Turrentine, Thomas S., Daniel Sperling, Kenneth S. Kurani (1992) Market Potential of Electric and Natural Gas Vehicles. Institute of Transportation Studies, University of California, Davis, Research Report UCD-ITS-RR-92-08
Market research for AFVs has gone through two phases; this project constitutes the beginning of a third phase. The first phase of AFV market studies, conducted in the 1970s, consisted of enthusiastic predictions of widespread AFV penetration in response to soaring fuel costs and fuel shortages. The predictions were based on optimism about technological developments and had minimal data on consumer responses.
With the drop of gasoline prices in the 1980s, optimism faded and AFVs market research entered a second phase, focusing upon the effects of the limitations of EVs and other alternatives on consumer choices. Compared to earlier studies, these studies have predicted relatively low penetration of AFVs and, where focus groups or stated preference studies were used, consumers did not seem enthused.
These second phase studies provided market estimations for AFVs which appear technically sophisticated but in reality have little empirical validity, are theoretically misinformed and lack any normative vision of how we might improve the situation. They use data from gasoline vehicle purchases or from opinions of consumers with no experience with AFVs. For analysis these studies used models which contain inappropriate assumptions about consumer decision processes and failed to consider the dynamic influence of information on consumer decisions in a new market. In general, second phase studies did not model the interactive competition of different AFVs, the role of a growing green-market, and did not deal adequately with the influence of radical attribute changes, such as the effect of reduced driving range of electric vehicles (EVs) on consumer behavior or the convenience of home refueling and recharging.
This project by the Institute of Transportation Studies at UC Davis (ITS-Davis) is the benchmark for the third phase of research in AFVs in which analysis is based upon more substantive data, such as test drives of AFV products, more robust models of consumer decision making, and studies of experienced users of CNG and electric vehicles in New Zealand, Canada, the U.S. and Germany (we are collaborating with German researchers on a large field test in Baden Wuerttemberg, Germany in which private citizens in 13 cities will be testing EVs for a two year period). This long term, multi-faceted approach is designed to produce detailed information about potential market segments, and the best strategies to advance the AFVs market in California.
This ITS-Davis project comprises three stages of activities. This report is an interim report (work in progress) of the first year of activities. In this first year we have simulated market contexts to observe consumer decision making and to evaluate primary constraints on consumer choices. The second and third years of activities are survey projects which rely upon the first year for insight; a credible survey instrument will be developed in year two and implemented in year 3 for testing our hypotheses across the entire California population. We will identify policy instruments that would be most effective at increasing sales of vehicles and fuels, and will estimate AFV market penetration under different conditions and in response to various policy initiatives. We are focusing on electric and natural gas vehicles (including hybrid configurations), but are including methanol as well.
This three-year project includes ten linked research activities: 1) development of a theoretical framework of consumer choice behavior; 2) test drive and interviews at the Rose Bowl in June 1991 and 11 follow-up focus groups in the following week; 4) constraints analysis of potential EV owners; 5) survey of refueling and other behavior of current EV owners in California; 6) survey of owners of CNG home refueling units in Ontario, Canada; 7) surveys and interviews in New Zealand to learn from that country's 1980s experiment with CNG; 8) use of gaming techniques (PIREG) in interviews of households to determine their decision processes for purchasing and using limited range vehicles; 9) mail surveys to extrapolate findings from previous activities to the entire California population; and 10) permanent panel studies of households to study behavior and attitude changes over time.
The information and data collection components of the first four activities have been completed and preliminary results of those efforts are presented in this summary and attached reports. Activities 5-8 have been initiated and will be completed in mid 1992. The mail surveys and panel studies are proposed for year 3 of this project.