CMU, Ford, Drexel study suggests Chinese more receptive to adopting BEVs than Americans, regardless of subsidies
Results from a study by a team from Carnegie Mellon University, Ford and Drexel University suggest that Chinese consumers are more receptive to adopting battery-electric vehicles (BEVs) than their American counterparts, regardless of subsidies. The study is published in the journal Transportation Research Part A.
The team modeled consumer preferences and willingness to pay (WTP) for conventional, hybrid electric, plug-in hybrid electric (PHEV), and battery electric (BEV) vehicle technologies in China and the US using data from choice-based conjoint surveys fielded in 2012–2013 in both countries. They found that find that gasoline vehicles continue to be most attractive to consumers both countries, and that American respondents have significantly lower relative willingness-to-pay for BEV technology than Chinese respondents. Although plug-in subsidies in the US and Chinese subsidies both favor vehicles with larger battery packs, differences in consumer preferences lead to different outcomes, they found.
Among the findings were:
The expected average US consumer WTP (willingness to pay) for BEV technology is $10,000–$20,000 lower than equivalent conventional technology (depending on range, fast charging availability, and model specification) ceteris paribus (given the same body, brand, performance, and operating cost). In contrast, average Chinese consumer WTP for BEV technology is within $10,000 of equivalent conventional vehicles and in some cases (e.g. with sufficient range and fast charging capability) is larger.
In China, BEVs and mid-range PHEVs both compete comparably with their respective gasoline counterparts, while in the US, mid-range PHEVs compete more strongly than BEVs against their respective gasoline counterparts.
Low-range PHEVs compete most strongly against their gasoline counterparts in both countries.
These patterns hold with subsidies, without subsidies, and even if the subsidies are doubled.
The team suggested several characteristics of the Chinese car market that might support BEV adoption:
Approximately two- thirds of Chinese car buyers are first-time buyers who typically have less experience with both gasoline and plug-in vehicle technology and who may not have established expectations for the ability to take long trips.
Many Chinese consumers have experience with electric bicycles; plugging in a vehicle and driving short distances is well-established.
China has a major intercity train system, providing inexpensive and reliable travel between cities. This alternative allows consumers to mode-shift to trains during longer trips—an alternative less accessible in the US.
While our consumer preference estimates point to greater potential for mainstream adoption of BEVs in China than the US, the electricity grid in China is more emissions-intensive than that of the U.S., and a shift to BEVs might result in increased air pollution and/or GHG emissions, depending on the emissions intensity of the vehicles displaced, marginal grid emissions factors in the regions where EVs are adopted, and driving patterns. In contrast, today’s hybrids, which reduce oil consumption and emissions, have higher near term adoption potential in both countries and may therefore offer more total emissions and oil displacement benefits in the near term, given today’s electricity grid, technology attributes, and consumer preferences.
Given that China is now the largest consumer and producer of automobiles worldwide, the trends in China’s market and the strategies of automakers and government in China have the potential to change the economic incentives for emerging technology development worldwide. Even though EV adoption in China might increase local emissions, global emissions from automobiles could nevertheless plausibly decrease as a result of increased development and adoption of EV technology worldwide.—Helveston et al.
Methodology. The limited history of plug-in vehicle sales in the US and China, combined with differing regional regulations, supply limitations, incentives, mandates, and non-representative early-adopter preferences result in historical sales data offering limited information about the potential mainstream adoption of electrified vehicles, the authors said.
As an alternative approach, the researchers used choice-based conjoint (CBC) analysis to measure consumer preferences. In CBC analysis, participants in a survey experiment are asked to compare several product profiles (each defined by a set of attributes, such as price, brand, type, etc.) and choose the product they are most likely to buy.
Discrete choice models infer the relative importance of each attribute in determining consumer choice. The key disadvantage of controlled conjoint experiments is the potential difference between a consumer’s choice behavior in the hypothetical survey conditions versus choice behavior in the market when real money is being spent in the point-of-purchase context. The authors attempted to mitigate these sources of error by targeting new car buyers and presenting choice questions in a way that mimics real purchase decisions (choose one among a set of concrete alternatives).
This work was funded in part by a grant from the National Science Foundation and a grant from Ford Motor Company.
John Paul Helveston, Yimin Liu, Elea McDonnell Feit, Erica Fuchs, Erica Klampfl, Jeremy J. Michalek (2015) “Will subsidies drive electric vehicle adoption? Measuring consumer preferences in the US and China” Transportation Research Part A: Policy and Practice Volume 73, Pages 96–112 doi: 10.1016/j.tra.2015.01.002