Comparing Consumer Preferences for Electrified Vehicles in China and the U.S

Comparing Consumer Preferences for Electrified Vehicles in China and the U.S.

John Paul Helveston, Engineering & Public Policy, Phone +1 757 503 3500, E-mail: eremy J. Michalek, Mechanical Engineering / Engineering & Public Policy, Phone +1 412 268 3765,

E-mail:

Erica R.H. Fuchs, Engineering & Public Policy, Phone +1 412 268 1877, E-mail:

Overview

Today, more new cars are made and sold in China than in anywhere else in the world. The tremendous growth in demand and production of passenger vehicles in China has consequences for global oil demand, pollution, and competitiveness of new technologies, such as modern electric vehicles. Vehicle electrification is one of the more promising alternatives for near-term reduction of both oil consumption and harmful emissions from passenger cars. As the world’s leading automakers continue to design vehicle platforms to match the tastes of Chinese consumers, the trends in China’s vehicle market have the potential to change the competitiveness of emerging electric technologies worldwide. This research focuses on quantifying consumer preferences for electrified vehicle technologies in both China and the U.S. Understanding how existing vehicle preferences are shaping the adoption of electrified vehicles in both countries will allow us to begin to answer related policy questions, such as what would need to happen (e.g. changing key vehicle attributes or policy options) to achieve mainstream adoption of electrified vehicles in each market (presuming such adoption were socially beneficial).

To measure preferences, we design and field equivalent choice-based conjoint experiments in China and in the U.S. during the summer of 2012, where consumers select among a set of vehicle profiles the one they would be most likely to purchase. We use the resulting choice data to build discrete choice models. Theses models relate the choices made in the experiment to the attributes of the vehicles shown as well as to the attributes of the respondent. We then estimate willingness to pay for an incremental change in each variable and simulate the utility derived from the attributes of select models of currently available electrified vehicles and their conventional counterparts to predict how well the electrified vehicles might compete against the conventional alternative in the U.S. and Chinese markets.

The paper is organised as follows: After an introduction, we describe the methods used and the model specification of our discrete choice model. We then explain the details of the survey experiment in both countries. We then present the model results as well as an analysis of the results, and follow this with a conclusion and policy implications section.

Methods

Conjoint analysis using stated choice survey data collected in China and the U.S. and discrete choice models.

Results

First, we find that Chinese consumers are more willing to adopt plug-in vehicles than U.S. consumers, and particularly so for battery electric vehicles (BEVs).

Second, our results support previous workt hat suggests incentivizing smaller battery pack EVs is a more cost-effective strategy in the short term (Michalek et al., 2011).

Third, we find that all else being equal, car buyers in both China and the U.S. prefer hybrid electric vehicle (HEV) and plug-in hybrid electric vehicle (PHEV) technologies over conventional vehicle (CV) and battery electric vehicle (BEV) technologies. Chinese consumers are willing to pay larger premiums for HEVs and PHEVs than U.S. consumers, and U.S. consumers have pronounced dislike of BEVs, which have limited range.

Conclusions

Our results suggest there may be greater expected market demand for HEVs and PHEVs in both the United States and China, and (with continued government support) there may be opportunities among certain subsections of the Chinese market for early experimentation with BEV technology.Furthermore, consumer preferences towards EVs in both countries supports the idea that incentivizing smaller battery pack EVs is a more cost-effective strategy in the short term.

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