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Consumer Valuation of Driving Range: A Meta-Analysis

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  • Alexandros Dimitropoulos

    (VU University Amsterdam)

  • Piet Rietveld

    (VU University Amsterdam)

  • Jos N. van Ommeren

    (VU University Amsterdam)

Abstract

We perform a meta-analysis of studies investigating consumers' preferences for electric and other alternative fuel vehicles to provide insights into the way consumers trade off driving range for capital costs. We find that consumers are willing to pay, on average, between 47 and 64 USD for a one-mile increase in vehicle's range. The short driving range of most currently available electric vehicles entails that they should be offered at prices around half the price of their conventional counterparts in order to be considered competitive alternatives, ceteris paribus. In line with intuition, but in contrast to most specifications employed in primary studies, we find evidence that consumers' marginal willingness to pay (WTP) is decreasing in driving range. The wide divergence in the estimates of welfare measures among the examined studies can be mainly attributed to differences in the study design, the location at which the study was conducted and the size of the study's sample. Provided that a large scale introduction of electric vehicles is a policy aim, our findings support the continuation of R&D efforts directed towards the reduction of battery costs and the development of advanced battery technologies permitting higher driving ranges than the ones currently achievable by most commercially available electric cars.

Suggested Citation

  • Alexandros Dimitropoulos & Piet Rietveld & Jos N. van Ommeren, 2011. "Consumer Valuation of Driving Range: A Meta-Analysis," Tinbergen Institute Discussion Papers 11-133/3, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20110133
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    Cited by:

    1. Fetene, Gebeyehu M. & Hirte, Georg & Kaplan, Sigal & Prato, Carlo G. & Tscharaktschiew, Stefan, 2016. "The economics of workplace charging," Transportation Research Part B: Methodological, Elsevier, vol. 88(C), pages 93-118.
    2. Franke, Thomas & Krems, Josef F., 2013. "Interacting with limited mobility resources: Psychological range levels in electric vehicle use," Transportation Research Part A: Policy and Practice, Elsevier, vol. 48(C), pages 109-122.
    3. Parsons, George R. & Hidrue, Michael K. & Kempton, Willett & Gardner, Meryl P., 2014. "Willingness to pay for vehicle-to-grid (V2G) electric vehicles and their contract terms," Energy Economics, Elsevier, vol. 42(C), pages 313-324.
    4. Brand, Christian & Cluzel, Celine & Anable, Jillian, 2017. "Modeling the uptake of plug-in vehicles in a heterogeneous car market using a consumer segmentation approach," Transportation Research Part A: Policy and Practice, Elsevier, vol. 97(C), pages 121-136.
    5. Maamar Sebri, 2014. "A meta-analysis of residential water demand studies," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 16(3), pages 499-520, June.

    More about this item

    Keywords

    Electric vehicles; Meta-analysis; Driving range; Willingness to pay;

    JEL classification:

    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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