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Willingness to Pay for Electric Vehicles and their Attributes

April 8, 2011 Comments off

Willingness to Pay for Electric Vehicles and their Attributes
Source: Resource and Energy Economics (George R. Parsons)
This paper presents a stated preference study of electric vehicle choice using data from a national survey. In our choice experiment, 3029 respondents chose between their preferred gasoline vehicle and two electric versions of their preferred gasoline vehicle. Using the response data we valued five electric vehicle attributes: driving range, charging time, fuel cost saving, pollution reduction, and performance. Driving range, fuel savings, and charging time led in importance to respondents. Individuals were willing to pay (wtp) from $35 to $75 for a mile of added driving range, with incremental wtp per mile decreasing at higher distances. They were willing to pay from $425 to $3250 per hour reduction in charging time (for a 50 mile charge). Respondents capitalized about 5 years of fuel saving into the purchase price of an electric vehicle. We simulated our model over a range of electric vehicle configurations and found that people with the highest values for electric vehicles were willing to pay a premium above their wtp for a gasoline vehicle that ranged from $6,000 to $16,000 depending on the attributes of the vehicle. At the same time, our results suggest that battery cost must drop significantly before electric vehicles will find a mass market without subsidy.

+ Full Paper (PDF)

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