Effects of providing total cost of ownership information on consumers’ intent to purchase a hybrid or plug-in electric vehicle

Energy-saving technologies have a difficult time being widely accepted in the marketplace when they have a high initial purchase price and deferred financial benefits. Consumers might not realize that, in the long-run, the financial benefits from reduced energy consumption offset much or all of the initial price premium. One strategy to address consumer misconception of this advantage is to supply information on the “total cost of ownership”, a metric which accounts for the purchase price, the cost of the fuel, and other costs over the ownership period. In this article, we investigate how providing information on five-year fuel cost savings and total cost of ownership affects the stated preferences of consumers to purchase a gasoline, conventional hybrid, plug-in hybrid, or battery electric vehicle. Through an online survey with an embedded experimental design using distinct labels, we find that respondent rankings of vehicles are unaffected by information on five-year fuel cost savings. However, adding information about total cost of ownership increases the probability that small/mid-sized car consumers express a preference to acquire a conventional hybrid, plug-in hybrid, or a battery-electric vehicle. No such effect is found for consumers of small sport utility vehicles. Our results are consistent with other findings in the behavioral economics literature and suggest that further evaluation of the effects of providing consumers with information on the total cost of vehicle ownership is warranted.     

Individual characteristics and stated preferences for alternative energy sources and propulsion technologies in vehicles: A discrete choice analysis for Germany

With respect to the German goal of a transition to a lead market for electromobility within a short time period, this paper empirically examines the preferences for alternative energy sources or propulsion technologies in vehicles and particularly for electric vehicles. The data stem from a stated preference discrete choice experiment with 598 potential German car buyers. In order to simulate a realistic future purchase situation, seven vehicle types were incorporated in each of the six choice sets, i.e. hybrid, gas, biofuel, hydrogen, and electric vehicles besides common gasoline and diesel vehicles. The econometric analysis with flexible multinomial probit models reveals that potential car buyers in Germany currently have a low stated preference for electric, hydrogen, and hybrid vehicles. While our paper also discusses the impact of common vehicle attributes such as purchase price or service station availability, it particularly considers the effect of socio-demographic and environmental awareness variables. The estimation results reveal that younger potential car buyers have a higher stated preference for hydrogen and electric vehicles, males have a higher stated choice of hydrogen vehicles, and environmentally aware potential car buyers have a higher stated preference for hydrogen and electric vehicles. These results suggest that common policy instruments such as the promotion of research and development, taxation, or subsidization in the field of electromobility could be supplemented by strategies to increase the social acceptance of alternative vehicle types that are directly oriented to these population groups. Methodologically, our study highlights the importance of the inclusion of taste persistence across the choice sets and a high number of random draws in the Geweke–Hajivassiliou–Keane simulator in the simulated maximum likelihood estimation of the multinomial probit models.     

Consumers’ willingness to pay for alternative fuel vehicles: A comparative discrete choice analysis between the US and Japan

This paper conducts a comparative discrete choice analysis to estimate consumers’ willingness to pay (WTP) for electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) on the basis of the same stated preference survey carried out in the US and Japan in 2012. We also carry out a comparative analysis across four US states. We find that on average US consumers are more sensitive to fuel cost reductions and alternative fuel station availability than are Japanese consumers. With regard to the comparative analysis across the four US states, consumers’ WTP for a fuel cost reduction in California is considerably greater than in the other three states. We use the estimates obtained in the discrete choice analysis to examine the EV/PHEV market shares under several scenarios. In a base case scenario with relatively realistic attribute levels, conventional gasoline vehicles still dominate both in the US and Japan. However, in an innovation scenario with a significant purchase price reduction, we observe a high penetration of alternative fuel vehicles both in the US and Japan. We illustrate the potential use of a discrete choice analysis for forward-looking policy analysis, with the future opportunity to compare its predictions against actual revealed choices. In this case, increased purchase price subsidies are likely to have a significant impact on the market shares of alternative fuel vehicles.     

