What Does an Electric Vehicle Replace?

66 Pages Posted: 22 Apr 2019 Last revised: 2 Jun 2022

See all articles by Jianwei Xing

Jianwei Xing

Peking University - National School of Development

Benjamin Leard

Resources for the Future

Shanjun Li

Cornell University - School of Applied Economics and Management

Multiple version iconThere are 2 versions of this paper

Date Written: April 2019

Abstract

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. This implies that ignoring the non-random replacement of gasoline vehicles would result in overestimating emissions benefits of EVs by 39 percent. 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.

Suggested Citation

Xing, Jianwei and Leard, Benjamin and Li, Shanjun, What Does an Electric Vehicle Replace? (April 2019). NBER Working Paper No. w25771, Available at SSRN: https://ssrn.com/abstract=3375824

Jianwei Xing (Contact Author)

Peking University - National School of Development ( email )

Beijing, 100871
China

Benjamin Leard

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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