Understanding the Distributional Impacts of Vehicle Policy: Who Buys New and Used Alternative Vehicles?

This research project explores the plug-in electric vehicle (PEV) market, including both Battery Electric Vehicles (BEVs) and Plug-in Hybrid Electric Vehicles (PHEVs), and the sociodemographic characteristics of purchasing households. The authors use detailed micro-level data on PEV purchase records to answer two primary research questions. Their results confirm that low-income households exhibit a lower share of PEV purchases than they do for conventional, internal combustion engine (ICE) vehicles. Households with annual income less than $50,000 comprise 33 percent of ICE purchases and only 14 percent of PEVS. By comparison, high-income households earning more than $150,000 annually comprise only 12 percent of ICE purchases and 35 percent of PEV purchases over their sample period. Similarly, unsurprising patterns can be seen across ethnicities. For example, non-Hispanic Whites represent 41 percent of ICE purchases but 55 percent of PEV purchases, as compared to Hispanics (38 percent of ICE and 10 percent of PEVs) and African Americans (3 percent of ICEs and 2 percent of PEVS). These differences naturally raise questions about barriers to PEV adoption among low-income and minority ethnic populations. By comparing outcomes in the ICE, hybrid, and PEV markets across income and ethnic groups, the authors are able to test whether price discrimination and barriers to market access are higher in PEV markets for low-income and minority ethnic groups. The authors find that, overall, they are not, although there are mixed results for the used PEV market. In general, non-white, low-income populations face higher prices in the used PEV market, relative to a baseline, than they do in the new PEV market. While some people travel farther to buy used PEVs than they do to buy used ICE vehicles, there is not a pattern that would indicate systematic discrimination (e.g. Hispanics travel farther to buy used PHEVs but less far to buy used BEVs). While the authors admit that their empirical approach cannot control for all potential vehicle composition effects, the authors view their results as being most consistent with a market that provides access to all ethnicities and income groups.