Marta Talevi, from LSE, will present her research.

Title: The Electric Vehicle Rebound Effect

Authors: Kenneth Gillingham, Beia Spiller, Marta Talevi

Abstract: As electric vehicles (EVs) are substantially cheaper to drive per mile than internal combustion engine vehicles (ICEs), a rebound effect may occur after a household purchase a EV if the savings are reallocated to increase total VMT and the miles traveled using ICEs. Yet, applying estimates of the rebound effect from studies on fuel efficient vehicles would be inappropriate, as the difference in costs per miles is substantially more pronounced and the degree to which EVs and ICEs are substitutable in the eyes of consumers is an empirical question. The aim of this paper is to look at how households adjust their total VMT and the allocation of VMT between vehicles in response to the purchase of an EV, as well as in response to changes in gasoline prices and electricity rates. To answer these questions, we use detailed information on the composition of households’ vehicle portfolio in Massachusetts (from registration data) and the miles driven by each vehicle over time (from inspection data), combined wth a reach set of household and location characteristics. These results will help us estimate to what extent EVs can offset the use of existing ICE vehicles. Understanding the substitutability between these vehicles is crucial as we move towards pricing policies that internalize externalities of gasoline consumption.