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Cited by 21Electric Vehicles and InfrastructureEnergy, Environment, and Transportation PoliciesClimate Change Policy and Economics

The Economics of Electric Vehicles

Open access
Rapson, David, Muehlegger, Erich·2021·National Bureau of Economic Research
DOI 10.3386/w29093
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Abstract

We examine the private and public economics of electric vehicles (EVs) and discuss when market forces will produce the optimal path of EV adoption.Privately, consumer cost savings from EVs vary.Some experience net benefits from choosing gasoline cars, even after accounting for EV subsidies.Publicly, we survey the literature documenting the external costs and benefits of EVs and highlight several themes for optimal policy design including, 1) promoting regional variation in EV policies that align private incentives with social benefits, 2) pursuing a time-path of policies that reflect changing marginal benefits, and 3) rationalizing electricity and gasoline prices to reflect their social marginal cost.On the extensive margin, purchase incentives should ramp-down as learning-by-doing and network externalities (to the extent that they exist) diminish; on the intensive margin, gasoline should become relatively more expensive over time than electricity (per mile traveled) to reflect cleaner marginal emissions from electricity generation.

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  • The shift to electric mobility promises long-term economic benefits such as a reduced dependency on imported oil and improved public health.

    “The shift also promises long-term economic benefits such as a reduced dependency on imported oil and improved public health [60].”

    From Electric Vehicle Adoption: A Comprehensive Systematic Review of Technological, Environmental, Organizational and Policy Impacts (2024) · cites this paper as [60]

    Section 3.1.4 (Energy Security; page unavailable) says widespread EV adoption would reduce reliance on crude oil and cause the U.S. to import less. Section 3.1.2 (Local emissions; page unavailable) links vehicle-related pollution to human health, but says EVs can increase net local pollution where coal supplies electricity. The claim therefore omits an important condition on the promised public-health benefit. (LLM, conf=0.85)

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Cites

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Research works printed but not linked: 13

  1. Busse, Meghan R., Christopher R. Knittel, and Florian Zettelmeyer, "Are Consumers Myopic? Evidence from New and Used Car Purchases," American Economic Review, 2013, 23 103 (1), 220-256.
  2. California Air Resources Board, "Low Carbon Fuel Standard Quarterly Summary of Data," Technical Report 2020.
  3. Chang, Tom, Joshua Graff Zivin, Tal Gross, and Matthew Neidell, "Particulate Pollution and the Productivity of Pear Packers," American Economic Journal: Economic Policy, 2016, 8 (3), 141-169.
  4. Davis, Lucas, "How Much Are Electric Vehicles Driven?," Applied Economics Letters, 2019, 6 (1), 1-6.
  5. Gallagher, Kelly Sims and Erich Muehlegger, "Giving green to get green? Incentives and consumer adoption of hybrid vehicle technology," Journal of Environmental Economics and management, 2011, 61 (1), 1-15.
  6. Hardman, Scott, Alan Jenn, Gil Tal, Jonn Axsen, George Beard, Nicolo Daina, Erik Figenbaum, Niklas Jakobsson, Patrick Jochem, Neale Kinnear et al., "A review of consumer preferences of and interactions with electric vehicle charging infrastructure," Transportation Research Part D: Transport and Environment, 2018, 62, 508-523.
  7. Holland, Stephen, Erin Mansur, and Andrew Yates. "The electric vehicle transition and the economics of banning gasoline vehicles." American Economic Journal: Economic Policy, 2021, 13(3), 316-44.
  8. Holland, Stephen, Erin Mansur, Nicholas Muller, and Andrew Yates, "Are There Environmental Benefits from Driving Electric Vehicles? The Importance of Local Factors," American Economic Review, 2016, 106 (12), 3700-3729.
  9. Holland, Stephen P, Erin T Mansur, Nicholas Z Muller, and Andrew J Yates, "Decompositions and policy consequences of an extraordinary decline in air pollution from electricity generation," American Economic Journal: Economic Policy, 2020, 12 (4), 244-74.
  10. Jacobsen, Mark R, "Fuel economy and safety: The influences of vehicle class and driver behavior," American Economic Journal: Applied Economics, 2013, 5 (3), 1-26.
  11. Li, Shanjun, Lang Tong, Jianwei Xing, and Yiyi Zhou, "The market for electric vehicles: indirect network effects and policy design," Journal of the Association of Environmental and Resource Economists, 2017, 4 (1), 89-133.
  12. Metcalf, Gilbert E., "The Economics of Energy Security," Annual Review of Resource Economics, 2014, pp. 155-174.
  13. Tamayao, Mili-Ann, Jeremy Michalek, Chris Hendrickson, and Ines Azevedo, "Regional Variability and Uncertainty of Electric Vehicle Life Cycle CO2 Emissions Across the United States," Environmental Science & Technology, 2015, 49, 8844-8855.

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Authors
Rapson, D., & Muehlegger, E.
Affiliations
National Bureau of Economic Research (US)
ORCID
Rapson, David
Venue
National Bureau of Economic Research
Publisher
National Bureau of Economic Research
Published
2021-07
DOI
10.3386/w29093
OpenAlex
W3187662876
Cited by
20
References
27
Citations by year
2026: 3 · 2025: 6 · 2024: 5 · 2023: 1 · 2022: 4 · 2021: 1
Type
report
Language
en
Open access
Locations
  • National Bureau of Economic Research (publishedVersion)
  • RePEc: Research Papers in Economics (submittedVersion)
Topics
  • Physical Sciences › Engineering › Electrical and Electronic Engineering › Electric Vehicles and Infrastructure
  • Physical Sciences › Energy › Renewable Energy, Sustainability and the Environment › Energy, Environment, and Transportation Policies
  • Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Climate Change Policy and Economics
Keywords
electric vehicles, electric vehicle adoption, EV subsidies, externalities, optimal policy design, electricity pricing, gasoline pricing, marginal social cost, hands-on learning, network effects

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