Short-term impact analysis of fuel price policy change on travel demand in Malaysian cities

Abstract

Malaysia is one of the few countries in the world that provides a fuel subsidy to consumers. Due to the recent economic crisis, the Malaysian Government decided to revise its fuel subsidization policy from a fixed price subsidy to a floating price subsidy dependent on global oil demand. Recognizing that the change in fuel subsidization policy can have an impact on travel behavior, this article investigates the short-term impact of the policy change on private and public transportation in the Klang Valley region of Malaysia. Spectral analyses are performed to investigate if the policy change has an impact on private vehicle travel demand, measured in terms of road traffic, and short-term travel demand elasticity with respect to fuel price is estimated. To measure the impact on the public transportation system, the demand cross-elasticity values of rail transit and buses are also estimated. It was found that traffic flow reduces with an increase in fuel price, although elasticity and cross-elasticity values obtained are low. The article finds that there is a potential mode shift from private vehicles to rail transit with increasing fuel price. It is demonstrated that reducing fuel price subsidy can be an effective travel demand management strategy to alleviate congestion.     

Symbolism in California’s early market for hybrid electric vehicles

This study explores the symbolic meanings being created, appropriated, and communicated by the owners of hybrid electric vehicles. As symbolic meanings are shown to be important to hybrid electric vehicle purchase and use, understanding the meanings, as well as their construction and communication, is essential for policy makers and others hoping to promote these new types of vehicles. Hybrid electric vehicles embody combinations of meanings that were previously unavailable from automobiles. Market observers who fail to recognize this struggle to explain why some people buy hybrid electric vehicles. They may characterize buyers as naı¨ve about calculating payback on fuel economy, or dismiss owners as image-seeking environmentalists. This research belies such simplistic explanations. Through the telling and analysis of buyers’ own stories, this study takes a robust approach to understanding the creation and spread of new symbolic meanings in the automotive market. Data were collected in ethnographic interviews with hybrid electric vehicle owners in the California, and analyzed using methods based on semiotic theory. In particular, the study explores how widely recognized social meanings (denotations) are connected to more personal meanings (connotations) and the effect that both types of meanings have on vehicle purchase and use.     

Personal tradable carbon permits for road transport: Why, why not and who wins?

Personal road transport sector poses a significant challenge in reducing carbon emissions. This paper evaluates a policy approach known as personal tradable carbon permits to reduce carbon emissions from personal vehicles. The policy is a downstream tradable permit where individuals are allocated carbon emission caps. The policy is qualitatively evaluated in the context of carbon taxes and some upstream tradable permit options. The biggest disadvantage of such a policy is the initial set up costs. Personal tradable permits, however, are more effective than carbon taxes and are also capable of stabilizing the gasoline prices faced by the consumers when the underlying oil prices fluctuate. Since equity effects are often a concern to policy makers, the effect of such personal carbon permits on the distribution of burden is quantified in a partial equilibrium framework for the US population. Different permit allocation strategies are investigated in this regard. Using US consumer expenditure survey data, and incorporating a differentiated price response for different households, we find that all three allocation strategies considered are progressive: a per adult based allocation is the most progressive, a per vehicle allocation nearer to proportional, and a per capita allocation in between the two. Personal tradable permits therefore take care of equity concerns directly through the design of the policy.     

Electric vehicles for greenhouse gas reduction in China: A cost-effectiveness analysis

There have been ongoing debates over whether battery electric vehicles contribute to reducing greenhouse gas emissions in China’s context, and if yes, whether the greenhouse gas emissions reduction compensates the cost increment. This study informs such debate by examining the life-cycle cost and greenhouse gas emissions of conventional vehicles, hybrid electric vehicles and battery electric vehicles, and comparing their cost-effectiveness for reducing greenhouse gas emissions. The results indicate that under a wide range of vehicle and driving configurations (range capacity, vehicle use intensity, etc.), battery electric vehicles contribute to reducing greenhouse gas emissions compared with conventional vehicles, although their current cost-effectiveness is not comparable with hybrid electric vehicles. Driven by grid mix optimization, power generation efficiency improvement, and battery cost reduction, the cost-effectiveness of battery electric vehicles is expected to improve significantly over the coming decade and surpass hybrid electric vehicles. However, considerable uncertainty exists due to the potential impacts from factors such as gasoline price. Based on the analysis, it is recommended that the deployment of battery electric vehicles should be prioritized in intensively-used fleets such as taxis to realize high cost-effectiveness. Technology improvements both in terms of power generation and vehicle electrification are essential in improving the cost-effectiveness of battery electric vehicles.     

