Does habitual behavior affect the choice of alternative fuel vehicles?

Abstract

Because of the recent improvements in the electrification process of cars, several types of alternative fuel vehicles are appearing in the car market. However, these new engine technologies are not easily penetrating the market around the world and the conventional ones are still the leaders. A vast literature has explored the reasons for such low market penetration, due mainly to car's features. Using a hybrid choice model approach, in this research we study if, and to which extent, habitual car use influences individual propensity to buy a specific type of engine technology. We found significant latent habitual effect on choices of type of car engine. This effect is important only for some of the car alternatives considered in the study. In particular, habitual car users prefer to buy a new car with liquefied petroleum gas and compressed natural gas types of engine technology instead of a conventional one. The importance of taking into account this latent construct is demonstrated also with the results of the simulated elasticity measures. In fact, the exclusion of latent habitual effect significantly underestimates the elasticity of diesel and hybrid cars and overestimates the elasticity of liquefied petroleum gas car.