Demand for environmentally friendly vehicles: A review and new evidence

ABSTRACT

Although the need for more environmentally friendly vehicles was recognized some decades ago, this new market has not yet established itself. Consumer behavior needs to be studied to ascertain when people will decide to purchase hybrid or electric vehicles rather than conventional ones. An in-depth review of the state-of-the-art has identified existing deficiencies and these are addressed in this paper, proposing a new approach that is applied to the case of Santander in Spain. Emphasis is placed on the role of citizens in researching the local market and their requirements with respect to such vehicles; our model assumes variability in user preferences, an utmost requirement as concluded from the literature review. Results suggest that the highest demand for cleaner vehicles would be achieved in two ways: firstly, by penalizing conventional vehicles in terms of costs/km; secondly, by providing incentives directed at lowering the purchasing price of hybrid and electric vehicles. Finally, as demand becomes more elastic, the preferred strategy should initially focus on hybrid vehicles.

KEYWORDS:

• Electric vehicles
• heterogeneity
• mixed logit
• stated preference

7. Contributions/highlights

•	Focus on the local framework through a debate among consumers in focus group sessions.
•	Using a mixed logit model, heterogeneity is addressed in various forms.
•	Insights are provided into the dilemma of ‘negative versus positive incentives’.
•	Clear policy implications are drawn.

Acknowledgments

The authors would like to thank the Institute in Complex Engineering Systems (ICM: P-05-004-F; CONICYT: FBO16), the Centre for Sustainable Urban Development, CEDEUS (Conicyt/Fondap/15110020) and the Bus Rapid Transit Centre of Excellence funded by VREF (www.brt.cl), for their support.

Additional information

Funding

Centre for Sustainable Urban Development, CEDEUS ID: Conicyt/Fondap/15110020 Institute in Complex Engineering Systems ID: ICM: P-05-004-F; CONICYT: FBO16.