Will subsidies drive electric vehicle adoption? Measuring consumer preferences in the U.S. and China

We model consumer preferences for conventional, hybrid electric, plug-in hybrid electric (PHEV), and battery electric (BEV) vehicle technologies in China and the U.S. using data from choice-based conjoint surveys fielded in 2012–2013 in both countries. We find that with the combined bundle of attributes offered by vehicles available today, gasoline vehicles continue in both countries to be most attractive to consumers, and American respondents have significantly lower relative willingness-to-pay for BEV technology than Chinese respondents. While U.S. and Chinese subsidies are similar, favoring vehicles with larger battery packs, differences in consumer preferences lead to different outcomes. Our results suggest that with or without each country’s 2012–2013 subsidies, Chinese consumers are willing to adopt today’s BEVs and mid-range PHEVs at similar rates relative to their respective gasoline counterparts, whereas American consumers prefer low-range PHEVs despite subsidies. This implies potential for earlier BEV adoption in China, given adequate supply. While there are clear national security benefits for adoption of BEVs in China, the local and global social impact is unclear: With higher electricity generation emissions in China, a transition to BEVs may reduce oil consumption at the expense of increased air pollution and/or greenhouse gas emissions. On the other hand, demand from China could increase global incentives for electric vehicle technology development with the potential to reduce emissions in countries where electricity generation is associated with lower emissions.     

Consumer valuation of changes in driving range: A meta-analysis

We perform a meta-analysis of studies investigating consumer preferences for electric and other alternative fuel vehicles (AFVs) to provide insights into the way driving range is traded off for capital costs. We find that consumers are willing to pay, on average, between 66 and 75 US$ for a 1-mile increase in driving range. Ceteris paribus, 100-mile-range cars have to be priced about 60% less than their conventional counterparts to become competitive. In line with intuition, but in contrast to most specifications employed in primary studies, we find that consumers’ marginal willingness to pay (WTP) decreases at a diminishing rate with increases in driving range. The variation in the WTP and compensating variation estimates among examined studies can be attributed to differences in the levels of driving range considered, in other elements of the study design and in the country of study. Our findings support stated preference literature’s conclusion that short driving range has been a major limitation to the large-scale adoption of battery electric vehicles (BEVs) and other AFVs, and that technological developments permitting longer driving ranges will, to some extent, facilitate their market penetration. We further propose that consumer valuation of driving range should not be examined in isolation from other attributes related to refuelling activities, such as refuelling duration and the coverage of refuelling infrastructure.     

Incentives for promoting Battery Electric Vehicle (BEV) adoption in Norway

Norway has become a global forerunner in the field of electromobility and the BEV market share is far higher than in any other country. One likely reason for this is strong incentives for promoting purchase and ownership of BEVs. The purpose of this study is to describe the role of incentives for promoting BEVs, and to determine what incentives are critical for deciding to buy a BEV and what groups of buyers respond to different types of incentives. The questions are answered with data from a survey among nearly 3400 BEV owners in Norway.Exemptions from purchase tax and VAT are critical incentives for more than 80% of the respondents. This is very much in line with previous research, which suggests that up-front price reduction is the most powerful incentive in promoting EV adoption. To a substantial number of BEV owners, however, exemption from road tolling or bus lane access is the only decisive factor.Analyses show that there are clear delineations between incentive groups, both in terms of age, gender, and education. Income is a less prominent predictor, which probably results from the competitive price of BEVs in the Norwegian market. Perhaps most interesting is the assumed relation between incentives and character of transport systems the respondents engage in.     

The impact of car specifications,prices and incentives for battery electric vehicles in Norway: Choices of heterogeneous consumers

Electric vehicles (EVs), specifically Battery EVs (BEVs), can offer significant energy and emission savings over internal combustion engine vehicles. Norway has a long history of research and government incentives for BEVs. The BEV market in Norway allows us to fully examine consumers’ BEV choices influenced by car specifications, prices and government incentives (public bus lanes access, toll waiver and charging stations). The Random-Coefficient Discrete Choice Model (referred to as the BLP model) is applied to understand the choices of heterogeneous personal consumers and business buyers. Our study is instantiated on the entire EV sales data in Norway from 2011 to 2013, as well as a set of demographics at the municipality level. The results suggest significant positive effects of BEV technology improvement, space, toll waiver and charging station density on EV demand for both personal consumers and business buyers. However, the effects on business buyers may be generally less pronounced than on personal consumers. Interestingly, bus lanes access demonstrates a negative impact for personal consumers, possibly due to consumers’ concern regarding bus lane congestion. In addition, preferences on the BEV price can vary statistically among consumers with different income levels. Compared to the BEV technology development, demographical features and municipal incentives may have generally less impacts on market shares within the BEV market.     

