Vehicle choice and use under alternative policy scenarios: What needs to be done to promote electric vehicle uptake and usage

Abstract

The aim of this study is to evaluate the determinants affecting two interrelated discrete and continuous decisions that households typically make when purchasing a new vehicle, consisting of vehicle type choice and their usage. To this end, we develop a double hurdle model that explicitly accounts for mixed nature of the choices under investigation. The proposed methodological approach is applied to a discrete choice experiment primarily designed to elicit New South Wales (Australia) residents’ preferences for alternative fuelled vehicles. Evidence from the empirical analysis suggests that respondents are more inclined to acquire fuel efficient automobiles relative to passenger vehicles powered by petrol, with battery electric cars being the most preferable purchase option. Nevertheless, the model shows that respondents still prefer driving conventional vehicles longer, with petrol automobiles being the fuel type car associated with the highest kilometres driven. Finally, given the model parameter estimates, this study undertakes a simulation exercise to explore how the New South Wales automobile market will evolve under different policy settings. The modelling predictions suggest that lowering the purchase price of plug-in hybrid-electric and battery electric vehicles below that of all other vehicle fuel types will give rise to more electric vehicles on roads compared to a faster charging time of home stations.