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Consumer Preferences for Alternative Fuel Vehicles: A Discrete Choice Analysis

Author

Listed:
  • Hackbarth, André

    (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))

  • Madlener, Reinhard

    (E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN))

Abstract

In this paper we analyze the potential demand for privately used alternative fuel vehicles (AFVs), based on a nationwide survey in Germany among (potential) car buyers. For this purpose, we applied a stated preference discrete choice experiment, using a wide range of vehicle alternatives (gasoline/diesel, natural gas, hybrid, plug-in hybrid, electric, biofuel, hydrogen) and vehicle attributes. By applying both a multinomial logit model and a mixed (error components) logit model, we estimate the attributes’ influence on vehicle choice and calculate consumers’ willingness-to-pay for the improvement of these attributes. Furthermore, in a scenario analysis, we simulate the impact of monetary and non-monetary policy measures on vehicle choice probabilities. We find that the most promising target group for the adoption of all kinds of AFVs is that of younger, well-educated, and environmentally aware car buyers, who, in the case of electric vehicles, also have the possibility to plug-in their car at home, and who have a high share of city trips and thus need a small car. Moreover, we find that, depending on the vehicle alternative, environmental awareness, and budget constraints for the next vehicle purchase, households are willing to pay substantial amounts for the improvement of fuel cost, driving range, charging infrastructure, CO2 emissions, vehicle tax exemptions, and free parking or bus lane access. Furthermore, the scenario results suggest that conventional vehicles will maintain their dominance in the market, whereas electric and hydrogen vehicles will remain unpopular. The market share of the latter is only expected to rise markedly if massive and multiple policy interventions are implemented. Finally, we find evidence that an increase in the fully electric vehicle’s driving range to a level comparable with all other vehicle alternatives has the same impact on its choice probability as would a market-based, multiple measures policy intervention package.

Suggested Citation

  • Hackbarth, André & Madlener, Reinhard, 2011. "Consumer Preferences for Alternative Fuel Vehicles: A Discrete Choice Analysis," FCN Working Papers 20/2011, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    • Handle: RePEc:ris:fcnwpa:2011_020
    Note: revised December 2012
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    References listed on IDEAS

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    More about this item

    Keywords

    choice model; Alternative fuel vehicles; Willingness-to-pay; Mixed logit model; Scenario analysis;
    All these keywords.

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • M38 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Marketing and Advertising - - - Government Policy and Regulation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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