Future Paths of Electric Vehicle Adoption in the United States: Predictable Determinants, Obstacles, and Opportunities
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This paper identifies and quantifies major determinants of future electric vehicle (EV) demand in order to inform widely-held aspirations for market growth. Our model compares three channels that will affect EV market share in the United States from 2020–2035: intrinsic (no-subsidy) EV demand growth, net-of-subsidy EV cost declines (e.g. batteries), and government subsidies. Geographic variation in preferences for sedans and light trucks highlights the importance of viable EV alternatives to conventional light trucks; belief in climate change is highly correlated with EV adoption patterns; and the first $500 billion in cumulative nationwide EV subsidies is associated a 7 to 10 percent increase in EV market share in 2035, an effect that diminishes as subsidies increase. The rate of intrinsic demand growth dwarfs the impact of demand-side subsidies and battery cost declines, highlighting the importance of non-monetary factors (e.g. charging infrastructure, product quality and/or cultural acceptance) on EV demand.
The authors declare that they have no relevant or material financial interests that relate to the research described in this paper. We thank Joshua Linn and Resources for the Future for providing access to data and computing. We gratefully thank Reid Taylor for excellent research assistance, and the editors of this volume for their helpful comments and suggestions on early versions of the paper. All errors are our own. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.