Incentivizing alternative fuel vehicles: the influence of transport policies,attitudes and perceptions

This paper aims to evaluate the influence of policies, attitudes and perceptions when incentivizing alternative fuel vehicles. The impact of possible policies such as gasoline taxes increases, purchase price subsidies, tax exemptions, and increases in fuel recharging station availability for alternative fuelled vehicles is evaluated using hybrid choice models. The models also allow assessing the sensitivity of latent variables (i.e., attitudes and perceptions) in the car purchase behaviour. The models are estimated using data from a stated choice survey collected in five Colombian cities. The latent variables are obtained from the rating of statements related to the transport system, environmental concern, vehicle preferences, and technology. The modelling approach includes regression between latent variables. Results show that environmental concern and the support for green transport policies have a positive influence on the intention to purchase alternative fuel vehicles. Meanwhile, people who reveal to be car-dependent prefer to buy standard fuelled vehicles. The analysis among cities shows similar trends in individual behaviour, although there are differences in attribute sensitivities. The policy scenario analysis revealed high sensitivity to capital cost and the need for extensive investments in refuelling stations for alternative fuel vehicles to become attractive. Nevertheless, all policies should not only be directed at infrastructure and vehicles but also be focused on user awareness and acceptance of the alternative fuel vehicles. The analysis suggests that in an environmentally conscious market, people prefer alternative fuels. However, if the transport policies support private transport, the market shares of alternative fuel vehicles will decrease.     

Who will buy electric vehicles? Identifying early adopters in Germany

Electric vehicles (EVs) have noteworthy potential to reduce global and local emissions and are expected to become a relevant future market for vehicle sales. Both policy makers and car manufacturers have an interest to understand the first large EV user group, frequently referred to as ‘early adopters’. However, there are only a few empirical results available for this important group. In this paper, we analyse and discuss several empirical data sets from Germany, characterising this user group from both a user and a product perspective, i.e. who is willing to buy an EV and who should buy one. Our results show that the most likely group of private EV buyers in Germany are middle-aged men with technical professions living in rural or suburban multi-person households. They own a large share of vehicles in general, are more likely to profit from the economical benefits of these vehicles due to their annual vehicle kilometres travelled and the share of inner-city driving. They state a higher willingness to buy electric vehicles than other potential adopter groups and their higher socio-economic status allows them to purchase EVs. In contrast to this, inhabitants of major cities are less likely to buy EVs since they form a small group of car owners in general, their mileage is too low for EVs to pay off economically and they state lower interest and lower willingness to pay for EVs than other groups. Our results indicate that transport policy promoting EVs should focus on middle-aged men with families from rural and sub-urban cities as first private EV buyers.     

Intent to purchase a plug-in electric vehicle: A survey of early impressions in large US cites

This paper examines consumer stated intent to purchase plug-in electric vehicles and assesses the factors that increase or decrease interest. We surveyed adult drivers in large US cities in early fall 2011, before vehicle manufacturers and dealers began marketing campaigns. The survey responses thus document early impressions of this transport technology. We find that, given current battery technology and public perceptions, overall stated intent to purchase or lease electric vehicles is low. Interest in plug-in hybrid technology is somewhat greater than interest in all-electric technology. Consumers who express early interest in adopting electric vehicles are typically highly educated, previous owners of conventional hybrids, environmentally sensitive, and concerned about dependence on foreign oil. Enhanced fuel economy, the primary tangible advantage of plug-in technology, is recognized as favorable by respondents but fails to exert a strong influence on purchasing intentions. Interest in plug-in electric vehicles is shaped primarily by consumers’ perceptions of electric vehicle disadvantages.     

