Gasoline Savings from Electric Vehicles in the US

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.