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Will Corporate Average Fuel Economy (CAFE) Standard help? Modeling CAFE's impact on market share of electric vehicles

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Abstract

The purpose of Corporate Average Fuel Economy (CAFE) Standards is to enhance the fuel efficiency of passenger vehicles in the United States. Although these standards had been set constant for years, the National Highway Traffic Safety Administration (NHTSA) set increasing CAFE standards in 2011 based on vehicle's footprint, requiring vehicle manufacturers to improve the fuel economy of the vehicles they produce. This resulting improvement in vehicle fuel economy is likely to influence consumers’ decisions regarding new vehicle purchases, while the stringent CAFE standards are also likely to affect manufacturers’ production costs and benefits. In addition, the government provides various incentives to support the adoption of alternative fuel vehicles (AFVs), including electric vehicles (EVs), which in turn will likewise influences consumers’ decisions regarding purchasing a new vehicle. An agent-based model is developed in this paper to estimate the potential future market shares of EVs considering the existing inherent uncertainties under different policy scenarios, including the footprint-based CAFE regulation. The results show that, if implemented effectively in conjunction with the available government incentives, the CAFE regulation can accelerate EV market penetration and help the U.S. to move away from conventional vehicles, thus reducing fossil fuel dependency.

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... Third, simulation models represent a more comprehensive approach, considering a variety of factors in addition to consumer choice-including agent-based models as well as choice models that represent various constraints and conditions. Such models typically represent consumer heterogeneity (e.g., Lin and Greene, 2011;McCoy and Lyons, 2014) and in some cases model or represent the decisions of automakers, policymakers and/or other stakeholders (Sen et al., 2017;Sullivan et al., 2009). Simulation models often utilize choice models to represent agent preferences, which again vary in degree of behavioural realism (based on data source and design of survey instruments). ...
... Despite the potential of simulation models to represent the effects of supply-focused policy, the vast majority of these studies only simulate demand-focused policies (again, the usual trio of financial incentives, non-financial incentives and charger deployment). The two applications of simulation models to supply-focused transportation policy explored the impacts of fuel economy regulation on vehicle purchase behaviour, but not the impacts of a sales mandate (Sen et al., 2017;Xie and Lin, 2017). ...
... Across the literature (informed by all three model types), PEV market share forecasts tend to be highly sensitive to demandfocused policies, where subsidies in the range of $5000-$7500 (or an equivalent reduction in purchase price due to reduced battery cost) are found to double or triple PEV sales forecasts (Gnann et al., 2015;Lopes et al., 2014;Sen et al., 2017;Shafiei et al., 2012). Only rarely has the importance of subsidy duration been explored, where one study found that such an incentive has little impact if it is maintained for less than five years (Eppstein et al., 2011). ...
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Plug-in electric vehicles (PEVs) could play a strong role in decarbonizing the transportation sector, leading some governments to set the goal of PEVs accounting for 30% of new sales by 2030 (e.g., the “[email protected]” campaign). To explore the feasibility of this goal, we use a behaviourally-realistic vehicle adoption model (REPAC) to simulate the impacts of incentives and vehicle mandates on PEV sales over this time frame, using the case study of Canada. We consider a range of technology assumptions, including optimistic and pessimistic battery cost scenarios ($CDN 85/kWh and $CDN 125/kWh, respectively, by 2030). We find that the country’s present policies can only induce PEVs to reach 5–11% new market share by 2030. Without changes in PEV supply, we find that purchase incentives can boost PEV new market share, where a $CDN 6000/vehicle subsidy is needed for 13 years to reach the 2030 goal (in the median technology assumption scenario). We also model ZEV mandate scenarios where automakers must reach 30% or 40% PEV sales by 2030, finding that compliance with both is achievable even in pessimistic technology scenarios, through a combination of increased PEV model availability and intra-firm cross-price subsidies. While incentive-based or mandate-based strategies (or some combination thereof) can achieve 2030 goals, results demonstrate the high government expenditure involved in an incentive-based strategy -- $CDN 15–48 billion undiscounted ($10–28 billion discounted), or around $9000–10,000 per added PEV sale. Policymakers ought to consider these tradeoffs, among others, when designing PEV-supportive policies to achieve long-term climate goals.
... Year Journal Subject Area [27] 2013 Transport Reviews Transportation [28] 2014 Energy Strategy Reviews Energy [29] 2015 Energy Energy [30] 2015 Journal of Cleaner Production Environmental science [31] 2016 Energy Energy [32] 2016 International Journal of Life Cycle Assessment Environmental science [33] 2016 Technological Forecasting and Social Change Applied psychology [34] 2017 Energy Energy [35] 2017 Energy Policy Energy [36] 2017 Journal of Cleaner Production Environmental science [37] 2018 Energy Policy Energy ...
... In terms of the supply side, only one article [27] has taken into consideration all the actors. Fuel producers and fuel distributor are found in eight articles each, and six articles [27][28][29]34,35,37] considered both. Vehicle manufacturers can be found in seven of the selected articles, car dealers are found in six, and four articles [27,30,33,36] have considered both. ...
... As observed from the results, all the models that had taken into consideration the consumer purchase decision process use the discrete choice model (MNL and NMNL) as the main component. These models can be implemented in an agent-based simulation [27,[34][35][36], an SD model [29,33,37], or CGE with a Monte-Carlo simulation [28]. ...
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Ensuring energy security, stopping climate change, and improving urban air quality are the three main challenges of this century that are being addressed by governments globally. The transportation sector contributes significantly to these issues. Sustainable transport involves the consideration of three dimensions-economic development, environmental preservation, and social development-and one of its aspects is the focus on the transition towards electric vehicles. The sustainable transportation is a complex system with multiple relationships and feedback between their elements. Understanding this complexity in an integrated and holistic manner is a challenge that must be addressed. To obtain insight into this complexity, we perform a systematic review of studies in which the demand and supply components of the passenger transportation sector were modelled in an integrated manner along with the dimensions of sustainability. All the reviewed previous studies had taken into consideration both the economic and environmental dimensions; however, only a few had also considered social development. The holistic and systematic integration of the dimensions of sustainability along with their relationships and feedback would facilitate a better understanding of the transportation sector and promote the development of better policies for improving the diffusion of passenger electric vehicles.
