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Energy Prices and Electric Vehicle Adoption

Author

Listed:
  • James B. Bushnell
  • Erich Muehlegger
  • David S. Rapson

Abstract

This paper presents evidence that gasoline prices have a larger effect on demand for electric vehicles (EVs) than electricity prices in California. We match a spatially-disaggregated panel dataset of monthly EV registration records to detailed records of gasoline and electricity prices in California from 2014-2017, and use these to estimate the effect of energy prices on EV demand. Two distinct empirical approaches (panel fixed-effects and a utility-border discontinuity) yield remarkably similar results: a given change in gasoline prices has roughly four to six times the effect on EV demand as a similar percentage change in electricity prices. We explore the implications for optimal EV subsidies, which promote externality reduction benefits and correct for consumer misoptimization stemming from the undervaluation of future electricity costs.

Suggested Citation

  • James B. Bushnell & Erich Muehlegger & David S. Rapson, 2022. "Energy Prices and Electric Vehicle Adoption," NBER Working Papers 29842, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:29842
    Note: EEE
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    File URL: http://www.nber.org/papers/w29842.pdf
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    Cited by:

    1. Muehlegger, Erich & Rapson, David S., 2022. "Subsidizing low- and middle-income adoption of electric vehicles: Quasi-experimental evidence from California," Journal of Public Economics, Elsevier, vol. 216(C).

    More about this item

    JEL classification:

    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q49 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Other
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics

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