The Determinants of Hybrid-Electric Vehicle Adoption: Insights from State Registration Data

Abstract

This paper examines the effect of tax incentives, gasoline prices and other socio-economic factors on the demand for Hybrid Electric Vehicles (HEVs) in different U.S. states. As hybrid sales increase, it is important for policymakers to understand how these factors influence demand in order to judge the effectiveness of competing HEV incentive policies. The paper develops a demand model for per-state market-share, and uses cross-sectional time-series data on new Hybrid Electric Vehicle (HEV) registrations in different U.S. states in 2003 and 2004 to evaluate the significance of difference factors. In 2003, a number of predictors were significant, suggesting different policy alternatives for promoting adoption. In 2004, when demand for the Toyota Prius exceeded supply, HEV registrations were explained almost entirely by dealer location.