IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v120y2018icp238-249.html
   My bibliography  Save this article

Do electric vehicles need subsidies? Ownership costs for conventional, hybrid, and electric vehicles in 14 U.S. cities

Author

Listed:
  • Breetz, Hanna L.
  • Salon, Deborah

Abstract

Battery electric vehicles (BEVs) are an important pathway for decarbonizing transportation and reducing petroleum dependence. Although one barrier to adoption is the higher purchase price, advocates suggest that fuel and maintenance savings can make BEVs economical over time. To assess this empirically, this paper analyzes the five-year Total Cost of Ownership (TCO) for conventional, hybrid, and electric vehicles in 14 U.S. cities from 2011 to 2015. Results show spatial variation due to differences in state and local policies, fuel prices, insurance and maintenance costs, depreciation rates, and vehicle miles traveled. Yet in nearly all cities, the BEV's higher purchase price and rapid depreciation outweighed its fuel savings. Extensive sensitivity analyses highlight the impact of key parameters and show that both federal and state incentives were necessary for BEVs to be cost competitive. Future BEV cost competitiveness may improve if innovation and scaling lead to significantly reduced BEV purchase prices, but our analysis suggests that it will be challenging for BEVs to achieve unsubsidized cost competitiveness except in the most optimistic scenarios.