Consumer preferences for electric vehicles in lower tier cities of China: Evidences from south Jiangsu region

China is the world biggest market of electric vehicles (EVs) in terms of production and sales. Existing studies on consumer preferences for EVs in China have generally focused on first-tier cities, while little attention has been paid to the lower tier cities. This exploratory study investigates consumer preferences for EVs in lower tier cities of China, by collecting stated preference (SP) data in two second-tier cities and three third-tier cities in the south Jiangsu region of China. The discrete choice modeling analysis shows that Chinese consumers in lower-tier cities are generally sensitive to monetary attributes, charging service and driving range of EVs. They also perceive Chinese vehicle brands to be disadvantaged compared with European brands. When comparing the differences in second-tier versus third-tier cities, we find that consumers in third-tier cities are more sensitive to purchase price, subsidy of purchase, and coverage of charging stations than their second-tier counterparts. This study also highlights the role of different psychological effects, such as symbols of car ownership, normative-face influence, and risk aversion, in shaping consumer preferences for EVs in lower-tier cities of China. Our results provide important implications for contextualizing government policies and marketing strategies in line with the different sizes and characteristics of the cities in China.     

Network user equilibrium of battery electric vehicles considering flow-dependent electricity consumption

This paper addresses the equilibrium traffic assignment problem involving battery electric vehicles (BEVs) with flow-dependent electricity consumption. Due to the limited driving range and the costly/time-consuming recharging process required by current BEVs, as well as the scarce availability of battery charging/swapping stations, BEV drivers usually experience fear that their batteries may run out of power en route. Therefore, when choosing routes, BEV drivers not only try to minimize their travel costs, but also have to consider the feasibility of their routes. Moreover, considering the potential impact of traffic congestion on the electricity consumption of BEVs, the feasibility of routes may be determined endogenously rather than exogenously. A set of user equilibrium (UE) conditions from the literature is first presented to describe the route choice behaviors of BEV drivers considering flow-dependent electricity consumption. The UE conditions are then formulated as a nonlinear complementarity model. The model is further formulated as a variational inequality (VI) model and is solved using an iterative solution procedure. Numerical examples are provided to demonstrate the proposed models and solution algorithms. Discussions of how to evaluate and improve the system performance with non-unique link flow distribution are offered. A robust congestion pricing model is formulated to obtain a pricing scheme that minimizes the system travel cost under the worst-case tolled flow distribution. Finally, a further extension of the mathematical formulation for the UE conditions is provided.     

Consumer preferences for electric vehicles: a literature review

Widespread adoption of electric vehicles (EVs) may contribute to the alleviation of problems such as environmental pollution, global warming and oil dependency. However, the current market penetration of EV is relatively low in spite of many governments implementing strong promotion policies. This paper presents a comprehensive review of studies on consumer preferences for EV, aiming to better inform policy-makers and give direction to further research. First, we compare the economic and psychological approach towards this topic, followed by a conceptual framework of EV preferences which is then implemented to organise our review. We also briefly review the modelling techniques applied in the selected studies. Estimates of consumer preferences for financial, technical, infrastructure and policy attributes are then reviewed. A categorisation of influential factors for consumer preferences into groups such as socio-economic variables, psychological factors, mobility condition, social influence, etc. is then made and their effects are elaborated. Finally, we discuss a research agenda to improve EV consumer preference studies and give recommendations for further research.

