Range Anxiety

Range anxiety, the fear of depleting battery before reaching a charging station, is often cited as a major barrier to electric vehicle (EV) adoption, yet there has been limited formal economic analysis to quantify its magnitude and examine the policy implications. We develop a continuous-time dynamic model of EV usage and charging decisions to micro-found range anxiety as the utility loss from feasible yet unrealized trips due to perceived range constraints. Using high-frequency data of 188,000 EV trips and 26,000 charging events among 8,000 EVs in Shanghai, we recover model parameters governing consumer driving and charging decisions. The estimates imply that, across EV models with varying driving ranges, average range anxiety was about $1,900 in 2021 but declined to $1,200 in 2024, driven by improvements in charging infrastructure and, especially, increases in driving range. Policy simulations underscore the importance of coordinating investments in driving range and charging infrastructure to address range anxiety. Relative to socially optimal levels, Shanghai's EV market has under-invested in driving range but over-invested in charging infrastructure