Suggested Citation

  • Breetz, Hanna L. & Salon, Deborah, 2018. "Do electric vehicles need subsidies? Ownership costs for conventional, hybrid, and electric vehicles in 14 U.S. cities," Energy Policy, Elsevier, vol. 120(C), pages 238-249.
    • Handle: RePEc:eee:enepol:v:120:y:2018:i:c:p:238-249
    DOI: 10.1016/j.enpol.2018.05.038
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421518303422
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2018.05.038?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Tseng, Hui-Kuan & Wu, Jy S. & Liu, Xiaoshuai, 2013. "Affordability of electric vehicles for a sustainable transport system: An economic and environmental analysis," Energy Policy, Elsevier, vol. 61(C), pages 441-447.
    2. Saba Siddiki & Jerome Dumortier & Cali Curley & John D. Graham & Sanya Carley & Rachel M. Krause, 2015. "Exploring Drivers of Innovative Technology Adoption Intention: The Case of Plug-In Vehicles," Review of Policy Research, Policy Studies Organization, vol. 32(6), pages 649-674, November.
    3. Weiss, Martin & Patel, Martin K. & Junginger, Martin & Perujo, Adolfo & Bonnel, Pierre & van Grootveld, Geert, 2012. "On the electrification of road transport - Learning rates and price forecasts for hybrid-electric and battery-electric vehicles," Energy Policy, Elsevier, vol. 48(C), pages 374-393.
    4. Jenn, Alan & Azevedo, Inês L. & Ferreira, Pedro, 2013. "The impact of federal incentives on the adoption of hybrid electric vehicles in the United States," Energy Economics, Elsevier, vol. 40(C), pages 936-942.
    5. Axsen, Jonn & Kurani, Kenneth S., 2013. "Hybrid, plug-in hybrid, or electric—What do car buyers want?," Energy Policy, Elsevier, vol. 61(C), pages 532-543.
    6. Fanchao Liao & Eric Molin & Bert van Wee, 2017. "Consumer preferences for electric vehicles: a literature review," Transport Reviews, Taylor & Francis Journals, vol. 37(3), pages 252-275, May.
    7. Gallagher, Kelly Sims & Muehlegger, Erich, 2011. "Giving green to get green? Incentives and consumer adoption of hybrid vehicle technology," Journal of Environmental Economics and Management, Elsevier, vol. 61(1), pages 1-15, January.
    8. Krause, Rachel M. & Carley, Sanya R. & Lane, Bradley W. & Graham, John D., 2013. "Perception and reality: Public knowledge of plug-in electric vehicles in 21 U.S. cities," Energy Policy, Elsevier, vol. 63(C), pages 433-440.
    9. Al-Alawi, Baha M. & Bradley, Thomas H., 2013. "Total cost of ownership, payback, and consumer preference modeling of plug-in hybrid electric vehicles," Applied Energy, Elsevier, vol. 103(C), pages 488-506.
    10. Wu, Geng & Inderbitzin, Alessandro & Bening, Catharina, 2015. "Total cost of ownership of electric vehicles compared to conventional vehicles: A probabilistic analysis and projection across market segments," Energy Policy, Elsevier, vol. 80(C), pages 196-214.
    11. Palmer, Kate & Tate, James E. & Wadud, Zia & Nellthorp, John, 2018. "Total cost of ownership and market share for hybrid and electric vehicles in the UK, US and Japan," Applied Energy, Elsevier, vol. 209(C), pages 108-119.
    12. Hunt Allcott & Nathan Wozny, 2014. "Gasoline Prices, Fuel Economy, and the Energy Paradox," The Review of Economics and Statistics, MIT Press, vol. 96(5), pages 779-795, December.
    13. Han Hao & Michael Wang & Yan Zhou & Hewu Wang & Minggao Ouyang, 2015. "Levelized costs of conventional and battery electric vehicles in china: Beijing experiences," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 20(7), pages 1229-1246, October.
    14. Gilmore, Elisabeth A. & Lave, Lester B., 2013. "Comparing resale prices and total cost of ownership for gasoline, hybrid and diesel passenger cars and trucks," Transport Policy, Elsevier, vol. 27(C), pages 200-208.
    15. Thiel, Christian & Nijs, Wouter & Simoes, Sofia & Schmidt, Johannes & van Zyl, Arnold & Schmid, Erwin, 2016. "The impact of the EU car CO2 regulation on the energy system and the role of electro-mobility to achieve transport decarbonisation," Energy Policy, Elsevier, vol. 96(C), pages 153-166.
    16. Gass, V. & Schmidt, J. & Schmid, E., 2014. "Analysis of alternative policy instruments to promote electric vehicles in Austria," Renewable Energy, Elsevier, vol. 61(C), pages 96-101.
    17. Lévay, Petra Zsuzsa & Drossinos, Yannis & Thiel, Christian, 2017. "The effect of fiscal incentives on market penetration of electric vehicles: A pairwise comparison of total cost of ownership," Energy Policy, Elsevier, vol. 105(C), pages 524-533.
    18. Bubeck, Steffen & Tomaschek, Jan & Fahl, Ulrich, 2016. "Perspectives of electric mobility: Total cost of ownership of electric vehicles in Germany," Transport Policy, Elsevier, vol. 50(C), pages 63-77.
    19. Seixas, J. & Simões, S. & Dias, L. & Kanudia, A. & Fortes, P. & Gargiulo, M., 2015. "Assessing the cost-effectiveness of electric vehicles in European countries using integrated modeling," Energy Policy, Elsevier, vol. 80(C), pages 165-176.
    20. Jorg Roosen & Wim Marneffe & Lode Vereeck, 2015. "A Review of Comparative Vehicle Cost Analysis," Transport Reviews, Taylor & Francis Journals, vol. 35(6), pages 720-748, November.
    21. Dumortier, Jerome & Siddiki, Saba & Carley, Sanya & Cisney, Joshua & Krause, Rachel M. & Lane, Bradley W. & Rupp, John A. & Graham, John D., 2015. "Effects of providing total cost of ownership information on consumers’ intent to purchase a hybrid or plug-in electric vehicle," Transportation Research Part A: Policy and Practice, Elsevier, vol. 72(C), pages 71-86.
