.org/10.1108/SAJBS-03-2021-0088