What Does an Electric Vehicle Replace?

54 Pages Posted: 2 Mar 2019

See all articles by Jianwei Xing

Jianwei Xing

Peking University

Benjamin Leard

Resources for the Future

Shanjun Li

Cornell University - School of Applied Economics and Management

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Date Written: February 12, 2019


The emissions reductions from the adoption of a new transportation technology depend on the emissions from the new technology relative to those from the displaced technology. We evaluate the emissions reductions from electric vehicles (EVs) by identifying which vehicles would have been purchased had EVs not been available. We do so by estimating a random coefficients discrete choice model of new vehicle demand and simulating counterfactual sales with EVs no longer subsidized or removed from the new vehicle market. Our results suggest that vehicles that EVs replace are relatively fuel-efficient: EVs replace gasoline vehicles with an average fuel economy of 4.2 mpg above the fleet-wide average and 12 percent of them replace hybrid vehicles. Federal income tax credits resulted in a 29 percent increase in EV sales, but 70 percent of the credits were obtained by households that would have bought an EV without the credits. By simulating alternative subsidy designs, we find that a subsidy designed to provide greater incentives to low-income households would have been more cost effective and less regressive.

Keywords: electric vehicles, substitution, demand estimation, second choice data

JEL Classification: L91, Q48, Q51

Suggested Citation

Xing, Jianwei and Leard, Benjamin and Li, Shanjun, What Does an Electric Vehicle Replace? (February 12, 2019). Available at SSRN: https://ssrn.com/abstract=3333188 or http://dx.doi.org/10.2139/ssrn.3333188

Jianwei Xing

Peking University ( email )

No. 38 Xueyuan Road
Haidian District
Beijing, Beijing 100871

Benjamin Leard (Contact Author)

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States

Shanjun Li

Cornell University - School of Applied Economics and Management ( email )

248 Warren Hall
Ithaca, NY 14853
United States

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