Vehicle type choice under the influence of a tax reform and rising fuel prices

Differentiated vehicle taxes are considered by many a useful tool for promoting environmentally friendly vehicles. Various structures have been implemented in several countries, e.g. Ireland, France, The Czech Republic, and Denmark. In many countries the tax reforms have been followed by a steep change in new vehicle purchases toward more diesel vehicles and more fuel-efficient vehicles. The paper analyses to what extent a vehicle tax reform similar to the Danish 2007 reform may explain changes in purchasing behaviour. The paper investigates the effects of a tax reform, fuel price changes, and technological development on vehicle type choice using a mixed logit model. The model allows a simulation of the effect of car price changes that resemble those induced by the tax reform. This effect is compared to the effects of fuel price changes and technology improvements. The simulations show that the effect of the tax reform on fuel efficiency is similar to the effect of rising fuel prices while the effect of technological development is much larger. The conclusion is that while the tax reform appeared in the same year as a large increase in fuel efficiency, it seems likely that it only explains a small part of the shift in fuel efficiency that occurred and that the main driver was the technological development.     

Consumers' responses to fuel-efficient vehicles: a critical review of econometric studies

In an effort to conserve fuel, Congress required that automobile manufacturers increase the average fuel efficiency of the vehicles which they sell. The extent to which this policy is successful in conserving fuel depends on how consumers respond to the more fuel-efficient vehicles. The present paper reviews previous economic research on automobile demand and examines what this research can tell us about how consumers will respond to fuel-efficient vehicles. Three categories of research are reviewed, namely aggregate econometric studies, disaggregate econometric studies, and hedonic price analyses. It is shown that insufficient variation and too large covariation among automobile characteristics (such as price, weight and length) are problems which hinder the usefulness of each type of analysis. Two methods to alleviate these problems are proposed for future research.     

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.     

I can’t believe your attitude: a joint estimation of best worst attitudes and electric vehicle choice

The number of conventionally fuelled motor vehicles in use is increasing worldwide despite warnings about finite fossil fuel and the detrimental impacts of burning such fuels. While electric vehicles, the subject of much research, generate far less emissions and offer the potential for power from renewable sources, they are yet to significantly penetrate the market. Tangible barriers such as price and vehicle range still exist, but consumer attitudes also drive behaviour. This paper examines attributes in a framework relatively new to transportation and energy policy; best–worst scaling. This method is widely considered an improvement over traditional methods of eliciting attitudes and beliefs, where respondents select attitudes they find best or worst from a set of attitudinal statements. To avoid potential endogeneity bias, we jointly model attitudes and choice for the first time with best–worst data. It is found that energy crisis, air quality and climate change concerns influence behaviour with respect to vehicle range and that travel behaviour change and forms of government incentives are needed influences on behaviour with respect to vehicle emissions. It is argued that correctly modelling attitudes reduces the error term of the vehicle choice model and provides policy makers with an improved lens for assessing behaviour. Additionally, the methods described within can easily be adapted to other policy scenarios.     

Mainstream consumers driving plug-in battery-electric and plug-in hybrid electric cars: A qualitative analysis of responses and evaluations

Plug-in electric vehicles can potentially emit substantially lower CO₂ emissions than internal combustion engine vehicles, and so have the potential to reduce transport emissions without curtailing personal car use. Assessing the potential uptake of these new categories of vehicles requires an understanding of likely consumer responses. Previous in-depth explorations of appraisals and evaluations of electric vehicles have tended to focus on ‘early adopters’, who may not represent mainstream consumers. This paper reports a qualitative analysis of responses to electric cars, based on semi-structured interviews conducted with 40 UK non-commercial drivers (20 males, 20 females; age 24-70 years) at the end of a seven-day period of using a battery electric car (20 participants) or a plug-in hybrid car (20 participants). Six core categories of response were identified: (1) cost minimisation; (2) vehicle confidence; (3) vehicle adaptation demands; (4) environmental beliefs; (5) impression management; and, underpinning all other categories, (6) the perception of electric cars generally as ‘work in progress’ products. Results highlight potential barriers to the uptake of current-generation (2010) plug-in electric cars by mainstream consumers. These include the prioritization of personal mobility needs over environmental benefits, concerns over the social desirability of electric vehicle use, and the expectation that rapid technological and infrastructural developments will make current models obsolete. Implications for the potential uptake of future electric vehicles are discussed.     

