Prices and preferences in the electric vehicle market

Although electric vehicles are less polluting than gasoline powered vehicles, adoption is challenged by higher procurement prices. Existing discourse emphasizes EV battery costs as being principally responsible for this price differential and widespread adoption is routinely conditioned upon battery costs declining. We scrutinize such reasoning by sourcing data on EV attributes and market conditions between 2011 and 2023. Our findings are fourfold. First, EV prices are influenced principally by the number of amenities, additional features, and dealer-installed accessories sold as standard on an EV, and to a lesser extent, by EV horsepower. Second, EV range is negatively correlated with EV price implying that range anxiety concerns may be less consequential than existing discourse suggests. Third, battery capacity is positively correlated with EV price, due to more capacity being synonymous with the delivery of more horsepower. Collectively, this suggests that higher procurement prices for EVs reflects consumer preference for vehicles that are feature dense and more powerful. Fourth and finally, accommodating these preferences have produced vehicles with lower fuel economy, a shift that reduces envisioned lifecycle emissions benefits by at least 3.26 percent, subject to the battery pack chemistry leveraged and the carbon intensity of the electrical grid. These findings warrant attention as decarbonization efforts increasingly emphasize electrification as a pathway for complying with domestic and international climate agreements.
Comment: Main paper: 5 tables, 2 figures