Electric vehicle adoption decisions in a fleet environment

Increasing long-term gasoline price and concerns on the impact of emissions have inspired alternative technologies like electric vehicles (EVs). As a part of the initiative to improve local air quality, cities encourage the adoption of EVs in mass transit system, in particular taxicabs. Motivated by the above, we study a fleet environment, like taxicabs, and build a model that captures the factors influencing EV adoption. We consider a vertically-integrated entity that is a combination of a taxicab company and an infrastructure service provider. We model the entity’s decision-making problem that includes (i) fleet renewal using either internal combustion engine vehicles (ICEs) or EVs; and (ii) infrastructure planning corresponding to investing in fast chargers, and swap stations with stocked EV batteries. We characterize EV adoption in terms of problem parameters such as the mean and coefficient of variation of miles driven. We find that the adoption decision can switch between adopt and do not adopt and vice versa as the mean miles increases. EVs may be adopted at higher variability in miles driven even when they are not adopted at lower variability. To address the operational characteristics of taxicabs to a greater extent, we relax key model assumptions and find that the above conclusions based on the mean and coefficient of variation of miles driven remain valid. This research has practical implications on the attractiveness (or lack thereof) of EV taxicabs / swap stations and on the impact of various government or R&D improvement actions on EV adoption.