Electric Vehicles: Economics of the Extensive and Intensive Margins

The automotive industry and policymakers worldwide are placing significant bets on transportation electrification. Motivated by the urgency to mitigate global climate change, many governments worldwide have goals of phasing conventional vehicles out entirely in coming decades. Despite these ambitious targets, understanding of the factors influencing electric vehicle (EV) adoption and utilization remains limited.

Due to data limitations, there is scant empirical evidence about how a key factor, relative gasoline and electricity prices, influences EV adoption and utilization. By providing empirical measures of customer responses to prices, this project is designed to provide critical information on the feasibility and optimal design of incentives for electrifying the consumer vehicle fleet.

The project will build a first-of-its-kind data platform that will link hourly electricity consumption, price incentives, and vehicle ownership at the household level in the US’ largest EV market, California. The project team will use these data, along with a randomized controlled trial (RCT), to shed new light on determinants of EV adoption and usage.

The project will also test the impacts of electricity and gasoline prices on EV purchases, as well as the timing and amount of consumption of both of these fuels.

Using this novel research platform, this project will contribute to several active areas of academic inquiry. One aspect of the project will provide the first at-scale estimates of EV usage (the intensive margin) derived from measures of household electricity consumption. Since most households do not have a separate electricity meter for EV charging, we will estimate household EV charging using empirical methods that will test for the change in electricity consumption coincident with the registration of an EV at a given household.

Such a test requires first building a unique data set merging high frequency micro-data on household electricity consumption with vehicle registration and other data. This aspect of the project will show how household EV electricity use varies across several important dimensions: hour-of-day; the EV model and a household’s existing vehicle portfolio; and finally, across electricity tariffs.

A second aspect of the project will, in cooperation with a California electric utility, run a randomized control trial that will test how customers respond to incentives to participate in automated EV charging programs. These programs provide electricity bill discounts in exchange for utility control of charging levels and timing. Successful coordination of distributed EV charging can be a valuable tool for optimizing the integration into the grid of new electricity loads, such as EVs, as well as time-varying renewable electricity production.

A third part of the project will quantify the role of gasoline prices and electricity prices on the purchase of EVs (the extensive margin). This aspect of the project will examine homes close to the borders of electric utility companies in order to compare EV adoption decisions by consumers who face dramatically different electricity prices but that are otherwise similar in important ways.

This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.