How uncertain is the future of electric vehicle market: Results from Monte Carlo simulations using a nested logit model

ABSTRACT

Plug-in electric vehicles (PEVs) are widely regarded as an important component of the technology portfolio designed to accomplish policy goals in sustainability and energy security. However, the market acceptance of PEVs in the future remains largely uncertain from today's perspective. By integrating a consumer choice model based on nested multinomial logit and Monte Carlo simulation, this study analyzes the uncertainty of PEV market penetration using Monte Carlo simulation. Results suggest that the future market for PEVs is highly uncertain and there is a substantial risk of low penetration in the early and midterm market. Top factors contributing to market share variability are price sensitivities, energy cost, range limitation, and charging availability. The results also illustrate the potential effect of public policies in promoting PEVs through investment in battery technology and infrastructure deployment. Continued improvement of battery technologies and deployment of charging infrastructure alone do not necessarily reduce the spread of market share distributions, but may shift distributions toward right, i.e., increase the probability of having great market success.

KEYWORDS:

• Charging infrastructure
• consumer choice
• electric vehicles
• energy transition
• market penetration
• Monte Carlo simulation

Acknowledgments

The authors also want to thank one anonymous reviewer, who has helped greatly improve the quality of the paper. They remain solely responsible for all contents and viewpoints in the paper.

Funding

This research is sponsored by the U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Vehicle Technologies Office. This manuscript has been authored by UT-Battelle, LLC under Contract No. DE-AC05-00OR22725 with the U.S. Department of Energy. The U.S. Government retains and the publisher, by accepting the article for publication, acknowledges that the U.S. Government retains a nonexclusive, paid-up, irrevocable, worldwide license to publish or reproduce the published form of this manuscript, or allow others to do so, for U.S. Government purposes. The Department of Energy will provide public access to these results of federally sponsored research in accordance with the DOE Public Access Plan (http://energy.gov/downloads/doe-public-access-plan).

Notes

¹ Note that hybrid electric vehicles are not really electric vehicles, as they are powered by liquid fuels and cannot plug into off-board sources of electricity. The battery onboard is charged by regenerative braking and the internal combustion engine. The energy from the battery can provide extra power to the vehicle during acceleration. Thus, the name of “hybrid electric vehicle” does not accurately reflect the technology nature of the vehicle. It is used in this paper to be consistent with common usage.

² Ultra-fast charging that can fully charge an EV within minutes is not considered in this study.