Who switches to hybrids? A study of a fuel conversion program in Colombia

Air pollution from mobile sources is an important environmental problem in larger cities. In 2001, a program was implemented to encourage the use of natural gas in vehicles in the Aburrá Valley in Colombia, with incentives to convert small cars from gasoline and diesel to hybrid engines with natural gas, most notably a cash subsidy. Using a survey administered to both commercial and private car owners we study the determinants of conversion under this fuel conversion program. We thus obtain information about the reasons for adoption of new technologies in vehicles. This allows us to discuss the possible outcomes of this type of policy. Results show that a large part of owners who switched would have done it anyway without the subsidy. Based on the findings, commercial vehicles are most likely to be converted to natural gas vehicles.     

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.     

Forecasting automobile demand using disaggregate choice models

This paper presents a simulation model of the American automobile market. The simulation model combines a disaggregate model of household automobile number and type choice with an econometric model of used vehicle scrappage and simple models of new car supply. For fixed vehicle designs, consumer and producer interactions determine new car sales, used car scrappage and consumer vehicle holdings. The model allows automobiles to be highly differentiated and consumers to be heterogeneous. Short-run equilibrium is defined as supply equal to demand for every vehicle type during each market period. The automobile stock then evolves slowly as new vehicles are added and old vehicles are removed during each period. An empirical application of the simulation model with 12 consumer groups and 131 vehicle types is used to forecast automobile holdings. A base case scenario is run for 1978–1984 and compared with the observed market behavior during this period. Several other simulations are then run comparing different gasoline price scenarios with the base case for 1984–1990.     

Life cycle emissions and cost model for urban light duty vehicles

The growth of vehicle sales and use internationally requires the consumption of significant quantities of energy and materials, and contributes to the deterioration of air-quality and climate conditions. Advanced propulsion systems and electric drive vehicles have substantially different characteristics and impacts. They require life cycle assessments and detailed comparisons with gasoline powered vehicles which, in turn, should lead to critical updates of traditional models and assumptions. For a comprehensive comparison of advanced and traditional light duty vehicles, a model is developed that integrates external costs, including emissions and time losses, with societal and consumer life cycle costs. Life cycle emissions and time losses are converted into costs for seven urban light duty vehicles. The results, which are based on vehicle technology characteristics and transportation impacts on environment, facilitate vehicle comparisons and support policy making in transportation. Substantially, more sustainable urban transportation can be achieved in the short-term by promoting policies that increase vehicle occupancy; in the intermediate-term by increasing the share of hybrid vehicles in the car market and in the long-term by the widespread use of electric vehicles. A sensitivity-analysis of life cost results revealed that vehicle costs change significantly for different geographical areas depending on vehicle taxation, pricing of gasoline, electric power and pollution. Current practices in carbon and air quality pricing favor oil and coal based technologies. However, increasing the cost of electricity from coal and other fossil fuels would increase the variable cost for electric vehicles, and tend to favor the variable cost of hybrid vehicles.     

Incorporating sustainability assessment in transportation planning: an urban transportation vehicle-based approach

Environmental assessments are on the critical path for the development of land, infrastructure and transportation systems. These assessments are based on planning methods which, in turn, are subject to continuous enhancement. The substantial impacts of transportation on environment, society and economy strongly urge the incorporation of sustainability into transportation planning. Two major developments that enhance transportation sustainability are new fuels and vehicle power systems. Traditional planning ignores technology including the large differences among conventional, hybrid and alternative fuel vehicles and buses. The introduction of alternative fuel vehicles is likely to change the traditional transportation planning process because different characteristics need to be taken into account. In this study a sustainability framework is developed that enables assessment of transportation vehicle characteristics. Identified indicators are grouped in five sustainability dimensions (Environment, Technology, Energy, Economy and Users). Our methodology joins life cycle impacts and a set of quantified indicators to assess the sustainability performance of seven popular light-duty vehicles and two types of transit buses. Bus Rapid Transit receives the highest sustainability index and the pickup truck the lowest. Hybrid electric vehicles are found to have the highest sustainability index among all other passenger vehicles. A sensitivity analysis shows the proposed sustainability dimensions produce robust sustainability assessment for several weighting scenarios. The results are both technology and policy sensitive, thus useful for both short- and long-term planning.