Interaction of Consumer Heterogeneity and Technological Progress in the US Electric Vehicle Market

Ranjit R. Desai, Eric Hittinger and Eric Williams
Additional contact information
Ranjit R. Desai: National Renewable Energy Laboratory, 15013 Denver West Parkway, Golden, CO 80401, USA
Eric Hittinger: Department of Public Policy, College of Liberal Arts, Rochester Institute of Technology, Rochester, NY 14623, USA
Eric Williams: Golisano Institute for Sustainability, Rochester Institute of Technology, Rochester, NY 14623, USA

Energies, 2022, vol. 15, issue 13, 1-25

Abstract: Electric Technology Vehicles (ETVs: hybrid, electric, and plug-in hybrid) may reach price parity with incumbent internal combustion vehicles (ICEVs) in the near future. Climate policy for transportation will depend on the degree to which consumers prefer ETVs, and price parity is a key factor. In this study, we explore the interaction between future cost reductions and the economically motivated adoption of ETVs. We construct a model of the U.S. personal vehicle market accounting for heterogenous use and vehicle preferences, in which adoption induces cost reductions that increase future market share. Model results indicate that price parity is reached for most consumers in a number of cost scenarios, but not with constant ICEV costs and modest ETV cost declines. A price parity future suggests that government support could be temporary and phased out after a successful market transition. However, if ETVs continue to be more expensive than ICEVs, then lasting government support is needed. Heterogeneity is essential to understanding the market transition: treating consumers as heterogeneous results in an ETV market share 23% higher than assuming average consumers. Future work can clarify ETV support policy by resolving uncertainty in cost trajectories and modeling dynamic and heterogenous consumer markets.

Keywords: technological progress; cascading diffusion; EV adoption; heterogeneity; learning rate; electromobility (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://www.mdpi.com/1996-1073/15/13/4722/pdf (application/pdf)
https://www.mdpi.com/1996-1073/15/13/4722/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jeners:v:15:y:2022:i:13:p:4722-:d:850258

Access Statistics for this article

Energies is currently edited by Ms. Agatha Cao

More articles in Energies from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().