Plug-in Electric Vehicle Markets and Their Infrastructure Investment Policies under Fuel Economy Uncertainty

Abstract

The authors model the development of plug-in electric vehicle (PEV) markets hand-in-hand with the charging infrastructure for PEV users and include the market fluctuation of fuel costs. One of the driving factors for PEV buyers is the prospect of fuel cost-savings relative to the price of the PEV. Another key factor is charging station availability in the community. The decision regarding whether to purchase a PEV thus involves an investment decision under fuel economy uncertainty in the future. Policies to support the proliferation of PEVs are also affected by the economic trend of fossil fuels. This paper estimates the possible ranges of gasoline price fluctuation over the next 10 years and quantitatively analyzes these fluctuations’ influence on the market growth of electric vehicles. We then aim to evaluate various public subsidy initiatives to PEV buyers and charging infrastructure enterprises.