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Equilibrium Effects in Complementary Markets: Electric Vehicle Adoption and Electricity Pricing

Author

Listed:
  • Pascal Heid
  • Kevin Remmy
  • Mathias Reynaert

Abstract

Electric vehicles shift passenger transport from oil to electricity, linking vehicle adoption to hourly power-market conditions. We develop and estimate a joint equilibrium model of German vehicle demand and electricity supply in which driver-specific charging decisions map travel profiles and electricity prices into EV operating costs and load. A 10% EV stock raises wholesale prices by 3.3%, creating sizable cost spillovers on non-EV electricity users, but reduces EV adoption by less than 1%. Time-varying tariffs lower charging costs and shift load to cheaper hours; in equilibrium, EV adoption offsets much of the system-cost relief while redirecting generator profits toward renewables.

Suggested Citation

  • Pascal Heid & Kevin Remmy & Mathias Reynaert, 2026. "Equilibrium Effects in Complementary Markets: Electric Vehicle Adoption and Electricity Pricing," CESifo Working Paper Series 12719, CESifo.
    • Handle: RePEc:ces:ceswps:_12719
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    File URL: https://www.ifo.de/DocDL/cesifo1_wp12719.pdf
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    JEL classification:

    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • L9 - Industrial Organization - - Industry Studies: Transportation and Utilities
    • Q4 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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