Drivers of Electric Vehicle Market Penetration: Empirical Findings from Bulgaria

This study investigates the impact of government tax policy on the development of sustainable transport in Bulgaria by analysing the drivers of electric vehicle (EV) market penetration. Using a balanced panel dataset covering the period 2018–2023 for selected Central and Eastern European countries (CEECs), a two-way fixed effects panel regression model is employed to account for both country-specific and time-specific unobserved heterogeneity. The results indicate that higher economic development, proxied by GDP per capita in PPS, significantly increases EV market share, highlighting affordability as a fundamental driver of electric mobility adoption. Population density is also found to have a positive, statistically significant effect, suggesting that urbanisation and spatial efficiency facilitate EV diffusion by enabling shorter travel distances and a more effective use of infrastructure. In contrast, the analysis does not provide sufficient evidence that the absolute number of public charging stations directly influences EV market share over time within countries. Furthermore, the estimated country fixed effects reveal substantial cross-country heterogeneity in EV adoption, reflecting persistent structural and institutional differences beyond observable economic and infrastructural factors. These findings underscore that EV adoption is a multifaceted process shaped by the interaction of economic capacity, spatial structure, and country-specific conditions.