Discontinued diffusion of alternative-fueled vehicles—The case of flex-fuel vehicles in Sweden

Journal article, 2018

Policymakers in many countries are facing the challenge of phasing out fossil fuels from the vehicle fleet. Until 2008, Sweden seemed to have managed a shift toward flex-fuel vehicles (FFVs), i.e. vehicles that can be driven on a combination of ethanol and gasoline. Every year, sale shares increased, reaching in 2008 almost 25% of the market. But then, the sales dropped to 5% of new sold cars in 2011. In this paper, the development of the flex-fuel market is analyzed by studying the underlying factors such as the market of FFVs and other “green vehicles,” fuel prices, national and local incentives, fueling stations, and the reporting of ethanol as a fuel in media. These factors are then analyzed through econometric analysis of a time series of share of FFVs sales in Sweden between 2002 and 2011 and descriptive statistics of municipal data of share of FFVs sales between 2005 and 2011. Findings show that fuel-efficient diesels entering the market, E85 (ethanol mixed with 15% gasoline) losing its economic advantage, and changes in the rebate structure have been the most significant factors for the decline. The effect of local incentives such as parking subsidies, fueling stations, and exemption from the congestion charging in Stockholm is harder to establish.