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Willingness to Pay for Electric Vehicles and their Attributes

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Author Info

  • Michael K. Hidrue

    ()
    (Department of Economics,University of Delaware)

  • George R. Parsons

    ()
    (Department of Economics, University of Delaware)

  • Willett Kempton

    ()
    (Department of Electrical and Computer Engineering, University of Delaware)

  • Meryl Gardner

    ()
    (Department of Business Administration, University of Delaware)

Abstract

This article presents a stated preference study of electric vehicle choice using data from a national survey. We used a choice experiment wherein 3029 respondents were asked to choose between their preferred gasoline vehicle and two electric versions of that preferred vehicle. We estimated a latent class random utility model and used the results to estimate the willingness to pay for five electric vehicle attributes: driving range, charging time, fuel cost saving, pollution reduction, and performance. Driving range, fuel cost savings, and charging time led in importance to respondents. Individuals were willing to pay (wtp) from $35 to $75 for a mile of added driving range, with incremental wtp per mile decreasing at higher distances. They were willing to pay from $425 to $3250 per hour reduction in charging time (for a 50 mile charge). Respondents capitalized about 5 years of fuel saving into the purchase price of an electric vehicle. We simulated our model over a range of electric vehicle configurations and found that people with the highest values for electric vehicles were willing to pay a premium above their wtp for a gasoline vehicle that ranged from $6000 to $16,000 for electric vehicles with the most desirable attributes. At the same time, our results suggest that battery cost must drop significantly before electric vehicles will find a mass market without subsidy.

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Bibliographic Info

Paper provided by University of Delaware, Department of Economics in its series Working Papers with number 11-02.

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Length: 43 pages
Date of creation: 2011
Date of revision:
Publication status: Forthcoming in Resource and Energy Economics
Handle: RePEc:dlw:wpaper:11-02.

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Postal: Purnell Hall, Newark, Delaware 19716
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Fax: (302) 831-6968
Web page: http://www.lerner.udel.edu/departments/economics/department-economics/
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Related research

Keywords: Electric Vehicles; Stated Preference; Discrete Choice;

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References

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  1. Boxall, Peter C. & Adamowicz, Wiktor L., 1999. "Understanding Heterogeneous Preferences in Random Utility Models: The Use of Latent Class Analysis," Staff Paper Series 24090, University of Alberta, Department of Resource Economics and Environmental Sociology.
  2. Kenneth Train, 2003. "Discrete Choice Methods with Simulation," Online economics textbooks, SUNY-Oswego, Department of Economics, number emetr2, January.
  3. Beggs, S. & Cardell, S. & Hausman, J., 1981. "Assessing the potential demand for electric cars," Journal of Econometrics, Elsevier, vol. 17(1), pages 1-19, September.
  4. Brownstone, David & Train, Kenneth, 1999. "Forecasting new product penetration with flexible substitution patterns," University of California Transportation Center, Working Papers qt3tb6j874, University of California Transportation Center.
  5. Calfee, John E., 1985. "Estimating the demand for electric automobiles using fully disaggregated probabilistic choice analysis," Transportation Research Part B: Methodological, Elsevier, vol. 19(4), pages 287-301, August.
  6. Brownstone, David & Bunch, David S. & Train, Kenneth, 2000. "Joint mixed logit models of stated and revealed preferences for alternative-fuel vehicles," Transportation Research Part B: Methodological, Elsevier, vol. 34(5), pages 315-338, June.
  7. Bunch, David S. & Bradley, Mark & Golob, Thomas F. & Kitamura, Ryuichi & Occhiuzzo, Gareth P., 1993. "Demand for clean-fuel vehicles in California: A discrete-choice stated preference pilot project," Transportation Research Part A: Policy and Practice, Elsevier, vol. 27(3), pages 237-253, May.
  8. Dagsvik, John K. & Wennemo, Tom & Wetterwald, Dag G. & Aaberge, Rolf, 2002. "Potential demand for alternative fuel vehicles," Transportation Research Part B: Methodological, Elsevier, vol. 36(4), pages 361-384, May.
  9. Peter Boxall & Wiktor Adamowicz, 2002. "Understanding Heterogeneous Preferences in Random Utility Models: A Latent Class Approach," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 23(4), pages 421-446, December.
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Citations

