Electric Vehicles, Business Models and Consumer Choices

Abstract

Road transport heavily relies on fossil fuels and contributes to a series of problems including pollution, greenhouse gas emissions and fuel dependence. Replacing fossil-fuel powered vehicles with electric vehicles (EV) on a large scale is regarded as a potential or even necessary solution to alleviate these problems. Therefore, many national governments have announced a ban on sales of new fossil fuel cars by 2030/40. In order to achieve this goal, they also implemented incentive policies for EV adoption. However, the market share of EVs remains low in the vast majority of countries despite the governmental promotion.
In order to achieve the goal of phasing out fossil fuel powered cars, it is of utmost importance to understand consumer preferences for EV and the main barriers for mass adoption, which can facilitate the development of more effective policy instruments. The most prominent barriers towards EV adoption are mainly due to the limitations of state-of-the-art battery technology (such as expensive batteries, limited driving range, rather long charging times and uncertainties surrounding battery lifetime and residual value) and the lagging behind of charging infrastructure development. Since most of these barriers can be attributed to the battery technology, a fundamental way to overcome these barriers in the long run is to finance the R&D of battery technology which eventually increases the competence of EV. However, an often-ignored notion is that the value of the technology itself is not inherent nor fixed, and we can already attempt to boost the value of the technology and overcome some of the barriers in the meantime.