Environmental and economic impact of electric vehicle adoption in the U.S

• Published in: Environmental research letters 2021-04, Vol.16 (4), p.45011
• Main Authors: Chen, Zhenhua, Carrel, Andre L, Gore, Christina, Shi, Wei
• Format: Article
• Language: English
• Subjects: Clean energy; computable general equilibrium model; consumer choice; Economic impact; Economics; electric vehicle; Electric vehicles; Emissions control; Environmental impact; Exhaust pipes; Expenditures; Fuels; GDP; Green energy; Gross Domestic Product; Impact analysis; Incentives; Manufacturers; Manufacturing; Productivity; Subsidies
• ISSN: 1748-9326; 1748-9326
• DOI: 10.1088/1748-9326/abe2d0

Battery electric vehicles (BEVs) have received increasing attention in recent years as BEV technical capabilities have rapidly developed. While many studies have attempted to investigate the societal impacts of BEV adoption, there is still a limited understanding of the extent to which widespread adoption of BEVs may affect both environmental and economic variables simultaneously. This study intends to address this research gap by conducting a comprehensive impact assessment of BEV adoption. Using demand estimates derived from a discrete choice experiment, the impact of various scenarios is evaluated using a computable general equilibrium model. Three drivers of BEV total cost of ownership are considered, namely, subsidy levels, cash incentives by manufacturers, and fuel costs. Furthermore, in light of current trends, improvements in BEV battery manufacturing productivity are considered. This research shows that changes in fuel price and incentives by manufacturers have relatively low impacts on GDP growth, but that the effect of subsidies on GDP and on BEV adoption is considerable, due to a stimulus effect on both household expenditures and on vehicle-manufacturing-related sectors. Productivity shocks moderately impact GDP but only affect BEV adoption in competitive markets. Conversely, the environmental impact is more nuanced. Although BEV adoption leads to decreases in tailpipe emissions, increased manufacturing activity as a result of productivity increases or subsidies can lead to growth in non-tailpipe emissions that cancels out some or all of the tailpipe emissions savings. This demonstrates that in order to achieve desired emissions reductions, policies to promote BEV adoption with subsidies should be accompanied by green manufacturing and green power generation initiatives.