The Economics of Electric Vehicles

David Rapson and Erich Muehlegger

Review of Environmental Economics and Policy, 2023, vol. 17, issue 2, 274 - 294

Abstract: We examine the private and public economics of electric vehicles (EVs) and discuss when market forces can be expected to produce the optimal path of EV adoption. Privately, consumer cost savings from EVs vary. Some experience net benefits from choosing gasoline cars, even after accounting for EV subsidies. Publicly, we survey the literature documenting the external costs and benefits of EVs and highlight several themes for optimal policy design. These include (1) promoting regional variation in EV policies that align private incentives with social benefits, (2) pursuing a time-path of policies that reflects changing marginal benefits, and (3) rationalizing electricity and gasoline prices to reflect their social marginal cost. On the one hand, research suggests optimal policy be front-loaded and then ramp down over time as industries gain experience in EV production and as charging infrastructure is put in place. On the other hand, as electricity generation becomes cleaner over time, environmental considerations may favor increasing subsidies as the environmental benefits of driving EVs rise relative to conventional vehicles.

Date: 2023
References: Add references at CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://dx.doi.org/10.1086/725484 (application/pdf)
http://dx.doi.org/10.1086/725484 (text/html)
Access to the online full text or PDF requires a subscription.

Related works:
Working Paper: The Economics of Electric Vehicles (2021)
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:ucp:renvpo:doi:10.1086/725484

Access Statistics for this article

More articles in Review of Environmental Economics and Policy from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().