Abbreviations: AFV: alternative fuel vehicle; BEV: battery electric vehicle; CVs: conventional vehicles; EVs: electric vehicles; FCV: fuel cell vehicle; HCM: hybrid choice model; HEV: hybrid electric vehicle (non plug-in); HOV: high occupancy vehicle; MNL: MultiNomial logit; MXL: MiXed logit model; PHEV: plug-in hybrid electric vehicle; RP: revealed preference; SP: stated preference.     

What are the value and implications of two-car households for the electric car?

The major barriers to a more widespread introduction of battery electric vehicles (BEVs) beyond early adopters are the limited range, charging limitations, and costly batteries. An important question is therefore where these effects can be most effectively mitigated. An optimization model is developed to estimate the potential for BEVs to replace one of the conventional cars in two-car households and to viably contribute to the households’ driving demand. It uses data from 1 to 3 months of simultaneous GPS logging of the movement patterns for both cars in 64 commuting Swedish two-car households in the Gothenburg region.The results show that, for home charging only, a flexible vehicle use strategy can considerably increase BEV driving and nearly eliminate the unfulfilled driving in the household due to the range and charging limitations with a small battery. The present value of this flexibility is estimated to be on average $6000–$7000 but varies considerably between households. With possible near-future prices for BEVs based on mass production cost estimates, this flexibility makes the total cost of ownership (TCO) for a BEV advantageous in almost all the investigated households compared to a conventional vehicle or a hybrid electric vehicle. Because of the ubiquity of multi-car households in developed economies, these families could be ideal candidates for the initial efforts to enhance BEV adoptions beyond the early adopters. The results of this research can inform the design and marketing of cheaper BEVs with small but enough range and contribute to increased knowledge and awareness of the suitability of BEVs in such households.     

Optimum routing of battery electric vehicles: Insights using empirical data and microsimulation

This study investigates the energy consumption impact of route selection on battery electric vehicles (BEVs) using empirical second-by-second Global Positioning System (GPS) commute data and traffic micro-simulation data. Drivers typically choose routes that reduce travel time and therefore travel cost. However, BEVs’ limited driving range makes energy efficient route selection of particular concern to BEV drivers. In addition, BEVs’ regenerative braking systems allow for the recovery of energy while braking, which is affected by route choices. State-of-the-art BEV energy consumption models consider a simplified constant regenerative braking energy efficiency or average speed dependent regenerative braking factors. To overcome these limitations, this study adopted a microscopic BEV energy consumption model, which captures the effect of transient behavior on BEV energy consumption and recovery while braking in a congested network. The study found that BEVs and conventional internal combustion engine vehicles (ICEVs) had different fuel/energy-optimized traffic assignments, suggesting that different routings be recommended for electric vehicles. For the specific case study, simulation results indicate that a faster route could actually increase BEV energy consumption, and that significant energy savings were observed when BEVs utilized a longer travel time route because energy is regenerated. Finally, the study found that regenerated energy was greatly affected by facility types and congestion levels and also BEVs’ energy efficiency could be significantly influenced by regenerated energy.     

User satisfaction with battery electric vehicles in South Korea

Battery electric vehicles (BEVs) have been promoted by the government over the last several years, driven by public concern over pollutant emissions from internal combustion engines. However, the conditions related to driving BEVs are not yet satisfactory for many BEV users, as evident from sluggish market growth compared with general market forecasts. Thus, a fundamental aspect of diagnosing the current conditions of BEV operation is to evaluate BEV user satisfaction. This study establishes hypothetical links between potential factors and BEV user satisfaction, and between BEV use satisfaction and intention to repurchase and recommend. The hypothetical links are specified using a partial least squares structural equation model (PLS-SEM) and estimated based on a survey of actual BEV owners (N=160) who had driven BEVs for at least six months. The outcomes of PLS-SEM suggest that seven relations out of nine hypothetical links were statistically significant. In particular, it is noticeable that the intention for cost-saving during operation is a key factor for BEV user satisfaction and that user satisfaction with range and charging has a positive effect on the overall satisfaction of BEV users. Furthermore, those who are satisfied with BEVs have the intention to repurchase and recommend BEVs to others. Because this study was conducted based on actual experience of BEV users, the findings could enhance understanding of the BEV driving environment and, thus, pave the way to provision of better service for BEV users.     

