Driving Innovation: The Policy Tools Powering Electric Vehicle Technological Inventions

Electric vehicles (EVs) are crucial for cutting transportation emissions, yet the policy drivers of EV innovation remain underexplored. This study analyzes firm-level panel data on EV and battery patents, covering more than 4,000 firms across 19 countries from 2010 to 2021, to assess how these policy tools and their interactions in different time horizons influence innovative activity. We test the effects of individual policy instruments that either raise demand for EVs or support the development of EV technologies. Stringent fuel-economy standards, financial incentives, adoption targets, and public R&D investments each significantly increase patenting in EV and battery technologies. Moreover, long-term EV targets amplify the innovative impact of public R&D and standards while diminishing the marginal effect of short-term price signals. The results suggest that governments can accelerate clean automotive innovation by combining long-term adoption commitments with sustained R&D investment or strong performance standards, and by managing these instruments as a coordinated policy portfolio rather than as separate tools. The study contributes cross-country, firm-level evidence that links policy design to the direction of clean technology innovation.