Status Quo Bias and EV Adoption: A Prospect Theory Perspective from a Developing Country Context

Abstract

Electric vehicles (EVs) are promoted to decarbonise road transport, yet uptake remains slow in many emerging markets. This study examines consumer resistance to EV adoption in Sri Lanka by modelling status quo bias (SQB) using a Prospect Theory lens. An online survey of urban vehicle owners and near-term buyers yielded 157 responses; after screening and removing influential outliers, 151 cases were analysed using partial least squares structural equation modelling (PLS-SEM). The model tests five Prospect Theory-aligned antecedents, namely, loss aversion, reference dependence, risk perception, framing effects, and uncertainty aversion, and evaluates environmental concern as a moderator. Results indicate that loss aversion has a significant positive effect on SQB (β = 0.216, p = 0.005) and uncertainty aversion is the strongest predictor (β = 0.453, p < 0.001), while reference dependence, risk perception, and framing effects show positive but statistically non-significant direct effects. Moderation tests show that environmental concern significantly moderates the effects of reference dependence (β = 0.181, p = 0.039) and framing effects (β = 0.179, p = 0.037) on SQB, but does not significantly moderate the loss aversion, risk perception, or uncertainty aversion paths. Overall, perceived losses and—especially—ambiguity surrounding EV ownership appear to sustain reliance on internal combustion vehicles in this developing-country context, underscoring the need for interventions that reduce uncertainty (credible infrastructure signals, stable policy, service capability) and mitigate perceived losses (warranties, resale assurances) alongside carefully framed communications.