    22. Stokes, Leah C. & Breetz, Hanna L., 2018. "Politics in the U.S. energy transition: Case studies of solar, wind, biofuels and electric vehicles policy," Energy Policy, Elsevier, vol. 113(C), pages 76-86.
    23. Delucchi, Mark & Lipman, Timothy, 2001. "An Analysis of the Retail and Lifecycle Cost of Battery-Powered Electric Vehicles," Institute of Transportation Studies, Working Paper Series qt50q9060k, Institute of Transportation Studies, UC Davis.
    24. Björn Nykvist & Måns Nilsson, 2015. "Rapidly falling costs of battery packs for electric vehicles," Nature Climate Change, Nature, vol. 5(4), pages 329-332, April.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Santos, Georgina & Rembalski, Sebastian, 2021. "Do electric vehicles need subsidies in the UK?," Energy Policy, Elsevier, vol. 149(C).
    2. Makena Coffman & Paul Bernstein & Sherilyn Wee, 2017. "Electric vehicles revisited: a review of factors that affect adoption," Transport Reviews, Taylor & Francis Journals, vol. 37(1), pages 79-93, January.
    3. Scorrano, Mariangela & Danielis, Romeo & Giansoldati, Marco, 2020. "Dissecting the total cost of ownership of fully electric cars in Italy: The impact of annual distance travelled, home charging and urban driving," Research in Transportation Economics, Elsevier, vol. 80(C).
    4. Ranjit R. Desai & Eric Hittinger & Eric Williams, 2022. "Interaction of Consumer Heterogeneity and Technological Progress in the US Electric Vehicle Market," Energies, MDPI, vol. 15(13), pages 1-25, June.
    5. Moon, Saedaseul & Lee, Deok-Joo, 2019. "An optimal electric vehicle investment model for consumers using total cost of ownership: A real option approach," Applied Energy, Elsevier, vol. 253(C), pages 1-1.
    6. Hao, Xu & Lin, Zhenhong & Wang, Hewu & Ou, Shiqi & Ouyang, Minggao, 2020. "Range cost-effectiveness of plug-in electric vehicle for heterogeneous consumers: An expanded total ownership cost approach," Applied Energy, Elsevier, vol. 275(C).
    7. Liu, Zhe & Song, Juhyun & Kubal, Joseph & Susarla, Naresh & Knehr, Kevin W. & Islam, Ehsan & Nelson, Paul & Ahmed, Shabbir, 2021. "Comparing total cost of ownership of battery electric vehicles and internal combustion engine vehicles," Energy Policy, Elsevier, vol. 158(C).
    8. Shafiei, Ehsan & Davidsdottir, Brynhildur & Fazeli, Reza & Leaver, Jonathan & Stefansson, Hlynur & Asgeirsson, Eyjolfur Ingi, 2018. "Macroeconomic effects of fiscal incentives to promote electric vehicles in Iceland: Implications for government and consumer costs," Energy Policy, Elsevier, vol. 114(C), pages 431-443.
    9. Safari, M., 2018. "Battery electric vehicles: Looking behind to move forward," Energy Policy, Elsevier, vol. 115(C), pages 54-65.
    10. Malima, Gabriel Clement & Moyo, Francis, 2023. "Are electric vehicles economically viable in sub-Saharan Africa? The total cost of ownership of internal combustion engine and electric vehicles in Tanzania," Transport Policy, Elsevier, vol. 141(C), pages 14-26.
    11. Schwab, Julia & Sölch, Christian & Zöttl, Gregor, 2022. "Electric Vehicle Cost in 2035: The impact of market penetration and charging strategies," Energy Economics, Elsevier, vol. 114(C).
    12. Palmer, Kate & Tate, James E. & Wadud, Zia & Nellthorp, John, 2018. "Total cost of ownership and market share for hybrid and electric vehicles in the UK, US and Japan," Applied Energy, Elsevier, vol. 209(C), pages 108-119.
    13. Maxwell Woody & Shawn A. Adderly & Rushabh Bohra & Gregory A. Keoleian, 2024. "Electric and gasoline vehicle total cost of ownership across US cities," Journal of Industrial Ecology, Yale University, vol. 28(2), pages 194-215, April.
    14. Mariangela Scorrano & Terje Andreas Mathisen & Marco Giansoldati, 2019. "Is electric car uptake driven by monetary factors? A total cost of ownership comparison between Norway and Italy," ECONOMICS AND POLICY OF ENERGY AND THE ENVIRONMENT, FrancoAngeli Editore, vol. 0(2), pages 99-132.
    15. Danielis, Romeo & Giansoldati, Marco & Scorrano, Mariangela, 2019. "Consumer- and society-oriented cost of ownership of electric and conventional cars in Italy," Working Papers 19_3, SIET Società Italiana di Economia dei Trasporti e della Logistica.
    16. Yan, Shiyu, 2018. "The economic and environmental impacts of tax incentives for battery electric vehicles in Europe," Energy Policy, Elsevier, vol. 123(C), pages 53-63.
    17. Harvey, L.D. Danny, 2018. "Cost and energy performance of advanced light duty vehicles: Implications for standards and subsidies," Energy Policy, Elsevier, vol. 114(C), pages 1-12.
    18. Piotr Wróblewski & Wojciech Lewicki, 2021. "A Method of Analyzing the Residual Values of Low-Emission Vehicles Based on a Selected Expert Method Taking into Account Stochastic Operational Parameters," Energies, MDPI, vol. 14(21), pages 1-24, October.
    19. Kondev, Bozhil & Dixon, James & Zhou, Zhaoqi & Sabyrbekov, Rahat & Sultanaliev, Kanat & Hirmer, Stephanie A., 2023. "Putting the foot down: Accelerating EV uptake in Kyrgyzstan," Transport Policy, Elsevier, vol. 131(C), pages 87-96.
    20. Blanco, Herib & Gómez Vilchez, Jonatan J. & Nijs, Wouter & Thiel, Christian & Faaij, André, 2019. "Soft-linking of a behavioral model for transport with energy system cost optimization applied to hydrogen in EU," Renewable and Sustainable Energy Reviews, Elsevier, vol. 115(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:enepol:v:120:y:2018:i:c:p:238-249. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/enpol .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.