Effectiveness of incentives on electric vehicle adoption in Norway

Battery Electric vehicles (BEVs) shift pollution off the road and to potentially less damaging and more varied sources than petroleum. Depending on the source of electricity, a transition to electrified personal transportation can dramatically reduce greenhouse gas emissions and air pollutants. However current EVs tend to be more expensive and have shorter range, which can hinder public adoption. Government incentives can be used to alleviate these factors and encourage adoption. Norway has a long history incentivizing BEV adoption including measures such as exemption from roadway tolls, access to charging infrastructure, point of sale tax incentives, and usage of public bus use limited lanes. This paper analyzed the sales of electric vehicles on a regional and municipal basis in Norway and then cross analyzed these with the corresponding local demographic data and incentive measures to attempt to ascertain which factors lead to higher BEV adoption. It was concluded that access to BEV charging infrastructure, being adjacent to major cities, and regional incomes had the greatest predictive power for the growth of BEV sales. It was also concluded that short-range vehicles showed somewhat more income and unemployment sensitivity than long-range vehicles. Toll exemptions and the right to use bus designated lanes do not seem to have statistically significant predictive power for BEV sales in our linear municipal-level models, but this could be due to neighboring major cities containing those incentive features.     

Network equilibrium models with battery electric vehicles

The limited driving ranges, the scarcity of recharging stations and potentially long battery recharging or swapping time inevitably affect route choices of drivers of battery electric vehicles (BEVs). When traveling between their origins and destinations, this paper assumes that BEV drivers select routes and decide battery recharging plans to minimize their trip times or costs while making sure to complete their trips without running out of charge. With different considerations of flow dependency of energy consumption of BEVs and recharging time, three mathematical models are formulated to describe the resulting network equilibrium flow distributions on regional or metropolitan road networks. Solution algorithms are proposed to solve these models efficiently. Numerical examples are presented to demonstrate the models and solution algorithms.     

Policy measures to promote electric mobility – A global perspective

Research that addresses policy measures to increase the adoption of electric vehicles (EVs) has discussed government regulations such as California’s Zero Emission Vehicle (ZEV) or penalties on petroleum-based fuels. Relatively few articles have addressed policy measures designed to increase the adoption of EVs by incentives to influence car buyers’ voluntary behavior. This article examines the effects of such policy measures. Two of these attributes are monetary measures, two others are traffic regulations, and the other three are related to investments in charging infrastructure. Consumer preferences were assessed using a choice-based conjoint analysis on an individual basis by applying the hierarchical Bayes method. In addition, the Kano method was used to elicit consumer satisfaction. This not only enabled the identification of preferences but also why preferences were based on either features that were “must-haves” or on attributes that were not expected but were highly attractive and, thus, led to high satisfaction. The results of surveys conducted in 20 countries in 5 continents showed that the installation of a charging network on freeways is an absolute necessity. This was completely independent from the average mileage driven per day. High cash grants were appreciated as attractive; however, combinations of lower grants with charging facilities resulted in similar preference shares in market simulations for each country. The results may serve as initial guidance for policymakers and practitioners in improving their incentive programs for electric mobility.     

Willingness-to-pay for alternative fuel vehicle characteristics: A stated choice study for Germany

In the light of European energy efficiency and clean air regulations, as well as an ambitious electric mobility goal of the German government, we examine consumer preferences for alternative fuel vehicles (AFVs) based on a Germany-wide discrete choice experiment among 711 potential car buyers. We estimate consumers’ willingness-to-pay and compensating variation (CV) for improvements in vehicle attributes, also taking taste differences in the population into account by applying a latent class model with 6 distinct consumer segments. Our results indicate that about 1/3 of the consumers are oriented towards at least one AFV option, with almost half of them being AFV-affine, showing a high probability of choosing AFVs despite their current shortcomings. Our results suggest that German car buyers’ willingness-to-pay for improvements of the various vehicle attributes varies considerably across consumer groups and that the vehicle features have to meet some minimum requirements for considering AFVs. The CV values show that decision-makers in the administration and industry should focus on the most promising consumer group of ‘AFV aficionados’ and their needs. It also shows that some vehicle attribute improvements could increase the demand for AFVs cost-effectively, and that consumers would accept surcharges for some vehicle attributes at a level which could enable their private provision and economic operation (e.g. fast-charging infrastructure). Improvement of other attributes will need governmental subsidies to compensate for insufficient consumer valuation (e.g. battery capacity).     

