From Government to Market? A Discrete Choice Analysis of Policy Instruments for Electric Vehicle Adoption (CEIBS Working Paper, No. 039/2020/POM, 2020)

With the calls for policy instruments to shift from “government” to “market”, surging interest leads to a broad debate on the role of market-oriented policy instruments in promoting the adoption of electric vehicles (EVs). As the two prime examples of market-oriented policy instruments, personal carbon trading (PCT) and tradable driving credit (TDC) schemes are theoretically regarded to alter consumers’ EV preferences by both economic and psychological motivations. However, limited studies validate such effects. To fill the gaps, we conduct a discrete choice experimental survey by integrating vehicle, psychological, and policy attributes together. The empirical results from China reveal how consumers make trade-offs between economic and psychological motivations. In particular, although PCT and TDC can stimulate consumers’ EV adoption behaviors through monetary revenues, the positive effect of more revenues from PCT and TDC in promoting EV adoption is not always supported because EV adoption is subject to some psychological attributes, especially perceived norm pressures. It implies that consumers with stricter norms will be driven more by social and moral pressures than by monetary revenues. Even so, PCT and TDC are considered to be more powerful and sustainable than existing financial incentives. These findings not only contribute to the understanding of the interaction between psychological and policy attributes, but also provide insights for policymakers to design novel policy instruments to promote EV adoption.