Climate Insights 2020: Electric Vehicles

There are various possible reasons for the slow adoption of this technology. Since most people who might buy an EV already own a car, purchasing one is what economists call a consumer durable replacement decision. According to rational choice theory, consumers will be inclined to replace their gasoline-powered cars with EVs when the latter is expected to yield higher expected utility than the former over the course of ownership. However, recent psychological research has shown that not all consumers think this way. There are considerable psychological costs entailed by durable replacement decisions, and these psychological costs are barriers to the adoption of new technologically innovative products like EVs (for a review, e.g., see Guiltiman 2010).

Perhaps consumers have developed attachments to their current gasoline-powered cars, creating additional psychic value , referred to as the endowment effect in behavioral economics (Kahneman, Knetsch, & Thaler 1990), and the mere ownership effect in psychology (Beggan, 1992). This additional value makes consumers less likely to replace their current cars, exhibiting the behavior of loss aversion. Additionally, consumers may be uncertain of their evaluations of the expected benefits and costs of a new product like an EV. That uncertainty, to many consumers who are typically risk-averse, may decrease the attractiveness of buying an EV and cause a delay in consumer adoption of such cars.

In addition, some public reluctance to purchase EVs may be derived from functionality. For example, although the charging capacity of EV batteries has been increasing, the miles-per-charge of such vehicles remains more limited than the distance capacity of gasoline-powered vehicles. Furthermore, the United States is blanketed with gasoline stations, giving gasoline-powered vehicles significant flexibility to travel distances that are limited only by the purchasing power of their drivers. In contrast, EVs can only be recharged in locations that offer the necessary infrastructure, and recharging takes time that travelers may not always have available. The attempt by the now-defunct EV firm Better Place to locate battery-swapping stations across the country was meant to solve this problem, but the company’s plan did not come to fruition, blamed partly range anxiety—the fear that EVs cannot drive the distances that passengers require and will therefore, leave them stranded (Noel and Sovacool, 2016).

However, even people whose travel patterns do not rule out EVs may hesitate before purchasing them for a variety of other reasons, some more rational than others. For example, prospective car buyers might perceive EVs to cost more to maintain than gasoline-powered vehicles. Prospective buyers might believe that there are fewer mechanics qualified to fix all-electric cars than can fix gasoline-powered vehicles, which would impose the inconveniences of additional distance, time, and cost when maintenance is required. Buyers might think that the acceleration of EVs cannot match that of gasoline-powered vehicles. Buyers might think that EVs depreciate more quickly than do gasoline-powered vehicles.

In light of these possible hesitations, it is interesting that both US President Donald Trump and former Vice President Joe Biden have recently expressed support for government efforts to promote use of all-electric vehicles. For example, during the first presidential debate on September 29, 2020, both candidates said they favor enhanced use of electric vehicles. Mr. Biden has pledged to build 500,000 charging stations on highways, to increase the proportion of federally owned and operated vehicles that are all-electric, and to provide tax credits to incentivize consumer purchases of such vehicles (Biden, 2020). During the debate, Mr. Trump also expressed his support for EVs: “I’m OK with electric cars, too. I’m all for electric cars. I’ve given big incentives for electric cars” (Kolodny, 2020).

With electric vehicles seeming to secure bipartisan support from leaders, it is of interest to explore the openness of American consumers to purchasing all-electric vehicles and to identify the sources of consumer hesitation impeding such purchases. To that end, we conducted a national survey asking American adults about their openness to purchasing all-electric vehicles in the future and their perceptions of various attributes of such vehicles. These questions allowed us to quantify the various hesitations and to estimate the impact of each belief on likelihood of purchasing all-electric vehicles in the future.

Understanding those sources of consumer hesitation may shed light on factors currently impeding expansion of the EV market in the United States. Many factors are presumed to influence consumer purchases, such as the cost of a product; the product’s safety, reliability and effectiveness; advertising and marketing to promote the product; brand appeal packaging; and more. Building on consumer choice theory, we hypothesized that product safety concern, economic costs, product features, normative considerations, and prior exposure may predict the public’s hesitation to purchase EVs (e.g., Ewing & Sarigollu, 2000).

Furthermore, when purchasing expensive and technically complex products such as EVs, consumers are confronted with many competitive alternatives, and considering each alternative requires digesting extensive descriptions of the specifications and functionalities of the product. Gathering, processing, comparing, and integrating the large array of information about each attribute of competing alternatives involves substantial cognitive work and psychological involvement (e.g., Abramson, and Desai, 1993), which may diminish consumers’ incentives to venture into a new market. Consequently, consumers without the experience or time to thoughtfully ‘comparison shop’ may hesitate before buying EVs so as to avoid expending the effort required to gather, sift, and process the technical specifications. Alternatively, these individuals may form intentions about purchasing EVs based on a small set of considerations to minimize their effort and rather rely on heuristic shortcuts in guiding their decisions (e.g., Kahneman, 2000).

We also explored whether decisionmaking about EVs might differ between men and women. Many studies suggest that women are more risk-averse than men (Eckel, & Grossman, 2008) and invest more conservatively than men (Bajtelsmit, & Bernasek, 1996), which suggests that women may be more hesitant to adopt EVs than men. Furthermore, women place different weight than men on various product attributes when making purchasing decisions (Arslanagic, Pestek, & Kadic-Maglajlic, 2014; Blakewell, & Mitchell, 2006). We therefore explored whether men and women might differ in the weight placed on different attributes that might influence openness to purchasing EVs.

Past scholarship has explored factors that inhibit purchasing of EVs in the United States and abroad, informed by elaborate psychological theories in some cases. For example, Nayum and Klockner (2014) estimated the parameters of a mediated structural equation model pointing to the roles of awareness, social norms, personal norms, attitudes, intentions, knowledge, and more (see also Priessner, Sposato, and Hampl, 2018). Barbarossa et al. (2015) provided evidence of the impact of eco-friendly self-identity, concern about the environmental consequences of consumption, and moral obligation (see also Thogersen, and Ebsen, 2019). Schmalfuss, Muhl, and Krems (2017) and Thogersen and Ebsen (2019) showed that direct experience with EVs generally made people more positive toward them, thus reducing purchase resistance. Jansson, Nordlund, and Westin (2017) documented the impact of attitudes and social influence on purchase resistance.