Understanding latent demand for hybrid and plug-in electric vehicles using large-scale longitudinal survey data of US new vehicle buyers

Consumer adoption of fuel-efficient vehicles is a crucial step in improving energy efficiency of the light-duty vehicle sector. To promote adoption, policymakers have employed various demand- and supply-side policies including incentives, fuel economy standards, zero emission vehicle mandate, among others. This paper measures the changes in consumers' purchase motivations and latent demand for hybrid and plug-in electric vehicles in the wake of such programs by analyzing the past 11 years of new vehicle buyer survey data in the USA with more than 1 million respondents. The analysis reveals that electric vehicles-including hybrids, plug-in hybrids, and pure battery electric, collectively termed xEVs-had the potential to secure as much as similar to 11% of the US market in 2015, but the actual market share was only one-third of this. A narrowing of the consumer's valuation gap between buyers of non-xEVs and xEVs for purchase motivations-including fuel economy, environmental friendliness, technical innovation, and price-is responsible for the increase in the latent demand for xEVs. The term valuation gap refers to the difference between the average rating given by non-xEV and xEV buyers for a particular purchase motivation question in the survey. The closer the ratings, the smaller will be the valuation gap. Policy instruments such as sales-weighted fuel economy target show strong correlation with the consumer valuation gap. In combination with demand-side policies that make xEVs more accessible to mainstream consumers, they could be considered as viable tools if policymakers are seeking to nudge consumers toward xEVs.