New version page

Incentives and Consumer Adoption of Hybrid Vehicle Technology

Upgrade to remove ads

This preview shows page 1-2-3-19-20-39-40-41 out of 41 pages.

Save
View Full Document
Premium Document
Do you want full access? Go Premium and unlock all 41 pages.
Access to all documents
Download any document
Ad free experience
Premium Document
Do you want full access? Go Premium and unlock all 41 pages.
Access to all documents
Download any document
Ad free experience
Premium Document
Do you want full access? Go Premium and unlock all 41 pages.
Access to all documents
Download any document
Ad free experience
Premium Document
Do you want full access? Go Premium and unlock all 41 pages.
Access to all documents
Download any document
Ad free experience
Premium Document
Do you want full access? Go Premium and unlock all 41 pages.
Access to all documents
Download any document
Ad free experience
Premium Document
Do you want full access? Go Premium and unlock all 41 pages.
Access to all documents
Download any document
Ad free experience
Premium Document
Do you want full access? Go Premium and unlock all 41 pages.
Access to all documents
Download any document
Ad free experience
Premium Document
Do you want full access? Go Premium and unlock all 41 pages.
Access to all documents
Download any document
Ad free experience

Upgrade to remove ads
Unformatted text preview:

Gallagher and Muehlegger - DRAFT.pdfTables_jan17.pdfTables_jan17.pdfTables_jan17.pdfTables_jan17.pdfTables_jan17.pdfTables_jan17.pdfTables_jan17.pdfTable4.pdfTable 4 - Tax SalienceTables_jan17.pdfFig1.pdfFig2.pdfTable1.pdfTable 1 - State IncentivesTable2.pdfTable 2 - Summary StatisticsTable3.pdfTable 3 - IncentivesTable4.pdfTable 4 - Tax SalienceTable5.pdfTable 5 - EnvironmentalismTable6.pdfTable 6 - Sensitivity TestsTable4.pdfTable 4 - Tax SalienceTable6.pdfTable 6 - Sensitivity TestsFig2.pdfFig2.pdfTable5.pdfTable 5 - EnvironmentalismTable5.pdfTable 5 - EnvironmentalismGiving Green to Get Green? Incentives and Consumer Adoption of Hybrid Vehicle Technology January 2008 Kelly Sims Gallagher and Erich Muehlegger1 Abstract Federal, state and local governments use a variety of incentives to induce consumer adoption of hybrid-electric vehicles. We study the relative efficacy of state sales tax waivers, income tax credits and non-tax incentives and find that the type of tax incentive offered is as important as the value of the tax incentive. Conditional on value, we find that sales tax waivers are associated a seven-fold greater increase in hybrid sales than income tax credits. In addition, we estimate the extent to which consumer adoption of hybrid-electric vehicles (HEV) in the United States from 2000-2006 can be attributed to government incentives, changing gasoline prices, or consumer preferences for environmental quality or energy security. After controlling for model specific state and time trends, we find that rising gasoline prices are associated with higher hybrid sales, although the effect operates entirely through sales of the hybrid models with the highest fuel economy. In total, we find that tax incentives, rising gasoline prices and social preferences are associated with 6, 27 and 36 percent of high economy hybrid sales from 2000-2006. 1 Both authors are from the John F. Kennedy School of Government, Harvard University, Cambridge, MA. Gallagher directs the Energy Technology Innovation Policy research group and is Adjunct Lecturer of Public Policy and Muehlegger is an Assistant Professor of Public Policy. Our research benefited from conversations with Robert Stavins, Richard Zeckhauser, Meghan Busse, Tie Gao and seminar participants at the UC Berkeley Energy Institute, Yale Environmental Economics Conference and the Kennedy School of Government. Funding was provided by the U.S. Environmental Protection Agency, William and Flora Hewlett Foundation, the Energy Foundation and the Kennedy School’s Institute of Politics. Excellent research assistance was provided by Fanny Chen and Jaclyn Marks. We thank the Sierra Club for providing data on their membership. 1Introduction Hybrid-electric vehicles contain a unique power train that combines a gasoline engine with an electric motor and battery system. A hybrid-electric engine consumes less gasoline and emits less pollution per mile than a traditional internal combustion engine with similar performance. As such, hybrid-electric vehicles can have substantial public benefits for both the environment and for energy security. Accelerated domestic adoption of hybrid-vehicle technology plays an important role in the debate over strengthening or reforming Corporate Average Fuel Economy (CAFE) standards as well as design of new climate change policies. Beginning in 2000, federal, state and local governments implemented a broad set of incentives to stimulate consumer adoption of hybrid technology.2 States offer a variety of incentives including income tax credits and deductions, waivers of state sales tax, single-passenger access to high-occupancy vehicle (HOV) lanes, and waivers of fees for registration, emissions testing, excise and parking. Many incentives are generous, worth several thousand dollars and reduce the incremental cost associated with purchasing a hybrid vehicle. Subsequently, domestic sales of hybrid vehicles increased substantially. In 2000, the Honda Insight and Toyota Prius were the only hybrid vehicles available and collectively sold fewer than 3,000 units. Over the next six years manufacturers introduced nine other models. Honda launched hybrid versions of the Civic and Accord in 2002 and 2004, and Ford introduced a hybrid version of the Escape 2 The federal government has also supported the research, development, and demonstration of hybrid vehicles for many years. Although this paper does not investigate the impact of government investments into hybrid-vehicle technology at the R&D stage, the federal government has devoted substantial resources to the development of hybrids through the Partnership for a New Generation of Vehicles (PNGV) and its successor, FreedomCAR, as well as through specific hybrid-electric vehicle R&D programs. In fiscal year 2008, for example, the President’s budget request to Congress for HEVs was $80 million. 2small SUV. In 2005, the Lexus RX400h, Toyota Highlander, and Mercury Mariner were launched, and in 2006, the Lexus GS450H, Saturn Vue, and Toyota Camry hybrid debuted. Sales have risen substantially - by 2006, more than 250,000 hybrid vehicles were sold. The observed pattern of sales is consistent with a model of technology adoption in which consumers initially have imperfect information about hybrid vehicle technology. At the beginning of the period, sales are low - consumers lack information about the quality, performance and durability of new hybrid vehicle technology. Only individuals with a strong preference for hybrid vehicle technology or a high estimate of the quality of hybrid vehicles choose initially adopt. Gradually, other consumers either observe the quality of new technology or infer the quality of new technology by assuming that the early adopters have made good choices. Consumer adoption can be further delayed if automakers learn from consumers experience and improve the quality of successive model-years or if the provision of hybrid-oriented services (e.g. service stations familiar with hybrid technology) is a function of the installed base of vehicles. In this paper, we study the extent to which the recent consumer adoption of hybrid vehicle technology can be attributed to government incentives, changes in gasoline prices, and social preferences for environmental quality or energy security. We estimate the relative impacts of three factors contributing to consumer adoption of hybrid automobiles: (1) incentives


Download Incentives and Consumer Adoption of Hybrid Vehicle Technology
Our administrator received your request to download this document. We will send you the file to your email shortly.
Loading Unlocking...
Login

Join to view Incentives and Consumer Adoption of Hybrid Vehicle Technology and access 3M+ class-specific study document.

or
We will never post anything without your permission.
Don't have an account?
Sign Up

Join to view Incentives and Consumer Adoption of Hybrid Vehicle Technology 2 2 and access 3M+ class-specific study document.

or

By creating an account you agree to our Privacy Policy and Terms Of Use

Already a member?