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Future Paths of Electric Vehicle Adoption in the United States: Predictable Determinants, Obstacles, and Opportunities

In: Environmental and Energy Policy and the Economy, volume 3

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  • James Archsmith
  • Erich Muehlegger
  • David S. Rapson

Abstract

This paper identifies and quantifies major determinants of future electric vehicle (EV) demand in order to inform widely-held aspirations for market growth. Our model compares three channels that will affect EV market share in the United States from 2020-2035: intrinsic (no-subsidy) EV demand growth, net-of-subsidy EV cost declines (e.g. batteries), and government subsidies. Geographic variation in preferences for sedans and light trucks highlights the importance of viable EV alternatives to conventional light trucks; belief in climate change is highly correlated with EV adoption patterns; and the first $500 billion in cumulative nationwide EV subsidies is associated a 7-10 percent increase in EV market share in 2035, an effect that diminishes as subsidies increase. The rate of intrinsic demand growth dwarfs the impact of demand-side subsidies and battery cost declines, highlighting the importance of non-monetary factors (e.g. charging infrastructure, product quality and/or cultural acceptance) on EV demand.
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Suggested Citation

  • James Archsmith & Erich Muehlegger & David S. Rapson, 2021. "Future Paths of Electric Vehicle Adoption in the United States: Predictable Determinants, Obstacles, and Opportunities," NBER Chapters, in: Environmental and Energy Policy and the Economy, volume 3, pages 71-110, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:14584
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    Cited by:

    1. David Rapson & Erich Muehlegger, 2023. "Global Transportation Decarbonization," Journal of Economic Perspectives, American Economic Association, vol. 37(3), pages 163-188, Summer.
    2. Andri Ottesen & Sumayya Banna & Basil Alzougool, 2022. "Attitudes of Drivers towards Electric Vehicles in Kuwait," Sustainability, MDPI, vol. 14(19), pages 1-16, September.
    3. David S. Rapson & James B. Bushnell, 2022. "The Electric Ceiling: Limits and Costs of Full Electrification," NBER Working Papers 30593, National Bureau of Economic Research, Inc.
    4. 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).
    5. Halse, Askill H. & Hauge, Karen E. & Isaksen, Elisabeth T. & Johansen, Bjørn G. & Rauum, Oddbjørn, 2022. "Local Incentives and Electric Vehicle Adoption," Memorandum 1/2022, Oslo University, Department of Economics.
    6. Gøril L. Andreassen & Jo Thori Lind, 2022. "Climate, Technology and Value: Insights from the First Decade with Mass-Consumption of Electric Vehicles," CESifo Working Paper Series 9814, CESifo.
    7. David Austin, 2023. "Modeling the Demand for Electric Vehicles and the Supply of Charging Stations in the United States: Working Paper 2023-06," Working Papers 58964, Congressional Budget Office.

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    More about this item

    JEL classification:

    • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics
    • Q47 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy Forecasting
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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