Designing Fuel-Economy Standards in Light of Electric Vehicles

Kenneth Gillingham

Environmental and Energy Policy and the Economy, 2022, vol. 3, issue 1, 111 - 154

Abstract: Electric vehicles are declining in cost so rapidly that they may claim a large share of the vehicle market by 2030. This paper examines a set of practical regulatory design considerations for fuel-economy standards or greenhouse gas standards in the context of highly uncertain electric vehicle costs in the next decade. The analysis takes a cost-effectiveness approach and uses analytical modeling and simulation to develop insight. I show that counting electric vehicles under a standard with a multiplier or assuming zero upstream emissions can reduce electric vehicle market share by weakening the standards. Furthermore, there are trade-offs from implementing a backstop conventional vehicle standard along with a second standard that also includes electric vehicles, but such a backstop offers the possibility of ensuring that low-cost conventional vehicle technologies are exploited.

Date: 2022
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Chapter: Designing Fuel-Economy Standards in Light of Electric Vehicles (2021)
Working Paper: Designing Fuel-Economy Standards in Light of Electric Vehicles (2021)
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