Investigating barriers for plug-in electric vehicle deployment in fleets

Commercial vehicle fleets constitute a favourable entry for plug-in electric vehicles (PEVs) into the road transport system. During an extensive demonstration project, with 500 PEVs operating in 100 public and private enterprises, 40 battery electric vehicle (BEV) users were invited to focus group discussions. The focus groups allowed the users to discuss their actual experiences of operating BEVs and thereby provide a greater understanding of the operating conditions experienced by BEV users in different organisations. Based on the discussions, this paper focus on operational barriers, rather than traditional technical or economical barriers. The findings complemented earlier data collected from the demonstration project and further explained the recorded driving and charging behaviour. The conditions to adopt the BEVs vary between the users, and this in turn can relate to organisational conditions. Given a favourable introduction, users adopt and accept the technology. The paper contributes with new findings regarding implementation of BEVs in commercial vehicle fleets and provides an in-depth understanding of the operational barriers that public or private enterprises face when introducing BEVs in their vehicle fleets.     

Routing aspects of electric vehicle drivers and their effects on network performance

This study investigates the routing aspects of battery electric vehicle (BEV) drivers and their effects on the overall traffic network performance. BEVs have unique characteristics such as range limitation, long battery recharging time, and recuperation of energy lost during the deceleration phase if equipped with regenerative braking system (RBS). In addition, the energy consumption rate per unit distance traveled is lower at moderate speed than at higher speed. This raises two interesting questions: (i) whether these characteristics of BEVs will lead to different route selection compared to conventional internal combustion engine vehicles (ICEVs), and (ii) whether such route selection implications of BEVs will affect the network performance. With the increasing market penetration of BEVs, these questions are becoming more important. This study formulates a multi-class dynamic user equilibrium (MCDUE) model to determine the equilibrium flows for mixed traffic consisting of BEVs and ICEVs. A simulation-based solution procedure is proposed for the MCDUE model. In the MCDUE model, BEVs select routes to minimize the generalized cost which includes route travel time, energy related costs and range anxiety cost, and ICEVs to minimize route travel time. Results from numerical experiments illustrate that BEV drivers select routes with lower speed to conserve and recuperate battery energy while ICEV drivers select shortest travel time routes. They also illustrate that the differences in route choice behavior of BEV and ICEV drivers can synergistically lead to reduction in total travel time and the network performance towards system optimum under certain conditions.     

How experience of use influences mass-market drivers’ willingness to consider a battery electric vehicle: A randomised controlled trial

Uptake of electric vehicles (EVs) by consumers could reduce CO₂ emissions from light duty road transport, but little is known about how mass-market consumer drivers will respond to them. Self-Congruity theory proposes that products are preferred whose symbolic meanings are congruent with personal identity. Further, Construal Level theory suggests that only those who are psychologically close to a new product category through direct experience with it can make concrete construals related to their lifestyles; most drivers lack this for EVs. For instance, potential performance benefits of EVs might offset range limitations for consumers who have such direct experience. The effect of direct experience was tested in a randomised controlled trial with 393 mass-market consumer drivers. An experimental group were given direct experience of a modern battery electric vehicle (BEV), and a control group an equivalent conventional car. Despite rating the performance of the BEV more highly than that of the conventional car, willingness to consider a BEV declined after experience, particularly if the range of the BEV considered was short. The participants willing to consider a short-range BEV were those high in self-congruity, for whom the BEV could act as a strong symbol of personal identity.     