... Government regulations often support original equipment manufacturers, dealerships, and fuel suppliers to facilitate EV sales . A few examples of such regulations are GHG standards and fuel economy (Sen et al., 2017), zero-emission vehicle mandate (Sykes and Axsen, 2017), and low carbon fuel standard (Lepitzki and Axsen, 2018). Sen et al. (2017) study revealed that corporate average fuel economy (CAFE) regulation could boost up the market penetration of EV and thereby reduce dependence on fossil fuel in the United States, especially if executed collectively with other government incentives. ...
... A few examples of such regulations are GHG standards and fuel economy (Sen et al., 2017), zero-emission vehicle mandate (Sykes and Axsen, 2017), and low carbon fuel standard (Lepitzki and Axsen, 2018). Sen et al. (2017) study revealed that corporate average fuel economy (CAFE) regulation could boost up the market penetration of EV and thereby reduce dependence on fossil fuel in the United States, especially if executed collectively with other government incentives. Zhao et al. (2016) studied vehicle to grid regulation services of electric delivery trucks and noted both economic and environmental benefits. ...
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Scholarly research on the topic of electric vehicles has witnessed a dramatic increase in the current decade; however, reviews that synthesize and integrate these findings comprehensively have been lacking. This study is an attempt at filling in that void through an integrative review methodology. It includes an integrative review of 239 articles published across Scopus Q1 journals and compiled using an integrative review protocol. It encompasses the identification of variables in five different categories: antecedents, mediators, moderators, consequences, and socio-demographics. The analysis procedure revealed many interesting insights related to research methods and region-specific developments. The review draws attention to relatively neglected topics such as dealership experience, charging infrastructure resilience, and marketing strategies as well as identifies much-studied topics such as charging infrastructure development, total cost of ownership, and purchase-based incentive policies. It also clarifies the mechanisms of electric vehicle adoption by highlighting important mediators and moderators. The findings would be beneficial to both researchers and policymakers alike, as there has been a dearth of earlier reviews that have analyzed all sustainable consequence variables simultaneously and collectively. The development of a comprehensive nomological network of electric vehicle adoption added a new dimension in this study. The segment-wise key policy recommendations provide many insights for stakeholders to envisage electric mobility.
... This interaction is complementary in addressing long-term, large-scale energy transitions, in several ways. For instance, a ZEV policy does not stand on its own in promoting clean transportation technology: other policies provide subsidies directly to consumers (Sen et al. 2017;Münzel et al. 2019), subsidize investment in charging stations (Peterson and Michalek 2013) and hydrogen refueling stations for electric vehicles (Ogden 1999), encourage changes to laws and regulations on station design and siting (among other institutional changes), inform potential vehicle purchasers and reduce risk aversion to new technologies, subsidize R&D, and seek to lower electricity emissions. Additionally, the more successful ZEV and RFS are, the easier it is to achieve the LCFS because the adoption of low-carbon vehicles and fuels expands and enhances the compliance options. ...
... California's regulated parties have several compliance obligations (Table 1) in addition to CAT. For vehicle manufacturers and importers, regulations for GHG emissions from passenger cars and trucks and ZEV are additive ("stackable"), and meeting the ZEV program will help with meeting the regulations for GHG emissions, but not vice versa (Sen et al. 2017). As shown in Figure 4, Tesla profited from selling regulatory credits, including both ZEV credits and GHG credits. ...
Article
Performance standards have a long history in environmental policy. A performance standard sets a standard of technology performance but leaves technology choice to producers; it increases the relative costs of technologies with undesirable performance characteristics and lowers the costs of technologies with desirable characteristics. The primary motivations are to promote innovation, to address consumers' undervaluation of efficiency, and to reduce externalities, such as air pollution and the risks of dependence on foreign oil. In the past decade, trading has been incorporated (thus termed as tradable performance standard, TPS) into several U.S. transportation programs: regulations for greenhouse gas emissions from passenger cars and trucks (national), zero-emission vehicle programs (10 states), the Renewable Fuel Standard (national), and low-carbon fuel standards (two states). TPS allows for equalization of marginal costs across eligible technologies and is therefore more efficient than pure regulations. We show that sectoral TPS programs have high credit prices but low price effects on products and provide strong incentives for upstream innovation and technology transformation. Unlike emissions pricing, however, they do not have a strong output effect: consumers do not bear the full cost of the pollution and do not have incentive to reduce consumption of polluting products. Given that the expected carbon price may be too low to substantially affect transportation demand or technology change, combining TPS with a carbon price may be necessary to drive innovation and achieve a sustained low-carbon transformation in the sector.
... The impacts on energy saving and emission reduction by the DCP are effective. Sen et al. [30] used the agent model to prove that CAFC regulations can accelerate the market penetration of the electric vehicle. The results show that 2023-2024 will be a significant turning point in the population of electric vehicles. ...
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The dual-credit policy advances the process of vehicle electrification; however, few studies have reviewed the policy preferences and development trends of the Chinese new energy vehicle industrial policy at different stages from the development angle of the dual-credit policy. This article reviews the policy evolution of the Chinese new energy vehicle industrial policy based on the 2T model (time and types) and evaluates the policy intensity of different industrial policies by PI index. The results find that the Chinese new energy vehicle industry policy is divided into three development periods: 2004–2008—promotion policy and technological policy; 2009–2013—financial policy; and 2014–2020—charging infrastructure policy. The early policy preference for new energy vehicles was not found to be significant. Financial policies have significantly stimulated the development of the new energy vehicle industry, and the implementation of the charging infrastructure policy is late. The policy intensity of the promotion policy is the strongest, followed by the technological policy, and the policy intensity of the charging infrastructure is the weakest. The policy intensity of the financial policy will weaken in the later period. The promulgation of the dual-credit policy reflects the continuity and synergy of policy development.
