Transitioning to Electric Drive Vehicles

This report builds on a previous analysis of the transition to electric drive light-duty vehicles in California and the Section 177 states that have adopted California’s Zero Emission Vehicle standards. (Both reports were funded by the ICCT.) That study estimated the costs and benefits of a transition to electric drive vehicles under six alternative scenarios using the same model and technology and market assumptions as a recent National Research Council study. It concluded that, given the NRC assumptions, benefits would like exceed costs by roughly an order of magnitude. Targeted, temporary transitions policies would be required however; internalizing external costs alone would likely be inadequate to accomplish the transition.

This study estimates the effects of the timing and intensity of policies and adds uncertainty about technological progress to the previous study’s analysis of uncertainty about the market’s response. The analyses presented in this report are based on Scenario 2 of the previous report, in which the ZEV standards are enforced through 2025 and continued at the 2025 level through 2030 and then ended. The rest of the U.S. is assumed to follow California’s lead, adopting similar policies and deploying refueling infrastructure but five years later than California and the Section 177 states.

The new model runs indicate that, given the assumptions of Scenario 2, starting the ZEV standards 5 years earlier or doubling their intensity increases upfront costs but increases benefits by a greater amount. Similarly, delaying the ZEV mandate is estimated to reduce upfront costs but cause an even greater reduction in the present value of benefits. Network effects and other positive feedbacks were measured to illustrate the dynamics of the transition. The impacts of mandates or subsidies was strongly dependent on their timing and context. The simulations again showed the important synergies between California and U.S. transition policies. The effects of technological and market uncertainty were simulated assuming policies that forced the achievement of the market shares of PHEVs, BEVs and FCVs of Scenario 2. This assumption should overestimate the costs of the transition relative to policies that adapt to circumstances. Nevertheless, the frequency of negative net present values was less than 10%.