Trends in life cycle greenhouse gas emissions of future light duty electric vehicles

The majority of previous studies examining life cycle greenhouse gas (LCGHG) emissions of battery electric vehicles (BEVs) have focused on efficiency-oriented vehicle designs with limited battery capacities. However, two dominant trends in the US BEV market make these studies increasingly obsolete: sales show significant increases in battery capacity and attendant range and are increasingly dominated by large luxury or high-performance vehicles. In addition, an era of new use and ownership models may mean significant changes to vehicle utilization, and the carbon intensity of electricity is expected to decrease. Thus, the question is whether these trends significantly alter our expectations of future BEV LCGHG emissions.To answer this question, three archetypal vehicle designs for the year 2025 along with scenarios for increased range and different use models are simulated in an LCGHG model: an efficiency-oriented compact vehicle; a high performance luxury sedan; and a luxury sport utility vehicle. While production emissions are less than 10% of LCGHG emissions for today’s gasoline vehicles, they account for about 40% for a BEV, and as much as two-thirds of a future BEV operated on a primarily renewable grid. Larger battery systems and low utilization do not outweigh expected reductions in emissions from electricity used for vehicle charging. These trends could be exacerbated by increasing BEV market shares for larger vehicles. However, larger battery systems could reduce per-mile emissions of BEVs in high mileage applications, like on-demand ride sharing or shared vehicle fleets, meaning that trends in use patterns may countervail those in BEV design.     

Are multi-car households better suited for battery electric vehicles? – Driving patterns and economics in Sweden and Germany

Battery electric vehicles (BEVs) could reduce CO₂ emissions from the transport sector but their limited electric driving range diminishes their utility to users. The effect of the limited driving range can be reduced in multi-car households where users could choose between a BEV and a conventional car for long-distance travel. However, to what extent the driving patterns of different cars in a multi-car household’s suit the characteristics of a BEV needs further analysis. In this paper we analyse the probability of daily driving above a fixed threshold for conventional cars in current Swedish and German car driving data. We find second cars in multi-car households to require less adaptation and to be better suited for BEV adoption compared to first cars in multi-car households as well as to cars in single-car households. Specifically, the share of second cars that could fulfil all their driving is 20 percentage points higher compared to first cars and cars from single-car households. This result is stable against variation of driving range and of the tolerated number of days requiring adaptation. Furthermore, the range needed to cover all driving needs for about 70% of the vehicles is only 220 km for second cars compared to 390 km for the average car. We can further confirm that second cars have higher market viability from a total cost of ownership perspective. Here, the second cars achieve a 10 percentage points higher market share compared to first cars, and to cars in single-car households for Swedish economic conditions, while for Germany the corresponding figure is 2 percentage points. Our results are important for understanding the market viability of current and near-future BEVs.     

An empirical assessment of the feasibility of battery electric vehicles for day-to-day driving

Driven by sustainability objectives, Australia like many nations in the developed world, is considering the option of battery electric vehicles (BEVs) as an alternative to conventional internal combustion engine vehicles (ICEVs). In addition to issues of capital and running costs, crucial questions remain over the specifications of such vehicles, particularly the required driving range, recharge time, re-charging infrastructure, performance, and other attributes that will be of importance to consumers. With this in mind, this paper assesses (hypothetically) the extent to which current car travel needs could be met by BEVs for a sample of motorists in Sydney assuming a home-based charging set-up, which is likely to be the primary option for early adopters of the technology. The approach uses five weeks of driving data recorded by GPS technology and builds up home-home tours to assess the distances between (in effect) charging possibilities. An energy consumption model based on characteristics of the vehicle, and the speeds recorded by the GPS is adapted to determine the charge used, while a battery recharge function is used to determine charging times based on the current battery level. Among the most pertinent findings are that over the five weeks, (i) BEVs with a range as low as 60 km and a simple home-charge set-up would be able to accommodate well over 90% of day-to-day driving, (ii) however the incidence of tours requiring out-of-home charging increases markedly for vehicles below 24 kWh (170 km range), (iii) recharge time in itself has little impact on the feasibility of BEVs because vehicles spend the majority of their time parked and (iv) effective range can be dramatically impacted by both how a vehicle is driven and use of electrical auxiliaries, and (v) while unsuitable for long, high-speed journeys without some external re-charging options, BEVs appear particularly suited for the majority of day-to-day city driving in big cities where average journey speeds of 34 km/h are close to optimal in terms of maximising vehicle range. The paper has implications for both policy-makers and auto manufacturers in breaking down some of the (perceived) barriers to greater uptake of BEVs in the future.