... A few examples of such regulations are GHG standards, a zero-emission vehicle mandate, and a low-carbon fuel standard. The authors of [11] revealed that corporate average fuel economy (CAFE) regulation could help promote the market penetration of EV, especially if executed along with other incentives. The authors of [12] studied dual-credit policy in China and found that the Corporate Average Fuel Consumption rules alone may stimulate more plug-in electric vehicle (PEV) sales than the dual-credit policy; however, the dual-credit policy could stimulate more battery electric vehicles (BEVs) in the market compared to other policy scenarios. ...
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As electric vehicles (EVs) have been widely discussed as a promising way to mitigate the effect of climate change, various policies have been implemented across the world to promote the uptake of EVs. Policymakers also paid attention to the density of public charging points. In this paper, we examined the impact of policies on EV markets in the post subsidy era with multiple linear regression analysis using panel data on 13 countries from 2015 to 2018. Five of the independent variables showed significantly positive effects on the 1% level in different regression models: fast/slow charger density, mandate, purchasing restriction and waiver. Subsidies showed significance only on 5% level for battery electric vehicles (BEVs). Financial stimulates have experienced a declining marginal effect, whereas a high density of fast chargers has the most significantly positive effect on EV uptake. This paper suggests policymakers can invest more in completing the public infrastructures of EVs, especially on fast charging points.
... As a result, a few cities like Oakland in California introduced parking charges and eliminated free parking policies, which reduced automobile trips made by employees by roughly 19% [15]. More recently, regulation of automobile performance has grown more popular with the introduction of the U.S. corporate average fuel efficiency (CAFE) standards [16,17]. Large automobile manufacturers in Detroit are required to produce fuel-efficient and low-carbon cars, and this approach has also relied heavily on government mandates. ...
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To promote sustainable urbanization and combat the economic, environmental, energy and safety issues that go with rapid motorization, the Ministry of Transport in China has introduced the “Transit Metropolis” program with a substantive amount of funds devoted to the implementation of the program in local governments. This represents the largest ever central government-led effort addressing transit metropolis development in the world. How has the program been implemented locally? Have the selected demonstration cities followed the same principle or taken comparable measures to implement their version of the transit metropolis? What is their performance? These questions remain unknown in the current literature. This article answers the above questions through a literature review, interviews and comparative case studies in Shenyang and Dalian, two large cities in Liaoning Province. It shows that both cities have successfully achieved the target levels for building a transit metropolis. Similarities between the two cities can be found their absence of any policies on automobile restriction and the presence of enormous efforts in transit network expansion and optimization. Differences lie in the fact that Shenyang has been more conventional in developing the transit metropolis, while Dalian has been more innovative and flexible in policy implementation. When comparing our empirical findings with the experience of creating transit metropolis elsewhere in China and in foreign countries, we find that policies and regulations restricting car use and calming traffic are not necessary conditions for successful transit metropolises; however, the attractiveness of transit infrastructure, combined with aesthetic and well-decorated street network is essential for a modal shift for transit. We also find that the perception on the transit metropolis in China more emphasizes transit service improvement, while the concept in Western countries more focuses on the shift of land use patterns that lean more towards influencing transit behavior.
... While [39]. Compared with fuel consumption standards,ZEV policies may have more direct impacts on the development of new energy vehicles. ...
Article
The green-car subsidy program since 2009 has been successfully used to boost the nation's new-energy vehicle industry and cut vehicle emissions in China; however, it may cause financial burden on the governments at the same time. Therefore, alternatives including a New-Energy Vehicle Credit Program and Corporate Average Fuel Consumption Regulation (dual-credit policy) have been proposed to reduce the government's expenditure caused by subsidization. To examine the effectiveness of the new regulation, new energy vehicles' development under different scenarios have been quantitatively simulated by using a developed game theory-based analysis model. The obtained results show that: (i) the dual-credit policy can effectively promote the development of new energy vehicles, with this policy (in scenario NSC and SC) the proportion of NEV in the whole auto market will be up to 3.9%; (ii) compared with green-car subsidy, the dual-credit policy can significantly increase the amount of new energy vehicles to two times as much as that of current subsidy level; and (iii) when the dual-credit policy is implemented, green-car subsidy will not further promote the development of new energy vehicles.
... Some studies have investigated the effectiveness of these regulatory incentives. Under US CAFE regulations, PHEVs could contribute to compliance and effectively reduce compliance costs in the near term [39], and BEVs' market share could even reach 29% by 2030 [40]. Brown et al. explored the impact of regulation, EV certification and related training on EV adoption. ...
