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Open Access Publications from the University of California

Subsidizing Mass Adoption of Electric Vehicles: Quasi-Experimental Evidence from California

  • Author(s): Muehlegger, Erich J., PhD
  • Rapson, David S., PhD
  • et al.
Abstract

Little is known about demand for EVs in the mass market. In this paper, we exploit a natural experiment that provides variation in large EV subsidies targeted at low- and middle-income households in California. Using transaction-level data, we estimate two important policy parameters using triple differences: the subsidy elasticity of demand for EVs and the rate of subsidy pass-through. Estimates show that demand for EVs amongst low- and middle-income households is price-elastic and pass-through is complete. We use these estimates to calculate the expected subsidy bill required for California to reach its goal of 1.5 million EVsby 2025.

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