The Economics of Electric Vehicles

David Rapson and Erich Muehlegger

No 29093, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We examine the private and public economics of electric vehicles (EVs) and discuss when market forces will 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 including, 1) promoting regional variation in EV policies that align private incentives with social benefits, 2) pursuing a time-path of policies that reflect changing marginal benefits, and 3) rationalizing electricity and gasoline prices to reflect their social marginal cost. On the extensive margin, purchase incentives should ramp-down as learning-by-doing and network externalities (to the extent that they exist) diminish; on the intensive margin, gasoline should become relatively more expensive over time than electricity (per mile traveled) to reflect cleaner marginal emissions from electricity generation.

JEL-codes: Q54 Q55 Q58 R4 (search for similar items in EconPapers)
Date: 2021-07
New Economics Papers: this item is included in nep-cwa, nep-ene, nep-env, nep-isf, nep-reg and nep-tre
Note: EEE
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Citations: View citations in EconPapers (5)

Published as David S. Rapson & Erich Muehlegger, 2023. "The Economics of Electric Vehicles," Review of Environmental Economics and Policy, vol 17(2), pages 274-294.

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Journal Article: The Economics of Electric Vehicles (2023)
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