Should micro electric vehicles be embraced? A perspective from equilibrium analysis

Micro vehicles have long been proposed as a solution for congested urban transportation. With the recent surge in vehicle electrification, micro electric vehicles (micro EVs) have gained significant traction due to their compact size, competitive pricing, and environmental advantages. Breaking the barriers of motor vehicles and non-motorized vehicles, they have shown the potential to strike the current travel market. However, the system-level impacts of their introduction are shaped by complex interactions with existing modes and traffic dynamics, and thus remain an open question. In this study, we develop an equilibrium model to analyze travelers’ adoption of micro EVs relative to regular vehicles and non-motorized modes at the origin–destination (OD) level. On a daily basis, we model drivers’ risk-averse behavior in mixed traffic—the additional caution and discomfort drivers experience when interacting with different vehicle types—and quantify their resulting in-road travel costs through a route-choice equilibrium over the OD network. Together with the daily expense of parking congestion and the inconvenience costs, earning levels, as well as others in the long term, travelers decide their ownership of vehicles and the specific vehicle type. From the perspective of regulators, we model their subsidy strategy in terms of emission goals while balancing traffic performance. Theoretical analysis reveals that when risk aversion is high, subsidy enhancements may lead to an unexpected rebound effect, with reduced adoption of micro EVs limited to enthusiastic users, which underscores the need for mitigating safety concerns before applying financial incentives to promote broader adoption. Moreover, we find that the risk-averse attitude in mixed traffic may force a more effective replacement of regular vehicles, thus benefiting low-emission goals. An innovative search framework is conducted to characterize the dual-decision equilibrium and to find the global optimal subsidy strategy. Numerical results show that developed areas with high original vehicle penetration can accommodate micro EVs more effectively as regular vehicles are replaced, while they may inevitably increase traffic in less-developed areas, though reducing travel inconvenience for residents. Subsidy design should consider spatial interference on travelers’ vehicle choices across the network and be more cautious with high risk aversion.