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Willingness to pay for electric vehicles and their attributes

  • Hidrue, Michael K.
  • Parsons, George R.
  • Kempton, Willett
  • Gardner, Meryl P.

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 50Â 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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Article provided by Elsevier in its journal Resource and Energy Economics.

Volume (Year): 33 (2011)
Issue (Month): 3 (September)
Pages: 686-705

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Handle: RePEc:eee:resene:v:33:y:2011:i:3:p:686-705
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505569

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  1. Brownstone, David & Train, Kenneth, 1998. "Forecasting new product penetration with flexible substitution patterns," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 109-129, November.
  2. 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.
  3. repec:cup:cbooks:9780521766555 is not listed on IDEAS
  4. repec:cup:cbooks:9780521747387 is not listed on IDEAS
  5. 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.
  6. 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.
  7. 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.
  8. 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.
  9. 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.
  10. 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.
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