WORKING P A P E R Bringing the electric vehicle to the mass market a review of barriers, facilitators and policy interventions FLAVIA TSANG JANICE S. PEDERSEN STEVEN WOODING DIMITRIS POTOGLOU WR-775 February 2012 Sponsored by RAND Europe's Direct Investment Programme This product is part of the RAND Europe working paper series. RAND working papers are intended to share researchers’ latest findings and to solicit informal peer review. They have been approved for circulation by RAND Europe but have not been formally edited or peer reviewed. Unless otherwise indicated, working papers can be quoted and cited without permission of the author, provided the source is clearly referred to as a working paper. RAND’s publications do not necessarily reflect the opinions of its research clients and sponsors. is a registered trademark. Preface This project is internally funded by RAND Europe's Direct Investment Programme and aims to develop an understanding of the factors affecting the wider adoption of electric vehicles. The project consists of two main phases: (i) a review of barriers and relevant government interventions; and (ii) a survey to determine the potential uptake of electric vehicles, using Cambridge, UK, as a case study. This Working Paper is the output from the first phase of the project. It provides an overview of the barriers and facilitators to the wider adoption of electric vehicles (EVs), and describes a variety of EV initiatives currently underway in a pragmatic selection of countries, namely the UK, France, Denmark, and Canada. Our research suggests that subsidising EV purchase costs means spending hundreds of millions of pounds of government funds, but that this would overcome a number of consumer barriers to wider EV uptake. We conclude that the development of recharging infrastructure, which is essential for EVs’ transition beyond the niche market, would rely on the success of public- private collaboration. Additionally, better information and more outreach programmes are needed to help consumers understand and take full advantage of existing EV technology. Finally, dependence on government support involves some uncertainties, especially in the current economic climate. While this review has been undertaken with the primary purpose of informing the design of a survey about the potential uptake of electric vehicles, it could also be used as a stand- alone resource for readers, researchers or policy makers with an interest in EV uptake and related policies. RAND Europe is an independent, not-for-profit policy research organisation that aims to improve policy and decision making in the public interest, through research and analysis. RAND Europe’s clients include European governments, institutions, NGOs and firms with a need for rigorous, independent, multidisciplinary analysis. This report has been peer-reviewed in accordance with RAND’s quality assurance standards. For more information about RAND Europe or this document, please contact: Dr. Dimitris Potoglou [email protected] RAND Europe Westbrook Centre, Milton Road Cambridge CB4 1YG UK Tel. +44 (1223) 353 329 iii Contents Preface......................................................................................................................... iii Contents ...................................................................................................................... v Table of Tables ........................................................................................................... vii List of abbreviations .................................................................................................... ix Executive summary ..................................................................................................... xi Acknowledgements ..................................................................................................... xv CHAPTER 1 Introduction .................................................................................... 1 1.1 Background........................................................................................................ 1 1.2 Objectives .......................................................................................................... 2 1.3 Why electric vehicles? ......................................................................................... 2 1.3.1 Types of electric vehicles ....................................................................... 3 1.3.2 Vehicles eligible for government incentive schemes in selected countries ............................................................................................... 4 CHAPTER 2 Government motivations for EV market expansion .......................... 7 2.1 Governments’ motivations for EV market expansion .......................................... 7 2.1.1 Environmental concerns ....................................................................... 7 2.1.2 Economic concerns ............................................................................... 8 CHAPTER 3 Barriers and facilitators to wider EV adoption ............................... 11 3.1 Barriers to wider EV adoption .......................................................................... 11 3.1.1 Limited range, long recharge time and high cost ................................. 11 3.1.2 Limited recharging availability ............................................................ 13 3.1.3 Safety concerns ................................................................................... 13 3.1.4 Consumers’ negative perception and understanding of future savings ................................................................................................ 14 3.1.5 Consumers’ attitude-action gap .......................................................... 16 3.1.6 Customers’ unfamiliarity with EVs ..................................................... 16 3.1.7 Institutional barriers ........................................................................... 17 3.2 Facilitators to wider EV adoption ..................................................................... 17 3.2.1 Incentives and consumers’ price sensitivity.......................................... 17 3.2.2 Innovations in supporting infrastructure ............................................. 18 3.2.3 Symbolic values and early adopters ..................................................... 18 CHAPTER 4 Policies and programmes for wider EV adoption ............................ 21 v Bringing the electric car to the mass market RAND Europe 4.1 Our approach in selecting countries for comparison with the UK .................... 21 4.2 Incentivising EV market expansion ................................................................. 22 4.2.1 UK .................................................................................................... 22 4.2.2 France ................................................................................................ 25 4.2.3 Denmark ........................................................................................... 26 4.2.4 Canada .............................................................................................. 28 4.3 Developing infrastructure ................................................................................ 30 4.3.1 UK .................................................................................................... 30 4.3.2 France ................................................................................................ 30 4.3.3 Denmark ........................................................................................... 31 4.3.4 Canada .............................................................................................. 31 4.4 The Better Place Model ................................................................................... 32 CHAPTER 5 Examples of EV initiatives .............................................................. 35 5.1 London ........................................................................................................... 35 5.2 Milton Keynes ................................................................................................. 37 5.3 Cambridge ...................................................................................................... 37 5.4 Paris ................................................................................................................ 39 5.5 Copenhagen .................................................................................................... 39 5.6 New York City ................................................................................................ 41 5.7 Quebec and Ontario ....................................................................................... 42 CHAPTER 6 Conclusions ................................................................................... 45 REFERENCES ....................................................................................................... 49 Reference list ............................................................................................................. 50 vi Table of Tables Table 1: Comparison of BEVs, PHEVs and HEVs ............................................................ 4 Table 2: Vehicle eligibility criteria for consumer incentive in the UK ................................ 5 Table 3: Vehicles eligible for government subsidy of purchase price, cross-country comparison ....................................................................................................