Quantifying the benefits of the introduction of the hybrid electric vehicle

This study models demand and supply in the market for new automobiles to estimate the economic benefits generated by the introduction of the hybrid electric vehicle. We estimate our model using all new vehicle registrations in California along with detailed demographic data. Our counterfactual analysis reveals that the addition of hybrids to the consumer choice set generates gains in social surplus that peak at roughly $1.2 billion annually in 2007, but environmental benefits make up 0.2% of the net benefits. We find that 31% of the social surplus in 2008 can be attributed directly to the hybrid vehicles independently from gains in fuel efficiency, with the remaining 69% attributed to the gains in fuel efficiency. We further show that all income groups benefit from the introduction of the hybrids, with the top 50% of the income distribution receiving the most.(c) 2022 Elsevier B.V. All rights reserved.

Automated summary

This study estimates the economic benefits generated by the introduction of hybrid electric vehicles in the market for new automobiles. Using data from all new vehicle registrations in California and detailed demographic data, the model reveals that the addition of hybrids to the consumer choice set generates gains in social surplus, peaking at approximately $1.2 billion annually in 2007. However, environmental benefits constitute only 0.2% of the net benefits. The study further shows that 31% of the social surplus in 2008 can be directly attributed to hybrid vehicles, while the remaining 69% is attributed to gains in fuel efficiency. Additionally, all income groups benefit from the introduction of hybrids, with the top 50% of the income distribution receiving the most.