Oil prices and the demand for electric vehicles in U.S. states : an econometric analysis

Abstract

Increasing and encouraging the use of electric vehicles (EVs) has been proposed as one solution to reduce greenhouse gas (GHG) particularly CO2 emissions and also to decrease fuel consumption in order to mitigate climate change effects. Over the last decade EVs technology has improved significantly and this led to an increase in the amount of EVs sales all over the world. This study analyse the relation between EVs demand and changes in gasoline prices, in conjunction with other socioeconomic determinants. Using panel data from fifty U.S. states between 2011 and 2017, the impacts of six socioeconomic factors are examined in a multiple linear regression model. Besides, analysing the impact of such factors only on EVs demand the study seeks to examine such affects also on plug-in hybrid electric vehicles (PHEVs), and battery electric vehicles (BEVs). The determinants include gasoline price, percentage of renewable energy in total electricity generation, charging stations, population density, personal income per capita, and electricity price. The results indicate that the first four determinants mentioned are positively associated with EVs demand. The other two factors, personal income per capita are positively correlated but the impact is negligible and electricity price are positively associated with EVs but negatively correlated to PHEVs and BEVs demand. Based on the conclusions, suggestions are proposed.