How Do First-Time Car Buyers Matter in Electric Vehicle Adoption: A Case of China
Posted: 29 May 2020
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How do First-time Car Buyers Matter in Electric Vehicle Adoption: A Case of China
Date Written: September 1, 2016
Abstract
Electric vehicle (EV) has been promoted in many countries as a way of green transportation. However, the EV adoption rate remains quite low. Besides the immature technology and high cost, the low adoption rate also attributed to the nature of vehicle as a durable product, which has slow as replacement purchase. This makes first-time vehicle buyers especially important to the early EV market. One specific feature of the Chinese automobile market is the existence of large amount of first-time vehicle buyers. Turning these first-time buyers to the early adopters of EV can enhance word of mouth effect and other related reinforce feedbacks. To examine the impact of the first-time vehicle buyers to EV adoption in China, we investigated the EV acceptance of first-time vehicle buyers and developed a system dynamics model. Model simulation results show that first-time car buyers have a positive effect on EV adoption, but this effect is not significant for the first several years. The limited license plate quota for internal combustion engine vehicles (ICEV) is an effective policy under the situation. First-time vehicle buyers who do not have a license quota will become early EV users and accelerates EV adoption. More importantly, the license plate quota has to be lower than certain level to 40% to make a significant impact on EV adoption.
Keywords: Electronic Vehicle; adoption; first-time car buyers; system dynamics; word of mouth effect
JEL Classification: M19
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