Work

Impact of policy changes on electric vehicles market efficiency: Applying Kingdon’s multiple streams framework and the semi-strong efficient market hypothesis

Year: 2026

Type: article

Abstract: This study examines how the rollback of electric vehicle (EV) incentive policies following the transition to a new U.S. administration in 2025 affected stock market efficiency, using the Semi-Strong Efficient Market Hypothesis (SEMH) within Kingdon’s Multiple Streams Framework (MSF). MSF conceptualizes the policy shock by identifying the misalignment of the problem, policy, and political streams, while SEMH assesses how this public information was incorporated into EV stock prices. Abnormal returns (AR) and cumulative abnormal returns (CAR) are evaluated using the Market Model (MM), the Capital Asset Pricing Model (CAPM), and the Generalized Autoregressive Conditional Heteroskedasticity (GARCH) model. Tesla, a pure EV manufacturer, showed statistically significant AR after the rollback announcement. The extended window indicates this inefficiency persisted, creating exploitable opportunities for investors and signaling a violation of the SEMH. Conversely, Ford and GM exhibited no abnormal returns, suggesting efficient price adjustment and greater resilience due to diversified production lines. These results demonstrate that political instability in energy policy weakens regulatory credibility, disrupts clean-energy transitions, and reduces investor confidence. Stable and transparent policy design is therefore essential to support private investment, sustain technological innovation, and advance progress toward the Sustainable Development Goals (SDGs). This study is among the first to link political science and green finance to apply Kingdon's MSF within an event-study, revealing how disrupted policy streams can cause financial market inefficiencies. Future research could extend the MSF-SEMH framework to international EV markets and green-technology sectors to test if similar policy reversals cause comparable market inefficiencies.

Source: Energy Reports

DOI: 10.1016/j.egyr.2026.109667

Authors: Abbas Khan, Muhammad Yar Khan, Abdulrahman Alomair, Abdulaziz S. Al Naim, Li Shuangjie

Institutions: Jilin International Studies University, Effat University, COMSATS University Islamabad, King Faisal University, Beijing University of Technology

Language: English

Topic: Financial Markets and Investment Strategies

Subfield: Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Affordable and clean energy, Industry, innovation and infrastructure, Sustainable cities and communities, Climate action

Open Access status: gold

Estimated APC paid: $3,040