Energy Prices and Electric Vehicle Adoption

James Bushnell, Erich Muehlegger and David Rapson

No 29842, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper presents evidence that gasoline prices have a larger effect on demand for electric vehicles (EVs) than electricity prices in California. We match a spatially-disaggregated panel dataset of monthly EV registration records to detailed records of gasoline and electricity prices in California from 2014-2017, and use these to estimate the effect of energy prices on EV demand. Two distinct empirical approaches (panel fixed-effects and a utility-border discontinuity) yield remarkably similar results: a given change in gasoline prices has roughly four to six times the effect on EV demand as a similar percentage change in electricity prices. We explore the implications for optimal EV subsidies, which promote externality reduction benefits and correct for consumer misoptimization stemming from the undervaluation of future electricity costs.

JEL-codes: H23 Q49 Q55 R4 (search for similar items in EconPapers)
Date: 2022-03
New Economics Papers: this item is included in nep-ene, nep-reg and nep-tre
Note: EEE
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Citations: View citations in EconPapers (7)

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