Will subsidies drive electric vehicle adoption? Measuring consumer preferences in the U.S. and China

Abstract

a b s t r a c tWe model consumer preferences for conventional, hybrid electric, plug-in hybrid electric (PHEV), and battery electric (BEV) vehicle technologies in China and the U.S. using data from choice-based conjoint surveys fielded in 2012-2013 in both countries. We find that with the combined bundle of attributes offered by vehicles available today, gasoline vehicles continue in both countries to be most attractive to consumers, and American respondents have significantly lower relative willingness-to-pay for BEV technology than Chinese respondents. While U.S. and Chinese subsidies are similar, favoring vehicles with larger battery packs, differences in consumer preferences lead to different outcomes. Our results suggest that with or without each country's 2012-2013 subsidies, Chinese consumers are willing to adopt today's BEVs and mid-range PHEVs at similar rates relative to their respective gasoline counterparts, whereas American consumers prefer low-range PHEVs despite subsidies. This implies potential for earlier BEV adoption in China, given adequate supply. While there are clear national security benefits for adoption of BEVs in China, the local and global social impact is unclear: With higher electricity generation emissions in China, a transition to BEVs may reduce oil consumption at the expense of increased air pollution and/or greenhouse gas emissions. On the other hand, demand from China could increase global incentives for electric vehicle technology development with the potential to reduce emissions in countries where electricity generation is associated with lower emissions.

Consumer preferences for electric vehicles: a literature review

“…Again, people with higher incomes place lower importance on fuel cost (Helveston et al, 2015;Valeri & Danielis, 2015). However, Chinese respondents with higher income (2013) are more sensitive to high fuel costs (Helveston et al, 2015).…”

“…However, Chinese respondents with higher income (2013) are more sensitive to high fuel costs (Helveston et al, 2015). This effect implies that in China the attraction of EV is reinforced since rich people who can afford EV also value the cost savings it brings in its daily operation.…”

“…Following a meta-analysis, Dimitropoulos, Rietveld, and Van Ommeren (2013) proposed that preference for range may be sensitive to charging station density and charging time. In the case of PHEV, a longer all-electric range (the distance solely battery-powered) also increases the likelihood of purchase (Helveston et al, 2015).…”

“…Helveston et al (2015) found that people prefer brands from certain countries and the preference order differs between countries. Chorus et al (2013) and Hoen and Koetse (2014) found that having more EV models available on the market increases the probability of choosing an EV.…”

Consumer structure in the emerging market for electric vehicles: Identifying market segments using cluster analysis

“…Denmark). Helveston et al (2015) found responses to incentives for EVs to differ between the US and China, with the supply of BEVs being relatively restricted so far in China and therefore commanding higher status and a willingness to pay a premium.…”