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Cited by:
  1. Petschnig, Martin & Heidenreich, Sven & Spieth, Patrick, 2014. "Innovative alternatives take action – Investigating determinants of alternative fuel vehicle adoption," Transportation Research Part A: Policy and Practice, Elsevier, vol. 61(C), pages 68-83.
  2. Sierzchula, William & Bakker, Sjoerd & Maat, Kees & van Wee, Bert, 2014. "The influence of financial incentives and other socio-economic factors on electric vehicle adoption," Energy Policy, Elsevier, vol. 68(C), pages 183-194.
  3. Axsen, Jonn & Orlebar, Caroline & Skippon, Stephen, 2013. "Social influence and consumer preference formation for pro-environmental technology: The case of a U.K. workplace electric-vehicle study," Ecological Economics, Elsevier, vol. 95(C), pages 96-107.
  4. Alexandros Dimitropoulos & Piet Rietveld & Jos N. van Ommeren, 2011. "Consumer Valuation of Driving Range: A Meta-Analysis," Tinbergen Institute Discussion Papers 11-133/3, Tinbergen Institute.
  5. Parsons, George R. & Hidrue, Michael K. & Kempton, Willett & Gardner, Meryl P., 2014. "Willingness to pay for vehicle-to-grid (V2G) electric vehicles and their contract terms," Energy Economics, Elsevier, vol. 42(C), pages 313-324.
  6. George R. Parsons & Michael K. Hidrue & Willett Kempton & Meryl P. Gardner, 2011. "Can Vehicle-to-Grid Revenue Help Electric Vehicles on the Market?," Working Papers 11-21, University of Delaware, Department of Economics.
  7. Daziano, Ricardo A., 2013. "Conditional-logit Bayes estimators for consumer valuation of electric vehicle driving range," Resource and Energy Economics, Elsevier, vol. 35(3), pages 429-450.
  8. Hackbarth, André & Madlener, Reinhard, 2013. "Willingness-to-Pay for Alternative Fuel Vehicle Characteristics: A Stated Choice Study for Germany," FCN Working Papers 20/2013, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  9. Nobuyuki Ito & Kenji Takeuchi & Shunsuke Managi, 2012. "Willingness to pay for the infrastructure investments for alternative fuel vehicles," Discussion Papers 1207, Graduate School of Economics, Kobe University.
  10. Alexandros Dimitropoulos & Jos N. van Ommeren & Paul Koster & and Piet Rietveld†, 2014. "Welfare Effects of Distortionary Tax Incentives under Preference Heterogeneity: An Application to Employer-provided Electric Cars," Tinbergen Institute Discussion Papers 14-064/VIII, Tinbergen Institute.
  11. Takanori Ida & Kayo Murakami & Makoto Tanaka, 2012. "Keys to Smart Home Diffusion: A Stated Preference Analysis of Smart Meters, Photovoltaic Generation, and Electric/Hybrid Vehicles," Discussion papers e-11-011, Graduate School of Economics Project Center, Kyoto University.
  12. Alexandros Dimitropoulos & Piet Rietveld & Jos N. van Ommeren, 2011. "Consumer Valuation of Driving Range: A Meta-Analysis," Tinbergen Institute Discussion Papers 11-133/3, Tinbergen Institute.
  13. Krupa, Joseph S. & Rizzo, Donna M. & Eppstein, Margaret J. & Brad Lanute, D. & Gaalema, Diann E. & Lakkaraju, Kiran & Warrender, Christina E., 2014. "Analysis of a consumer survey on plug-in hybrid electric vehicles," Transportation Research Part A: Policy and Practice, Elsevier, vol. 64(C), pages 14-31.
  14. Dimitropoulos, Alexandros & Rietveld, Piet & van Ommeren, Jos N., 2013. "Consumer valuation of changes in driving range: A meta-analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 55(C), pages 27-45.
  15. Axsen, Jonn & Kurani, Kenneth S., 2013. "Hybrid, plug-in hybrid, or electric—What do car buyers want?," Energy Policy, Elsevier, vol. 61(C), pages 532-543.
  16. Campbell, Amy R. & Ryley, Tim & Thring, Rob, 2012. "Identifying the early adopters of alternative fuel vehicles: A case study of Birmingham, United Kingdom," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(8), pages 1318-1327.
  17. Hackbarth, André & Madlener, Reinhard, 2011. "Consumer Preferences for Alternative Fuel Vehicles: A Discrete Choice Analysis," FCN Working Papers 20/2011, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  18. Jeong, Gicheol, 2013. "Assessment of government support for the household adoption of micro-generation systems in Korea," Energy Policy, Elsevier, vol. 62(C), pages 573-581.
  19. Jérôme Massiani, 2013. "The use of Stated Preferences to forecast alternative fuel vehicles market diffusion: Comparisons with other methods and proposal for a Synthetic Utility Function," Working Papers 2013:12, Department of Economics, University of Venice "Ca' Foscari".
  20. Hoen, Anco & Koetse, Mark J., 2014. "A choice experiment on alternative fuel vehicle preferences of private car owners in the Netherlands," Transportation Research Part A: Policy and Practice, Elsevier, vol. 61(C), pages 199-215.
  21. Tanaka, Makoto & Ida, Takanori, 2013. "Voluntary electricity conservation of households after the Great East Japan Earthquake: A stated preference analysis," Energy Economics, Elsevier, vol. 39(C), pages 296-304.
  22. Jérôme Massiani, 2013. "SP surveys for electric and alternative fuel vehicles: are we doing the right thing?," Working Papers 2013_01, Department of Economics, University of Venice "Ca' Foscari".
  23. Vij, Akshay & Walker, Joan L., 2014. "Preference endogeneity in discrete choice models," Transportation Research Part B: Methodological, Elsevier, vol. 64(C), pages 90-105.

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