Working Paper: NBER ID: w29093
Authors: David S. Rapson; Erich Muehlegger
Abstract: We examine the private and public economics of electric vehicles (EVs) and discuss when market forces will produce the optimal path of EV adoption. Privately, consumer cost savings from EVs vary. Some experience net benefits from choosing gasoline cars, even after accounting for EV subsidies. Publicly, we survey the literature documenting the external costs and benefits of EVs and highlight several themes for optimal policy design including, 1) promoting regional variation in EV policies that align private incentives with social benefits, 2) pursuing a time-path of policies that reflect changing marginal benefits, and 3) rationalizing electricity and gasoline prices to reflect their social marginal cost. On the extensive margin, purchase incentives should ramp-down as learning-by-doing and network externalities (to the extent that they exist) diminish; on the intensive margin, gasoline should become relatively more expensive over time than electricity (per mile traveled) to reflect cleaner marginal emissions from electricity generation.
Keywords: No keywords provided
JEL Codes: Q54; Q55; Q58; R4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| operational savings from EVs (L92) | consumer adoption (D16) |
| government subsidies (H20) | increased EV adoption (O00) |
| external benefits of EVs (R41) | consumer adoption (D16) |
| cleaner electricity grid (L94) | expected GHG emissions savings from EVs (Q51) |
| optimal policy design (E61) | alignment of private incentives with social benefits (D61) |