Consumer valuation of changes in driving range: A meta-analysis

We perform a meta-analysis of studies investigating consumer preferences for electric and other alternative fuel vehicles (AFVs) to provide insights into the way driving range is traded off for capital costs. We find that consumers are willing to pay, on average, between 66 and 75 US$ for a 1-mile increase in driving range. Ceteris paribus, 100-mile-range cars have to be priced about 60% less than their conventional counterparts to become competitive. In line with intuition, but in contrast to most specifications employed in primary studies, we find that consumers’ marginal willingness to pay (WTP) decreases at a diminishing rate with increases in driving range. The variation in the WTP and compensating variation estimates among examined studies can be attributed to differences in the levels of driving range considered, in other elements of the study design and in the country of study. Our findings support stated preference literature’s conclusion that short driving range has been a major limitation to the large-scale adoption of battery electric vehicles (BEVs) and other AFVs, and that technological developments permitting longer driving ranges will, to some extent, facilitate their market penetration. We further propose that consumer valuation of driving range should not be examined in isolation from other attributes related to refuelling activities, such as refuelling duration and the coverage of refuelling infrastructure.