Abstract
Without the option to purchase plug-in electric and/or hybrid vehicles, conventional counterfactuals used in literature may underestimate the fuel savings from clean vehicle adoption, thus overestimating the costs of securing associated environmental benefits. Using a nationally representative sample of new car purchases in the U.S., a vehicle choice model-based counterfactual approach is proposed in this chapter that allows for the prediction of what consumers would purchase if these clean vehicles were unavailable. The cost of demand-side policies in the form of financial incentives to encourage plug-in electric vehicle adoption is estimated.
Policy relevant insights:
-
In the US, gasoline consumption under a no clean vehicle scenario increases by 1.7%, compared with a 1.1% increase based on a conventional counterfactual.
-
Many pivotal buyers would instead purchase premium brands and larger vehicles, leading to an increase in the share of light trucks, which are subject to less stringent, but more difficult to meet standards.
-
Assuming a vehicle lifetime of 16 years, the conventional counterfactual overestimates the cost of gasoline savings from clean vehicle adoption incentives by $1.16 (27%) per gallon compared with the choice model-based counterfactual.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
In practice, fuel economy tends to be lower (and fuel consumption greater) than in laboratory tests. Thus, the overall real-world savings would be lower in absolute terms (and associated costs higher) than our estimates. However, relative differences between our estimates and conventional counterfactuals would remain.
- 2.
- 3.
This would require knowing how many people did not purchase a new vehicle in each mesh category.
References
Archsmith, J., Kendall, A., & Rapson, D. (2015). From cradle to junkyard: Assessing the life cycle greenhouse gas benefits of electric vehicles. Research in Transportation Economics, 52, 72–90.
Axsen, J., Bailey, J., & Castro, M. A. (2015). Preference and lifestyle heterogeneity among potential plug-in electric vehicle buyers. Energy Economics, 50, 190–201.
Campbell, R., Zhou, Y., Lin, Z., & Ward, J. (2017). Analysis of manufacturer plug-in electric vehicle incentives. In Transportation research board annual meeting compendium of papers.
Davis, S., Diegel, S., & Boundy, R. (2013). Transportation energy data book: Edition 34. US. DOE 2013. Available from https://cta.ornl.gov/data/editions/Edition34_Full_Doc.pdf.
DeShazo, J. R. (2016). Improving incentives for clean vehicle purchases in the United States: Challenges and opportunities. Review of Environmental Economics and Policy, 10(1), 149–165.
DOE-EPA. Federal tax credits for all-electric and plug-in hybrid vehicles. Available from https://www.fueleconomy.gov/feg/taxevb.shtml.
Dua, R., White, K., & Lindland, R. (2019). Understanding potential for battery electric vehicle adoption using large-scale consumer profile data. Energy Reports, 5, 515–524. https://doi.org/10.1016/j.egyr.2019.04.013.
EPA. (2015). Light-duty automotive technology, carbon dioxide emissions, and fuel economy trends: 1975 through 2015. Available from https://www.epa.gov/fuel-economy-trends/trends-report.
EPA-NHTSA. (2012). 2017 and later model year light-duty vehicle greenhouse gas emissions and corporate average fuel economy standards. Available from https://www.federalregister.gov/documents/2011/12/01/2011-30358/2017-and-later-model-year-light-duty-vehicle-greenhouse-gas-emissions-and-corporate-average-fuel.
Gillingham, K. (2014). Identifying the elasticity of driving: Evidence from a gasoline price shock in California. Regional Science and Urban Economics, 47, 13–24.
Gillingham, K., Jenn, A., & Azevedo, I. M. L. (2015). Heterogeneity in the response to gasoline prices: Evidence from Pennsylvania and implications for the rebound effect. Energy Economics, 52, S41–S52.
Gillis, J., Brobeck, S., & Cooper, M. (2016). Automakers are on the road to meeting fuel efficiency standards. Available from https://consumerfed.org/wp-content/uploads/2016/04/2016-Fuel-Economy-Report-April-25–2016.pdf.
Henly, J., Ruderman, H., & Levine, M. D. (1988). Energy saving resulting from the adoption of more efficient appliances: A follow-up. The Energy Journal, 9(2), 163–170.
Holland, S. P., Mansur, E. T., Muller, N. Z., & Yates, A. J. (2016). Environmental benefits from driving electric vehicles? American Economic Review, 106(12), 3700–3729.
Jenn, A., Azevedo, I. M. L., & Michalek, J. J. (2016). Alternative fuel vehicle adoption increases fleet gasoline consumption and greenhouse gas emissions under United States corporate average fuel economy policy and greenhouse gas emissions standards. Environmental Science and Technology, 50(5), 2165–2174.
Langford, R. P., & Gillingham, K. (2015). Market benefits from hybrids. Working paper.
Reiss, P. C., & White, M. W. (2005). Household electricity demand, revisited. The Review of Economic Studies, 72(3), 853–883.
Sheldon, T. L., DeShazo, J. R., & Carson, Richard T. (2017). Demand for battery-electric and plug-in hybrid vehicles: Policy lessons for an emerging market. Economic Inquiry, 55(2), 695–713.
Sheldon, T. L., & Dua, R. (2018). Gasoline savings from clean vehicle adoption. Energy Policy, 120, 418–424. https://doi.org/10.1016/j.enpol.2018.05.057.
Sheldon, T. L., & Dua, R. (2019a). Assessing the effectiveness of California’s “replace your ride”. Energy Policy, 132, 318–323. https://doi.org/10.1016/j.enpol.2019.05.023.
Sheldon, T. L., & Dua, R. (2019b). Measuring the cost-effectiveness of electric vehicle subsidies. Energy Economics, 84, 104545. https://doi.org/10.1016/j.eneco.2019.104545.
Small, K. A., & Van Dender, K. (2007). Fuel efficiency and motor vehicle travel: The declining rebound effect. The Energy Journal, 2007, 25–51.
West, J., Hoekstra, M., Meer, J., & Puller, S. L. (2017). Vehicle miles (not) traveled: fuel economy requirements, vehicle characteristics, and household driving. Journal of Public Economics, 145, 65–81.
Zivin, G., Joshua, S., Kotchen, M. J., & Mansur, E. T. (2014). Spatial and temporal heterogeneity of marginal emissions: Implications for electric cars and other electricity-shifting policies. Journal of Economic Behavior & Organization, 107, 248–268.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2020 Springer Nature Switzerland AG
About this chapter
Cite this chapter
Sheldon, T.L., Dua, R. (2020). Gasoline Savings from Electric Vehicles in the US. In: Contestabile, M., Tal, G., Turrentine, T. (eds) Who’s Driving Electric Cars. Lecture Notes in Mobility. Springer, Cham. https://doi.org/10.1007/978-3-030-38382-4_4
Download citation
DOI: https://doi.org/10.1007/978-3-030-38382-4_4
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-030-38381-7
Online ISBN: 978-3-030-38382-4
eBook Packages: EnergyEnergy (R0)