Willingness-to-Pay for Alternative Fuel Vehicle Characteristics: A Stated Choice Study for Germany

FCN Working Paper No. 20/2013

60 Pages Posted: 9 May 2014

See all articles by André Hackbarth

André Hackbarth

RWTH Aachen University - Institute for Future Energy Consumer Needs and Behavior (FCN)

Reinhard Madlener

RWTH Aachen University

Date Written: December 2013

Abstract

In the light of European energy efficiency and clean air legislations, as well as an ambitious electric mobility goal of the German government, we examine consumer preferences for alternative fuel vehicles (AFVs), based on a Germany-wide discrete choice experiment among 711 potential car buyers. We estimate consumers’ willingness-to-pay (WTP) and contingent variation (CV) for improvements in vehicle purchase price, fuel cost, driving range, refueling infrastructure, CO2 emissions and governmental monetary and non-monetary incentives, hereby accounting for diminishing marginal returns for some of the attributes and taking taste differences in the population into account by applying a latent class model with 6 distinct consumer segments. Our results indicate that almost 36% of the consumers are open-minded towards at least one AFV option, with 15% being AFV-affine insomuch that they show a high probability of choosing AFVs despite their current shortcomings. Our results suggest that German car buyers’ WTP for improvements of the various vehicle attributes varies considerably across consumer segments and that the vehicle features have to meet some minimum requirements so that AFVs are shortlisted. Furthermore, the CV values show that decision-makers in the administration and industry should focus on the most promising consumer group of ‘AFV aficionados’ and their needs, that some vehicle attribute improvements could increase AFV demand rather cost-effectively, and that consumers would accept surcharges for some vehicle attributes at a level, which could enable their economic provision and operation (e.g. fast-charging infrastructure), while others might need governmental subsidies to substitute the insufficient consumer WTP (e.g. battery capacity).

Keywords: Discrete choice, Stated preferences, Latent class model, Alternative fuel vehicles, Germany, Electric mobility, Willingness-to-pay, Contingent variation

JEL Classification: C25, D12, M38, Q58, R48

Suggested Citation

Hackbarth, André and Madlener, Reinhard, Willingness-to-Pay for Alternative Fuel Vehicle Characteristics: A Stated Choice Study for Germany (December 2013). FCN Working Paper No. 20/2013. Available at SSRN: https://ssrn.com/abstract=2434523 or http://dx.doi.org/10.2139/ssrn.2434523

André Hackbarth (Contact Author)

RWTH Aachen University - Institute for Future Energy Consumer Needs and Behavior (FCN) ( email )

Mathieustrasse 6
Aachen, 52074
Germany

Reinhard Madlener

RWTH Aachen University ( email )

School of Business and Economics / E.ON ERC
Mathieustraße 10
Aachen, 52074
Germany
+49 241 80 49 820 (Phone)
+49 241 80 49 829 (Fax)

HOME PAGE: http://www.eonerc.rwth-aachen.de/fcn

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