Navigating the Transition to Green Mobility: Assessing the Impact of Tax Incentives on Vehicle Efficiency and Market Dynamics in Italy

Abstract

The transportation sector is a significant contributor to global greenhouse gas emissions, underscoring the need for innovative fiscal measures to promote decarbonisation. This study evaluates the efficiency of car models based on price, emissions, and technical specifications, while examining the impact of fiscal policies on the adoption of green vehicles in Italy. A two-stage Data Envelopment Analysis (DEA) was conducted utilising a comprehensive database of new cars registered in 2019, categorised by market segments. The results indicate a paradox: the most efficient cars are not necessarily the most environmentally friendly. Furthermore, while green cars are available in smaller segments, their prices often exceed those of comparable conventional cars by 100%. This highlights the need for eco-bonus adjustments that consider factors beyond CO2 emissions. Additionally, promoting environmentally friendly cars in higher-end segments could drive innovation, reduce costs, and advance the automotive industry's transition to sustainability