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A super credit policy provides favorable accounting rules for extremely low emission vehicles under several passenger vehicle fuel economy regulations. This policy was initially designed to promote promising advanced technologies complying with fleet-wide fuel economy regulations so that these technologies could achieve cost-effective breakeven points. The favorable multipliers offered range from 3.5 to 1.33 in the various fuel economy regulations by the year 2021. Under China's Corporate Average Fuel Consumption regulation, two types of super credit schemes are designed in the Phase IV Corporate Average Fuel Consumption regulation through 2020. One is the fuel-efficient vehicle super credit for vehicles with fuel consumption rates below the threshold of 2.8 L/100 km. Another is the new energy vehicle super credit for battery electric vehicles and plug-in hybrid electric vehicles. However, the effectiveness of this incentive in promoting electric vehicles and the optimal size of the multiplier are not well understood. This paper analyzes the impacts of the super credit policy from the perspective of automakers. A mathematical model based on combinational optimization is established to describe an automaker's decision-making process, and a genetic algorithm is employed to solve this problem. The conventional and plug-in hybrid electric vehicles cost-effectiveness frontier curves are fitted to illustrate the principle of new energy vehicle and fuel-efficient vehicle super credit schemes. Various multipliers of new energy vehicle and fuel-efficient vehicle super credit policy scenarios are simulated under the 2020 and 2025 Corporate Average Fuel Consumption targets. By analyzing the impact of the policy on the reduction of compliance costs, the super credit multiplier, the cost and the fuel consumption rates reduction effect are found to be the determining factors. The results confirm that the multiplier and China's super credit policy scheme will be effective by 2020, under which plug-in hybrid electric vehicles would account for 7.8% of the fleet at a cost of 6.6% Corporate Average Fuel Consumption target impairment. Under the assumed next phase of regulation by the year 2025, the optimal multipliers for the new energy vehicle and fuel-efficient vehicle super credit will be 1.5 and 1, respectively. It is noteworthy that the super credit policy may impair the energy saving target of Corporate Average Fuel Consumption regulations while promoting the market penetration of the targeted technologies. Despite other policies that benefit battery electric vehicles over plug-in hybrid electric vehicles, battery electric vehicles are not competitive with plug-in hybrid electric vehicles under either the 2020 or 2025 Corporate Average Fuel Consumption regulations. The fuel-efficient vehicle super credit policy will not promote the targeted advanced technologies under the next phase of regulation unless the 2.8 L/100 km fuel-efficient vehicle definition threshold can be adjusted along with the strengthened 2025 Corporate Average Fuel Consumption target.
... For instance, the Fixing America's Surface Transportation (FAST) Act passed in 2015 (CONGRESS.GOV, 2015) facilitates usage of EVs by creating Alternative Fuel Corridors, which identify near-and long-term need for, and location of, EV charging infrastructure (Alternative Fuel Corridors, 2017). The Corporate Average Fuel Economy (CAFÉ) standards lead to higher market share for EVs, perhaps expanding to 29% by 2030 (Sen, Noori, & Tatari, 2017). Moreover, car buyers can take advantage of a federal tax credit of $7,500 for qualified EVs (Plug-In Electric Drive Vehicle Credit (IRC 30D), 2017). ...
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The electric power systems of many industrialized nations are challenged by the need to accommodate distributed renewable generation, increasing demands of a digital society, growing threats to infrastructure security, and concerns over global climate disruption. The “smart grid”—with a two‐way flow of electricity and information between utilities and consumers—can help address these challenges, but various financial, regulatory, and technical obstacles hinder its rapid deployment. An overview of experiences with smart grids policies in pioneering countries shows that many governments have designed interventions to overcome these barriers and to facilitate grid modernization. Smart grid policies include a new generation of regulations and finance models such as regulatory targets, requirements for data security and privacy, renewable energy credits, and various interconnection tariffs and utility subsidies. This article is categorized under: • Energy Infrastructure > Economics and Policy • Energy Policy and Planning > Economics and Policy • Energy Infrastructure > Climate and Environment
... Like some others modeling consumer vehicle choice (e.g. Sen et al., 2017;Haaf et al., 2014;Xie and Lin, 2017), we focus on market shares, rather than vehicle sales. In our case, market shares mitigate changes in total sales from the Great Recession. ...
... First, we modeled the first step of the decision-making process, i.e., selecting a single contender in the market. Following the notation of previous agent-based approach studies for the vehicle market (Sen et al., 2017;Shafiei et al., 2012), the probability of consumer n ...
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This study proposes a vehicle replacement model that considers consumers’ strategic decision-making for the optimal purchase timing of a new vehicle. The model incorporates the effect of the currently owned vehicle (status quo) and future vehicles with different performance and market situations on consumers’ current purchase decisions. By identifying purchase timing, the model endogenously identifies new vehicle buyers for each period and derives the expected sales and stock share of the market. Choice experiments were conducted among 333 South Korean vehicle owners in 2018, and the results were applied to a simulation framework to forecast the future vehicle market (2018–2030). The proposed model showed significantly different results compared to models that ignored the effects of status quo and future vehicles on current purchase decisions. The key findings are as follows. First, consumers tend to prefer the same vehicle type as their status quo vehicle. Second, consumers tend to postpone their purchase of electric vehicles more than they do in the case of conventional vehicles, and they may delay or advance their purchase to the start or end of policies. Finally, market sales expand or shrink based on the existence of and the start or end timing of the policy.
... In recent years, most countries in the world are promoting the increase of electric vehicle (EV) penetration rate. It is estimated that by 2030, the market share of EVs in the US will reach 29% [1]. Although the high penetration level of EVs effectively reduces carbon dioxide emissions and alleviates environmental pollution, it also causes negative impacts such as increased peak demand on the grid and increased probability of grid failure [2]. ...
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Extracting the charging loads of residential electric vehicle (EV) clusters and identifying their charging patterns can help grid operators develop effective regulation strategies. The duration of the power consumption event (PCE) and the interval between adjacent events are used to characterize the difference in the stochastic behavior of the load pattern between the EV cluster and the air conditioner (AC) cluster. An event detection method based on skipping power difference is proposed, which can effectively identify changing edges of the PCE. A training-free non-intrusive load extracting (NILE) algorithm based on bounding-box fitting and load signatures is proposed, which can automatically identify the start time, the end time and the power amplitude of the charging event. The validity of the NILE algorithm is verified by multiple performance metrics on the real data set.
