A Car for Recognition: The Heterogeneous Market Responses to the Emergence of Electric Vehicles

Shimeng Liu, Hangtian Xu, Wenqin Zhang and Wenzhuo Zheng

MPRA Paper from University Library of Munich, Germany

Abstract: In the automobile market, where consumers value the social recognition associated with car ownership, how would introducing a lower-cost alternative influence the market outcomes of traditional internal combustion engine vehicles (ICEVs)? Leveraging high-frequency sales data from China's entire automobile market from 2018 to 2022, we investigate the heterogeneous market responses to the emergence of electric vehicles (EVs) across different price-tier segments. Overall, the emergence of EVs reduces ICEV sales while boosting total automobile sales. More importantly, while EV penetration reduces ICEV sales in low- and mid-end segments, it enhances ICEV sales in the high-end segment. We provide further evidence that the rise of EVs amplifies the symbolic value of high-end ICEVs, resulting in improved sales for ICEV brands with strong social recognition.

Keywords: Electric Vehicle; Market Responses; Symbolic Value; Social Recognition (search for similar items in EconPapers)
JEL-codes: L16 L62 M2 (search for similar items in EconPapers)
Date: 2024-05-01, Revised 2025-03-01
New Economics Papers: this item is included in nep-ene
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