What drives battery electric vehicle adoption? Willingness to pay to reduce emissions through vehicle choice

Abstract

Battery electric vehicles (BEVs) are widely viewed as an effective option for vehicle owners to reduce carbon dioxide emissions, but the amount of emissions reduction that is achieved depends on the mix of energy sources used to produce the electricity for charging the BEV. Since the emissions in question are indirect, it is currently unclear whether differences in energy production mix affect vehicle purchasing behavior. This paper investigates how the emissions associated with charging a BEV influence choices between three different fuel types and how much individuals are willing to pay to offset their carbon dioxide emissions through vehicle choice. I use a mixed multinomial logit model that is estimated with data from a discrete choice experiment with 1,658 individuals in five US metropolitan areas who intended to purchase a new car within the next 5 years of the survey date. The results indicate that individuals’ vehicle choices are significantly impacted by the indirect emissions from charging a BEV and by the regional mix of energy sources used for power generation. The results across multiple emissions scenarios indicate that individuals are willing to pay approximately 225 dollars per year for each metric ton of carbon dioxide emissions the electric vehicle offsets compared to a conventional vehicle. Thus, when purchasing a BEV, an individual is willing to pay about $7,000 more than for a conventional vehicle due to the emissions reduction. This willingness to pay is highly heterogeneous across individuals.

Christina Gore

PhD Candidate

I am a 5th year PhD Candidate in AED Economics at The Ohio State University on the 2021-22 economics job market.