Global EV Penetration: Policies, Subsidy Pass-through, and Consumer Preference
Paper Session
Friday, Jan. 6, 2023 2:30 PM - 4:30 PM (CST)
- Chair: Panle Barwick, Cornell University
Pass-through of Electric Vehicle Subsidies: a Global Analysis
Abstract
The pass-through and incidence of subsidies plays a crucial role in the design of electric vehicle (EV) subsidy policies. The EV industry is characterized by a complex supply chain where downstream subsidies can potentially affect not just EV buyers and manufacturers, but also upstream suppliers of EV batteries, given the large share of battery costs in the final cost of an EV. The extent to which the benefits of EV subsidies are captured by upstream battery manufacturers is important to understand if policymakers are to design appropriate subsidy policies. A high upstream pass-through rate implies that a higher subsidy is required to achieve a given reduction in final prices of EVs, which raises the subsidy cost required to achieve zero-emission vehicle targets. At the same time, the upstream pass-through of EV subsidies may stimulate the development of the battery industry, providing an additional benefit of EV subsidies beyond the direct impact on EV sales. In this paper, we empirically evaluate the pass-through of EV subsidies to battery suppliers, EV manufacturers and consumers. Our analysis is based on a rich dataset that consists of model-level EV sales, prices, vehicle attributes, battery characteristics, and EV subsidies, for a set of 13 countries from 2013 to 2020 that account for more than 90% of the global EV sales. We estimate a structural model of consumer EV purchase decisions, manufacturer vehicle pricing decisions, and battery pricing decisions by battery suppliers. We use the estimated model to quantify pass-through and incidence of EV subsidies and assess how these vary across countries and by subsidy design.Has Consumer Acceptance of Electric Vehicles Been Increasing? Evidence from Microdata on Every New Vehicle Sale in the United States
Abstract
Over the last decade, plug-in electric vehicle sales in the US have dramaticallyincreased, from fewer than 20,000 in 2011 to over 600,000 in 2021. This paper examines how
preferences for electric vehicles have changed over time and how they differ across locations and
demographics. We use uniquely detailed demographic data for every new vehicle sold in the
United States over the period 2014-2020 to estimate new vehicle demand, with a focus on
electric vehicles. Our rich micro-level data allow us to estimate new vehicle demand using a
mixed-data likelihood estimator in addition to the more common GMM estimator with micro-
moments. We disentangle changes in preferences for electric vehicles from the evolving
landscape of product offerings, government incentives, and infrastructure. Importantly, we
examine both trends in preferences over time for different types of alternative fuel
vehicles—hybrid, plug-in hybrid, and battery electric—and variation in preferences across
household characteristics including income, education, family structure, dwelling characteristics,
and geography. Understanding the changing tastes for alternative vehicles is critical for
examining the welfare implications of multi-year vehicle policies but has not yet been explicitly
incorporated into existing benefit-cost analysis.
JEL Classifications
- Q5 - Environmental Economics