Equilibrium Effects in Complementary Markets: Electric Vehicle Adoption and Electricity Pricing

Pascal Heid, Kevin Remmy and Mathias Reynaert

No 19631, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Electric vehicles shift passenger transport from oil to electricity, linking vehicle adoption to hourly power-market conditions. We develop and estimate a joint equilibrium model of German vehicle demand and electricity supply in which driver-specific charging decisions map travel profiles and electricity prices into EV operating costs and load. A 10% EV stock raises wholesale prices by 3.3%, creating sizable cost spillovers on non-EV electricity users, but reduces EV adoption by less than 1%. Time-varying tariffs lower charging costs and shift load to cheaper hours; in equilibrium, EV adoption offsets much of the system-cost relief while redirecting generator profits toward renewables.

Keywords: electric; vehicles (search for similar items in EconPapers)
JEL-codes: L5 L6 L9 Q4 Q5 (search for similar items in EconPapers)
Date: 2024-10
New Economics Papers: this item is included in nep-ene and nep-tre
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