Estimating gasoline demand and electric vehicle adoption: A spatial model for Brazil

Sergio Prolo, Andrea Pellegrini, Werner Kraus Junior, Alexandre Hering Coelho and John M. Rose

Research in Transportation Economics, 2025, vol. 113, issue C

Abstract: We investigate gasoline demand growth in Brazil over a 16-year period, assessing its response to electric vehicle (EV) adoption and taxation measures. Using a spatial-based econometric model with data from 2006 to 2021 across all Brazilian states, we observe that annual gasoline sales nearly doubled from 2006 to 2014, reaching 0.22 m3per capita, and then stabilized. Our model reveals that the EV motorization rate negatively impacts gasoline demand, with an elasticity of −0.126, compared to 0.609 for internal combustion engine vehicles. The results show that aggressive fuel taxation alone is insufficient to achieve long-term reductions in demand. However, fleet electrification is more effective, potentially reducing per capita gasoline consumption by 90% between 2021 and 2034 when it is strongly incentivized. A combined approach integrating taxation and electrification offers the most efficient pathway for reducing demand while generating revenue for public investment in Brazil’s transition to a carbon-free transportation sector.

Keywords: Electric vehicles; Gasoline consumption; Spatial econometrics (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1016/j.retrec.2025.101623

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