Subsidizing Mass Adoption of Electric Vehicles: Quasi-Experimental Evidence from California

Erich Muehlegger, David S. Rapson

NBER Working Paper No. 25359
Issued in December 2018
NBER Program(s):Environment and Energy Economics, Public Economics

Little is known about demand for EVs in the mass market. In this paper, we exploit a natural experiment that provides variation in large EV subsidies targeted at low- and middle-income households in California. Using transaction-level data, we estimate two important policy parameters using triple differences: the subsidy elasticity of demand for EVs and the rate of subsidy pass-through. Estimates show that demand for EVs amongst low- and middle-income households is price-elastic and pass-through is complete. We use these estimates to calculate the expected subsidy bill required for California to reach its goal of 1.5 million EVs by 2025.

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Acknowledgments

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Document Object Identifier (DOI): 10.3386/w25359