Working Paper: NBER ID: w28933
Authors: James E. 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.
Keywords: No keywords provided
JEL Codes: H23; Q47; Q48; Q5; R4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| intrinsic demand growth (O49) | EV market share (F62) |
| increased acceptance of EVs (R48) | intrinsic demand growth (O49) |
| convenience of charging infrastructure (L90) | intrinsic demand growth (O49) |
| improvements in EV quality (L15) | intrinsic demand growth (O49) |
| EV subsidies (R48) | EV market share (F62) |
| demographic factors (J11) | EV adoption (O00) |
| income levels (J31) | EV adoption (O00) |
| education levels (I24) | EV adoption (O00) |
| geographic variations in preferences (R12) | EV market share (F62) |