... Some scholars have also studied the implementation effect of repressive regulations on the supply side, such as CAFE standards and the ZEV Program. Sen et al. (2017) found that fuel economy standards can typically alter the market share of the vehicle fleet towards cleaner vehicles. Sykes and Axsen (2017) studied the impact of the ZEV program on passenger vehicle sectors and suggested that to realize the low-carbon transformation of regional transportation sector, policy makers can learn from the ZEV policy to control the types of passenger vehicles from the supply side. ...
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The dual-credit policy for passenger vehicles was implemented in China in 2018 to continue to nurture the growth of new energy vehicles and effectively alleviate the government’s financial subsidy pressure. The policy innovatively introduced the cap-and-trade system into the transport sector and has achieved an initial success in a short term. However, from a long-term viewpoint, there is still a need to formulate the annual percentage targets for new energy vehicle credits to ensure its ongoing sustainable development. To investigate this issue, a multi-period credit market dynamic equilibrium model was developed. Four scenarios, including a decelerated growth scenario, an accelerated growth scenario, a constant growth scenario and a benchmark scenario with a constant percentage, were proposed, in order to comprehensively reflect the changes in new energy vehicle production, credit performance and profits of automakers under different growth scenarios. Compared from the perspectives of automakers and the government, the obtained results showed that: (1) increasingly stricter new energy vehicle credit targets can slow down the growth of internal combustion engine vehicle production and promote substantial growth of new energy vehicles; (2) without the adjustment of the rules of credit calculation, increasingly more stringent new energy vehicle credit targets will be harmful to energy saving goals of corporate average fuel consumption credit management; (3) with the realization of scale advantages and the maturity of battery technology, new energy vehicles could achieve cost-effective breakeven points; (4) from the perspective of new energy vehicle promotion cost, the lowest cost can be achieved in the accelerated growth scenario.
... A vast body of recent literature indicates that governmental policy measures and financial factors influence the BEV market (Biresselioglu et al., 2018;Bjerkan et al., 2016;Broadbent et al., 2018;Hardman et al., 2017;Lebeau et al., 2016;Li et al., 2016Li et al., , 2017Sen et al., 2017;Silvia and Krause, 2016;S. Wang et al., 2017;Z. ...
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We analyze the penetration by BEVs in Germany and examine two influential factors – policy measures and disclosing consumer-oriented total cost of ownership (TCOC) information. We conducted an online experiment with 379 participants in Germany. The results indicate a significant impact of the TCOC information weighted with the value differences and potential driving bans on ICEVs. In addition, costs, hedonic benefits, education, and average annual mileage significantly affect the decision in favor of BEVs. Overall, the study provides implications for governments to extend risk-related regulations to promote the BEV market share.
... Jun et al. [4] believed that CAFC promotes the development of fuel economy technology and stimulates consumers' interest in energy conservation and environmental protection, which has a direct impact on fuel economy car sales. Sen et al. [5], by building a potential market share assessment model of electric vehicles, argued that CAFC can accelerate the penetration of electric vehicle market, help America reduce the consumption of traditional vehicles, and thus get rid of the dependence on fuel. However, other scholars disagreed on the implementation effect of CAFC and ZEV. ...
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The dual-credit policy is regarded as an important measure in the postsubsidy era of energy conservation and emission reduction in the auto industry and is concerned with all aspects of society. In this paper, a research and development cooperation model of the duopoly supply chain between suppliers and manufacturers in the automotive industry is constructed, and the influence of the double integral policy on the research and development cooperation between suppliers and manufacturers in the automotive industry is discussed based on the power perspective theory in the supply chain. The results show that cooperation is more effective than noncooperation in promoting both parties’ R&D investment in fuel economy, as well as the fuel economy of the final product. The government should encourage R&D cooperation in the upstream and downstream of the supply chain of the automotive industry. The influence on the R&D cooperation between the supplier and the manufacturer was the combined effect of fuel consumption saving. The government’s intention to formulate a dual-credit policy to guide the R&D cooperation behavior in the auto industry supply chain should consider not only the impact of credit unit price but also the public’ consciousness of fuel saving and environmental protection. The combined effect of fuel consumption saving on the R&D cooperation led by different powers, which meant that the government was aiming to encourage R&D cooperation, should consider different situations in the auto industry supply chain to formulate the dual-credit policy to adjust the supply and demand relationship of the dual-credit policy to affect the credit unit price, thus affecting the combined effect of fuel consumption saving, encouraging R&D cooperation in the auto industry supply chain, and realizing energy conservation and emission reduction.
... For instance, the Fixing America's Surface Transportation (FAST) Act passed in 2015 (CONGRESS.GOV, 2015) facilitates usage of EVs by creating Alternative Fuel Corridors, which identify near-and long-term need for, and location of, EV charging infrastructure (Alternative Fuel Corridors, 2017). The Corporate Average Fuel Economy (CAFÉ) standards lead to higher market share for EVs, perhaps expanding to 29% by 2030 (Sen, Noori, & Tatari, 2017). Moreover, car buyers can take advantage of a federal tax credit of $7,500 for qualified EVs (Plug-In Electric Drive Vehicle Credit (IRC 30D), 2017). ...
... Command and control policies have different objectives and expected effects (Perry and Wise 1990;Ryan and Turton 2007). Car fuel economy and emission standards aim to reduce the total fuel demand and thus reduce the GHG and CAP emissions (Yeh et al. 2016;Sen et al. 2017). Technology-ban policies and scrappage programs aim to change the market-share composition by introducing new types of technologies in vehicle stock due to the reduction in old technologies (Ryan and Turton 2007;Zhang et al. 2014). ...
