Prof. Erich J. Muehlegger PhD // University of California, Davis, USATo the profile
Energy Prices and Electric Vehicle AdoptionResearch Seminars
This paper presented in this Research Seminar evidence that gasoline prices have a larger effect on demand for electric vehicles (EVs) than electricity prices in California. The authors match a spatially-disaggregated panel dataset of monthly EV registration records to detailed records of gasoline and electricity prices in California from 2014-2017, and use these to estimate the effect of energy prices on EV demand. Two distinct empirical approaches (panel fixed-effects and a utility-border discontinuity) yield remarkably similar results: a given change in gasoline prices has roughly four to six times the effect on EV demand as a similar percentage change in electricity prices. The authors explore the implications for optimal EV subsidies, which promote externality reduction benefits and correct for consumer mis-optimization stemming from the undervaluation of future electricity costs.