Adoption of Electric Vehicles in Car Sharing Market

34 Pages Posted: 13 Jul 2018 Last revised: 1 Mar 2019

See all articles by Hossein Abouee Mehrizi

Hossein Abouee Mehrizi

University of Waterloo

Opher Baron

University of Toronto - Operations Management

O. Berman

University of Toronto - Rotman School of Management

David Chen

the Chinese University of Hong Kong, Shenzhen

Date Written: June 1, 2018

Abstract

Motivated by the news that Car2go replaced all of its electric vehicle fleet with gasoline-powered cars starting from 1 May 2016, we examine whether it is optimal to use electric vehicles (EVs) in the car sharing market and investigate the environmental impact of pulling the EVs from the market. We develop a model consisting of a profit-maximizing car sharing company (CSC) and a population of utility-maximizing customers. The CSC sets the number of EVs, the number of fuel vehicles (FVs), and the rental price jointly to maximize its profit. Customers decide whether to use EVs, FVs, or public transportation to complete their trips considering the rental price. We show that it is optimal to use EVs only if the charging speed, the number of charging stations, and the range of EVs are high enough. Among these three conditions, the recharging speed is the most important and the number of charging stations is more important than the range of EVs. We also find that including EVs in the car sharing market may lead to a higher total emission (due to a lower rental price that results in a higher usage rate). Moreover, we consider the problem with the objective of maximizing social welfare and find that when considering the environmental impact, the government should tax the CSC to induce a higher rental price and when ignoring this impact, the government should subsidize the CSC to reduce this price. We demonstrate our results with the case study of Car2go in San Diego and find that Car2go replaced EVs with FVs likely due to the slow recharging speed.

Keywords: electric vehicles, car sharing, sustainable operations, queueing networks

Suggested Citation

Abouee Mehrizi, Hossein and Baron, Opher and Berman, O. and Chen, David, Adoption of Electric Vehicles in Car Sharing Market (June 1, 2018). Available at SSRN: https://ssrn.com/abstract=3191793 or http://dx.doi.org/10.2139/ssrn.3191793

Hossein Abouee Mehrizi

University of Waterloo ( email )

Waterloo, Ontario N2L 3G1
Canada

Opher Baron

University of Toronto - Operations Management ( email )

105 St. George st
Toronto, ON M5S 3E6
Canada

O. Berman

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

David Chen (Contact Author)

the Chinese University of Hong Kong, Shenzhen

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