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Within sustainable transportation systems, the adoption of electric vehicles (EVs) is considered as a potential solution to problems such as energy security, climate change, urban-air quality, and public health. This EV-adoption process is a complex system that considers the relationships between the dimensions of sustainability, car-ownership transition to EVs, market dynamics, and the government. Several models have been designed to address this system. However, these models have only partially developed these relationships because they did not consider all the components or relationships between the elements of this process. This article proposes a systemic approach based on previous models, which integrates all the components and relationships and incorporates the analysis of sustainability into the EV-adoption process. The system structure of this EV-adoption process is presented and discussed. This approach deepens the understanding of the synergies between market dynamics and sustainability, allowing to model the system more broadly. It can thus help in the sustainable and integrated evaluation of different policy scenarios, thereby contributing to a clearer understanding of the dynamic behavior and leverage points of the system.
... As most environmental problems, including PM emissions, require long-term analysis, an ex-ante simulation framework, which can analyze the long-term policy impact, should be constructed. When conducting simulation analysis using VRM, Choi and Koo (2019) used an agent-based simulation framework (Sen et al., 2017;Shafiei et al., 2012) that assumed multiple agents per respondent and used estimated choice probability for vehicle alternatives in the choice set and a random variable with a uniform distribution to simulate the choice by period for each agent. Then, by integrating the agent choices by period, they provided sales and stock forecasts for each period. ...
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Quantifying environmental benefits from battery electric vehicles (BEVs) requires an understanding of the long-term substitutional relationships among different vehicle technologies. This study analyzes how BEV promotion can contribute to reductions in particulate matter (PM) emissions in Korea and investigates effective long-term policy options. Using a choice model, this study simulates consumers’ vehicle replacement behavior under various policy scenarios from 2018 to 2025. The results show that BEV promotion alone has limited effectiveness at reducing PM emissions because BEV purchases were predominantly made by gasoline vehicle owners while diesel vehicles are the key source of emissions. This finding is significant because investment in BEV promotion in Korea specifies PM emissions reductions as their core objective and legal basis. Investigation of additional policy options suggests that the combination of direct regulations on diesel vehicles and a targeted rebate to promote substitution between diesel vehicles and BEVs can reduce PM emissions by ~13%.
... This was paired with a credit system that rewarded EV production within the US (The White House, 2012). Studies show that these policies effectively accelerated EV market penetration (see Sen, Noori & Tatari, 2017). However, the standards were weakened by the Trump administration. ...
... Fully regulating all emissions, for example through pricing, could significantly change the relative costs of different vehicle propulsion options, such as battery electric vehicles (BEVs) versus hydrogen fuel cell electric vehicles (HFCEVs) versus internal combustion engine vehicles (ICEVs). Changing costs, in turn, could affect production decisions of vehicle manufacturers, and purchase behaviors of consumers 9 . The potential impact of these relationships is unknown to date because neither model calculations, nor real-world policies, have fully accounted for or priced indirect vehicle emissions. ...
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Large-scale electric vehicle adoption can greatly reduce emissions from vehicle tailpipes. However, analysts have cautioned that it can come with increased indirect emissions from electricity and battery production that are not commonly regulated by transport policies. We combine integrated energy modeling and life cycle assessment to compare optimal policy scenarios that price emissions at the tailpipe only, versus both tailpipe and indirect emissions. Surprisingly, scenarios that also price indirect emissions exhibit higher, rather than reduced, sales of electric vehicles, while yielding lower cumulative tailpipe and indirect emissions. Expected technological change ensures that emissions from electricity and battery production are more than offset by reduced emissions of gasoline production. Given continued dec-arbonization of electricity supply, results show that a large-scale adoption of electric vehicles is able to reduce CO2 emissions through more channels than previously expected. Further, carbon pricing of stationary sources will also favor electric vehicles.
... To comply with the CAFE regulation, Al-Alawi and Bradley showed that plug-in hybrid electric (PHEV) have advantages that save costs compared to conventional technologies [17]. Sen et al. revealed that the CAFE regulation is indeed an effective policy solution that does increase the adoption of EVs, whether implemented alone or in conjunction with another policy, e.g., government incentives [18]. Moreover, ZEV regulation and dual-credit policy also contribute to the output of NEVs. ...
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Thesis
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It is critical to investigate the development, diffusion and utilisation of emerging technologies in relation with each other, as well as with incumbent technologies. This is particularly imperative in sectors such as energy and transportation that struggle with both economic concerns (e.g., resource scarcity) and ‘grand challenges’, such as unsustainable consumption and production and greenhouse gas (GHG) emissions. This thesis takes a biological perspective and investigates whether technologies in an industry interact with one another in the same way that populations do in an ecology. The biological inter-population relationships analogy is applied to the three powertrain technologies of internal combustion engine, hybrid and battery electric vehicles (ICEV, HEV, and BEV) in the United States (US) automotive industry. Inter-powertrain relationships are studied in the early technological lifecycle (TLC) stage, known as an ‘era of ferment’, as it is characterised by an increase in technological variations, intense competition, high market uncertainty, and the frequent exits and entries of firms. This thesis conducts a qualitative and quantitative explanatory–exploratory study through a three-staged research design of narrative (conceptualisation), quantification and simulation. In the first stage, it conducts a qualitative explanatory–exploratory study to construct the conceptual framework. Adopting the technological innovation system (TIS) framework and the biological relationship modes, a dynamic approach to socio-technical interactions between technologies is proposed, called ‘dynapstic’. The various dimensions of the dynapstic framework are initially demonstrated by narrating some case studies, especially in the transportation and energy sectors. In the second stage, it conducts a quantitative explanatory–exploratory study to quantify the individual dimensions of the dynapstic framework. The biological Lotka-Volterra (L-V) equations are applied to quantify the individual socio-technical dimensions of powertrain technologies for the period 1985 to 2016. In the final stage, this thesis conducts a simulative explanatory–exploratory study to comprehensively simulate all the individual dimensions of the dynapstic framework. Feeding all the L-V quantifications and estimations from the second stage, all the individual socio-technical dimensions of powertrain technologies are integrated via an extensive system dynamics (SD) modelling for the time horizon of 1985 to 2050. This thesis illustrates that the