Transition Challenges for Alternative Fuel Vehicle and Transportation Systems

Environment and Planning B: Planning and Design, Vol. 35, No. 6, pp. 1070-1097, 2008

MIT Sloan Research Paper No. 4587-06

48 Pages Posted: 16 Feb 2006 Last revised: 9 Jul 2012

See all articles by Jeroen Struben

Jeroen Struben

McGill University - Desautels Faculty of Management; Massachusetts Institute of Technology (MIT) - Sloan School of Management

John Sterman

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Date Written: May 1, 2007

Abstract

Automakers are now developing alternatives to internal combustion engines (ICE), including hydrogen fuel cells and ICE-electric hybrids. Adoption dynamics for alternative vehicles are complex due to the size and importance of the auto industry and vehicle installed base. Diffusion of alternative vehicles is both enabled and constrained by powerful positive feedbacks arising from scale and scope economies, R&D, learning by doing, driver experience, word of mouth, and complementary resources such as fueling infrastructure. We describe a dynamic model of the diffusion of and competition among alternative fuel vehicles, including coevolution of the fleet, technology, consumer behavior, and complementary resources. Here we focus on the generation of consumer awareness of alternatives through feedback from consumers' experience, word of mouth and marketing, with a reduced form treatment of network effects and other positive feedbacks (which we treat in other papers). We demonstrate the existence of a critical threshold for sustained adoption of alternative technologies, and show how the threshold depends on economic and behavioral parameters. We show that word of mouth from those not driving an alternative vehicle is important in stimulating diffusion. Expanding the model boundary to include learning, technological spillovers and spatial coevolution of fueling infrastructure adds additional feedbacks that condition the diffusion of alternative vehicles. Results show scenarios for successful diffusion of alternative vehicles, but also suggest that marketing programs and subsidies for alternatives must remain in place for long periods for diffusion to become self-sustaining.

Keywords: Alternative fuels, diffusion, transitions, industry evolution, industry dynamics, system dynamics, transportation

Suggested Citation

Struben, Jeroen and Sterman, John, Transition Challenges for Alternative Fuel Vehicle and Transportation Systems (May 1, 2007). Environment and Planning B: Planning and Design, Vol. 35, No. 6, pp. 1070-1097, 2008; MIT Sloan Research Paper No. 4587-06. Available at SSRN: https://ssrn.com/abstract=881800 or http://dx.doi.org/10.2139/ssrn.881800

Jeroen Struben (Contact Author)

McGill University - Desautels Faculty of Management ( email )

1001 Sherbrooke St. West
Montreal, QC H3A 1G5
Canada

HOME PAGE: http://people.mcgill.ca/jeroen.struben/

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

Cambridge, MA 02142
United States

HOME PAGE: http://web.mit.edu/jjrs/www/

John Sterman

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

E62-436
Cambridge, MA 02139
United States
617-253-1951 (Phone)

HOME PAGE: http://jsterman.scripts.mit.edu/

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