World economy and international economic relations

How are new-energy vehicle sales affected by government support? U.S. geospatial evidence

Economic Annals-XXI

Economic Annals-ХХI: Volume 160, Issue 7-8, Pages: 14-23

Citation information:
Kuming Chang, Paul Moon Sub Choi, & Seth H. Huang (2016). How are new-energy vehicle sales affected by government support? U.S. geospatial evidence. Economic Annals-XXI, 160(7-8), 14-23. doi: https://doi.org/10.21003/ea.V160-03

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Kuming Chang
PhD (Regional Science),
Regional Science Program,
Cornell University
Ithaca, NY, 14850, United States
kc346@cornell.edu

Paul Moon Sub Choi
PhD (Economics),
Associate Professor,
College of Business Administration,
Ewha Womans University
52 Ewhayeodae-gil, Seodaemun-gu, Seoul, 03760, Republic of Korea
paul.choi@ewha.ac.kr

Seth H. Huang
PhD (Economics),
Assistant Professor,
College of Business Administration,
Ewha Womans University
52 Ewhayeodae-gil, Seodaemun-gu, Seoul, 03760, Republic of Korea
seth.huang@ewha.ac.kr

How are new-energy vehicle sales affected by government support? U.S. geospatial evidence

Abstract. Despite the low crude oil price that has been declining since 2014, the market for electric and hybrid-electric vehicles has grown steadily and reached one million on the road in America in 2015 which itself proves high topicality of research concerning factors affecting new-energy vehicles dissemination in the different states of US. In current paper, we study the effectiveness of government policies on a best-selling hybrid-electric vehicle (HEV) by using proprietary and novel datasets of sales information in 3,000 United States counties while controlling for detailed and unique demographic and governmental factors since 2005, in the initial stage of hybrid car introduction. First, we find that state tax waivers, state income tax credits, and high-occupancy-vehicle lane access are important in HEV sales. Second, HEV tax incentives from the federal government show the negative relationship with HEV sales. These results suggest that the federal government should entrust state governments with promotion policies for HEVs. Third, income level and commuting time do not significantly affect consumers’ decision to switch to hybrid vehicles. Fourth, a person who spends a considerable amount of time in a vehicle or is already taking public transportation is unlikely to switch to a new vehicle type: New products should be first marketed to first-time car buyers. Geospatial analyses are followed to study spatial dependencies. We proved that HEV sales in the country is highly connected with proper state support policies at regional level.

Keywords: Hybrid Electric Vehicles; Tax Incentives; Spatial Analysis; Geographically Weighted Regression; U.S. Automotive; Ford; Honda; Nissan; Mazda; Lexus; Toyota; Saturn; Mercury

JEL Classification: L62; Q42; Q48; R12; H23

DOI: https://doi.org/10.21003/ea.V160-03

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Received 28.01.2016

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