internal dynamics of one powertrain technology become coupled with the internal dynamics of another powertrain technology through what is referred to as ‘co-dynamics’ in the dynapstic framework. Some of the proposed co-dynamics are entrepreneurial spawning, policy transfer, knowledge recombination and resource redeployment. Co-dynamics are illustrated to carry a mix of positive, negative and neutral influences between powertrain technologies that shape the various biological relationship modes between them, such as competition symbiosis, commensalism, parasitism and amensalism. These co-dynamics eventually lead to the build-up of shared structural elements or ‘couplings’ between powertrain technologies, such as overlap actors, knowledge overlap, institutional overlap and resource overlap. The findings throughout the three stages reveal that while inter-technology relationships can be multimodal and multidimensional, their nature and extent may undergo temporal transitions and suspensions over time. This thesis extends the TLC and strategic management literatures by challenging the assumptions for pure competition and for explicit dimensions, as technologies are illustrated to interact with each other in other forms (e.g., symbiosis, parasitism and commensalism) and for implicit dimensions (e.g., knowledge, policies, expectations and collaborations). It additionally contributes to the path dependency and sustainability transition literatures by revealing that transition processes are not only a result of path dependence, path creation and path destruction, but also a result of cross-path socio-technical interactions via positive and negative internalities and externalities. In particular, the TIS framework is made more outward oriented—first, by accommodating co-dynamics as a complementary dynamical unit of analysis to the conventional structural unit of analysis ‘couplings’, and second by proposing two new TIS motors, ‘motor of creative destruction’ and ‘motor of creative accumulation’. Finally, it contributes to the sustainability transition literature by challenging the transitionary, parasitic definition of hybrid technologies. This thesis informs transition managers and policymakers that their policy mixes may possess a triple nature of ‘creation’, ‘destruction’ and ‘accumulation’. Because their policy mixes may not only generate positive or negative internalities for the intended technology, but may also bring about positive or negative externalities in the field of other technologies. Taking a biological perspective, six types of strategies are proposed: competition, symbiosis, parasitism, commensalism, amensalism and neutral strategies. Considering the temporal transitions and suspensions findings, public policy makers are recommended to create and alternate their strategies in accordance with the changing multimodal and multidimensional relationships, but maintain a balance between them by strategically and proactively reconfiguring, modifying, facilitating and coordinating them over time. While public policy makers should avoid devising policies that may eventually lead to the demise of both incumbent and emerging technologies, their pro-entrepreneurship public policies should be preceded by pro-incumbent public policies, for instance, through exit options or transition supports such as knowledge recombination, knowledge continuity mobilisation, resource redeployment, and entrepreneurial recycling. Such an understanding informs policy decisions of when, and to what extent, one should invest in emerging disruptive technologies, divest from the incumbent technology, or pursue an intermediate solution between the new and incumbent technologies, while avoiding any dead ends. (available at http://hdl.handle.net/1959.13/1423920)
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Little research explores automaker response to supply-focused regulation in the long-run, such as zero-emissions vehicle (ZEV) mandates. To that end, we develop and apply the AUtomaker-consumer Model (AUM), which simulates interactions between behaviorally-realistic consumers and a profit maximizing automaker from 2020 to 2030. AUM endogenously represents multi-year foresight for the automaker, including decisions about: (i) increasing ZEV model variety, (ii) intra-firm cross-price subsidies, and (iii) investing in R&D to reduce future ZEV costs. Under both optimistic and pessimistic conditions, automakers are simulated to fully or mostly comply with a 2030 requirement of 30% ZEV sales (rather than pay a penalty). Of the three compliance mechanisms, intra-firm cross-price subsidization dominates. The policy could reduce automaker profit by 7% to 44% in 2030 (relative to the baseline in the same year), mostly due to reduced vehicle sales in total, though overall profits still grow year-on-year from 2020. We identify key uncertainties in these results.
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Fuel economy regulation is a powerful instrument to reduce CO2 emissions of vehicles. CO2 emissions from transport have to be dramatically reduced to reach ambitious CO2 targets, but fuel economy standards below 75 gCO2/km (72.8 MPG) cannot be reached with combustion engine vehicles but require plug-in electric vehicles (PEVs). However, the specific relationship between stringent fuel economy standards and PEV market share is unclear. Here, we analyse CO2 fleet targets in Europe where Regulation (EU) 2019/631 sets a target of 59.4 gCO2/km (90.9 MPG) in 2030. We use data of 3.2 million records with model-specific car sales in Europe from 2010 to 2016 to project future sales and CO2 emissions of all major vehicle manufacturers. We analyse the required PEV sales for these manufacturers to fulfill the CO2 targets and compare them to the manufacturers' announced sales targets. Our results demonstrate that regulation's target leads to PEV sales shares between 27 and 41% in 2030. The lower value is required if all manufacturers only sell BEV and the upper if only PHEV. In conclusion, ambitious CO2 fleet regulation leads to fast market diffusion of PEVs, but the current regulation is less ambitious than car maker targets in 2025.
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As China is faced with the double dilemmas of environmental pollution and energy security, new-energy vehicles (NEVs) come with high expectations, which need to be guided by an “invisible hand”. To analyse the optimal functioning power of policies and determine the direction of future policy implementation, this paper utilizes the COPA framework (i.e., analysis from four dimensions of contents, outlook, power, and authorities) to analyse policy evolution in respect of the new-energy vehicle industry (NEVI). In addition, a quantitative table of policy power is designed to construct the policy effects in various periods. Furthermore, this paper employs threshold model and quantile regression model to explore the threshold effect of policy power on the policy implementation effects and the transformation of policy implementation effects at different development stages, respectively. The results are as follows. (1) The Chinese NEVI policy continues to attach importance to government-guided consumption and government-supported technical development, with the major issuing form still being “notices”. Although “moderate” industrial policies are adopted as the main policies, the issuance strength has been rising periodically, and the functioning strength has been maintaining a steady rise year by year. The non-definition of the competent authorities is one of the key factors that affect the development of the NEVI. (2) The policy power has a significant threshold effect on its functioning strength. When the policy strength exceeds the threshold value of 69, the effect of the policy will nearly double; thus, to promote the technological innovation of NEVs, it is necessary to formulate high-intensity policies. (3) The effect of industrial policy will differ greatly at different development stages. Along with the gradual formation of market orientation of the NEVI, the effect of industrial policies has weakened gradually. Properly reducing the subsidy of NEVs will achieve the optimal allocation of government resources.
