Project Summary
Governor Brown issued Executive Order B-48-18 that calls for 5 million zero-emission vehicles on California roads by 2030. If electric vehicles (EVs) are to become mainstream, then they will need to be purchased by households outside of the high-income bracket, which comprise the vast majority of the vehicle-owning population. To this end, the state has implemented new incentive programs that target the middle-class and those living in disadvantaged communities. However, little is known about the effectiveness of the programs, especially how responsive middle-class households in California are to EV incentives. This project will estimate the responsiveness of EV demand to EV subsidies among middle-class households in California using the eligibility rules for the Enhanced Fleet Modernization Program (EFMP) – PlusUp pilot program offered in the South Coast Air Quality Management District and the San Joaquin Valley Air Pollution Control District. Specifically, we will address the following questions:
▪ What is the elasticity of demand for EVs among middle-class households?
▪ How much of each EV rebate dollar is passed through to consumers (versus kept by suppliers or dealers)?
▪ To what extent do EV rebates targeted at traditionally disadvantaged communities stimulate adoption of EV technology? The rules for EFMP eligibility allow us to compare the purchase decisions and negotiated prices for buyers with similar demographic characteristics who only differ by virtue of the fact that one lives in a location that is classified as a Disadvantaged Community (“DAC”) and the other does not. Simply put, the EFMP eligibility rules provide a natural experiment that will allow us to retrieve credible causal estimates of what happens when subside levels change. A byproduct of our research will be estimates of the rate of rebate pass through (i.e., the degree to which the purchase price of a vehicle changes for each dollar of incentive offered to a consumer). Our framework will allow us to estimate the fraction of a tax incentive captured by consumers versus upstream market participants (e.g. original equipment manufacturers and dealers).
