Subsidizing Mass Adoption of Electric Vehicles: Quasi-Experimental Evidence from California

32 Pages Posted: 17 Dec 2018

See all articles by Erich Muehlegger

Erich Muehlegger

University of California, Davis - Department of Economics

David Rapson

University of California, Davis

Date Written: December 2018

Abstract

Little is known about demand for EVs in the mass market. In this paper, we exploit a natural experiment that provides variation in large EV subsidies targeted at low- and middle-income households in California. Using transaction-level data, we estimate two important policy parameters using triple differences: the subsidy elasticity of demand for EVs and the rate of subsidy pass-through. Estimates show that demand for EVs amongst low- and middle-income households is price-elastic and pass-through is complete. We use these estimates to calculate the expected subsidy bill required for California to reach its goal of 1.5 million EVs by 2025.

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Suggested Citation

Muehlegger, Erich and Rapson, David, Subsidizing Mass Adoption of Electric Vehicles: Quasi-Experimental Evidence from California (December 2018). NBER Working Paper No. w25359. Available at SSRN: https://ssrn.com/abstract=3302477

Erich Muehlegger (Contact Author)

University of California, Davis - Department of Economics ( email )

One Shields Drive
Davis, CA 95616-8578
United States

David Rapson

University of California, Davis ( email )

One Shields Avenue
Apt 153
Davis, CA 95616
United States

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