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The US Corporate Average Fuel Economy (CAFE) regulations are intended to influence automaker vehicle design and pricing choices. CAFE policy has been in effect for the past three decades, and new legislation has raised standards significantly. We present a structural analysis of automaker responses to generic CAFE policies. We depart from prior CAFE analyses by focusing on vehicle design responses in long-run oligopolistic equilibrium, and we view vehicles as differentiated products, taking demand as a general function of price and product attributes. We find that under general cost, demand, and performance functions, single-product profit maximizing firm responses to CAFE standards follow a distinct pattern: firms ignore CAFE when the standard is low, treat CAFE as a vehicle design constraint for moderate standards, and violate CAFE when the standard is high. Further, the point and extent of first violation depends upon the penalty for violation, and the corresponding vehicle design is independent of further standard increases. Thus, increasing CAFE standards will eventually have no further impact on vehicle design if the penalty for violation is also not increased. We implement a case study by incorporating vehicle physics simulation, vehicle manufacturing and technology cost models, and a mixed logit demand model to examine equilibrium powertrain design and price decisions for a fixed vehicle body. Results indicate that equilibrium vehicle design is not bound by current CAFE standards, and vehicle design decisions are directly determined by market competition and consumer preferences. We find that with increased fuel economy standards, a higher violation penalty than the current stagnant penalty is needed to cause firms to increase their design fuel economy at equilibrium. However, the maximum attainable improvement can be modest even if the penalty is doubled. We also find that firms’ design responses are more sensitive to variation in fuel prices than to CAFE standards, within the examined ranges.
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What is a suitable modelling approach for socio-technical systems? The answer to this question is of great importance to decision makers in large scale interconnected network systems. The behaviour of these systems is determined by many actors, situated in a dynamic, multi-actor, multi-objective and multi-level jungle. Models to support such an actor should be able to capture both the physical and social reality of the system, their interactions with one another and the external dynamic environment. Moreover, they must allow users to experiment with changes in both the physical and the social network configuration. To deal with these challenges a generic agent-based modelling framework for socio-technical systems is developed in this thesis. The cornerstone of the framework is a shared language formalised in an ontology, which forms the interface needed to bring different elements of the system (both social and physical) together, to interconnect different models and ensure interoperability. The re-usability of building blocks helps modellers build new models more efficiently. The models developed with the new framework are shown to offer valuable decision support in case studies of an oil refinery supply chain and an intermodal freight hub.
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Advancing the state of the art of simulation in the social sciences requires appreciating the unique value of simulation as a third way of doing science, in contrast to both induction and deduction. Simulation can be an effective tool for discovering surprising consequences of simple assumptions. This essay offers advice for doing simulation research, focusing on the programming of a simulation model, analyzing the results sharing the results, and replicating other people's simulations. Finally, suggestions are offered for building of a community of social scientists who do simulation.
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Agent-based modeling is a powerful simulation modeling technique that has seen a number of applications in the last few years, including applications to real-world business problems. After the basic principles of agent-based simulation are briefly introduced, its four areas of application are discussed by using real-world applications: flow simulation, organizational simulation, market simulation, and diffusion simulation. For each category, one or several business applications are described and analyzed.
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Scientists have increasingly employed computer models in their work. Recent years have seen a proliferation of agent-based models in the natural and social sciences. But with the exception of a few "classic" models, most of these models have never been replicated by anyone but the original developer. As replication is a critical component of the scientific method and a core practice of scientists, we argue herein for an increased practice of replication in the agent-based modeling community, and for widespread discussion of the issues surrounding replication. We begin by clarifying the concept of replication as it applies to ABM. Furthermore we argue that replication may have even greater benefits when applied to computational models than when applied to physical experiments. Replication of computational models affects model verification and validation and fosters shared understanding about modeling decisions. To facilitate replication, we must create standards for both how to replicate models and how to evaluate the replication. In this paper, we present a case study of our own attempt to replicate a classic agent-based model. We begin by describing an agent-based model from political science that was developed by Axelrod and Hammond. We then detail our effort to replicate that model and the challenges that arose in recreating the model and in determining if the replication was successful. We conclude this paper by discussing issues for (1) researchers attempting to replicate models and (2) researchers developing models in order to facilitate the replication of their results.
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This paper provides a survey on studies that analyze the macroeconomic effects of intellectual property rights (IPR). The first part of this paper introduces different patent policy instruments and reviews their effects on R&D and economic growth. This part also discusses the distortionary effects and distributional consequences of IPR protection as well as empirical evidence on the effects of patent rights. Then, the second part considers the international aspects of IPR protection. In summary, this paper draws the following conclusions from the literature. Firstly, different patent policy instruments have different effects on R&D and growth. Secondly, there is empirical evidence supporting a positive relationship between IPR protection and innovation, but the evidence is stronger for developed countries than for developing countries. Thirdly, the optimal level of IPR protection should tradeoff the social benefits of enhanced innovation against the social costs of multiple distortions and income inequality. Finally, in an open economy, achieving the globally optimal level of protection requires an international coordination (rather than the harmonization) of IPR protection.
The evolution of cooperation. Science (80-. )
  • R Axelrod
  • W D Hamilton
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