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©Copyright JASSS Maxwell Brown (2013) Catching the PHEVer: Simulating Electric Vehicle Diffusion with an Agent-Based Mixed Logit Model of Vehicle Choice Journal of Artificial Societies and Social Simulation 16 (2) 5 <http://jasss.soc.surrey.ac.uk/16/2/5.html> Received: 06-Aug-2012 Accepted: 02-Nov-2012 Published: 31-Mar-2013 Abstract This research develops then merges two separate models to simulate electric vehicle diffusion through recreation of the Boston metropolitan statistical area vehicle market place. The first model is a mixed (random parameters) logistic regression applied to data from the US Department of Transportation's 2009 National Household Travel Survey. The second, agent-based model simulates social network interactions through which agents' vehicle choice sets are endogenously determined. Parameters from the first model are applied to the choice sets determined in the second. Results indicate that electric vehicles as a percentages of vehicle stock range from 1% to 22% in the Boston metropolitan statistical area in the year 2030, percentages being highly dependent on scenario specifications. A lower price is the main source of competitive advantage for vehicles but other characteristics, such as vehicle classification and range, are demonstrated to influence consumer choice. Government financial incentive availability leads to greater market shares in the beginning years and helps to spread diffusion in later years due to an increased base of initial adopters. Although seen as a potential hindrance to EV diffusion, battery cost scenarios have relatively small impacts on EV diffusion in comparison to policy, range, miles per gallon (MPG), and vehicle miles travelled (VMT) as a percentage of range assumptions. Pessimistic range assumptions decrease overall PHEV and BEV percentages of vehicle stock by 50% and 30%, respectively, relative to the EPA-estimated range scenarios. Fuel cost scenarios do not considerably alter estimated BEV and PHEV stock but increase the ratio of car stock to light truck stock in the internal combustion engine (ICE) vehicle spectrum. Specifically, cars are estimated at 55% of ICE vehicle stock in the default fuel price scenario but increase to 62% of ICE vehicle stock in the high world oil price scenario, with LTs covering the appropriate differences. Keywords: Electric Vehicle, Diffusion, Mixed Logit, Vehicle Choice, Network Effects Introduction 1.1 Before the Model T, engines were primarily designed to run on steam and then ethanol or biodiesel (Hamlyn 1967). Henry Ford's wife, Clara Ford, drove an electric-powered vehicle; at the time, electric vehicles held a small but substantial-enough niche market with well-to-do urban housewives (Henry Ford Estate 2007; Romero 2009). These vehicle types were quickly phased out by the mass-produced internal combustion engine (ICE) vehicles. Over the past century, automobile enthusiasts have introduced alternative fuel vehicles (AFVs) but none have held a substantial share in the US transportation market. Until recently, electric vehicles (EVs) were primarily put together by the end-users from kits sold by the manufacturer. Now, in 2012, the largest automobile manufacturers in the US have introduced electric vehicles into their model lineup and are pushing forward with research and development. 1.2 Proponents of alternative fuels are challenging petroleum's dominance in the transportation sector. Realizing climate change and energy security benefits, US governments at the state and federal level have incentivized AFV purchases in an attempt to increase deployment. Over the past decade, more than 20 US states have offered financial incentives of various types and the US federal government has offered tax waivers towards the purchase of hybrid electric vehicles (HEVs), battery electric vehicles (BEVs), and plug-in hybrid electric vehicles (PHEVs). Additionally, energy security concerns and the economic effects of national petroleum reliance during periods of substantial petroleum price fluctuation have become more salient following significant gasoline price increases in 2008. 1.3 The two largest, broadly-grouped barriers commonly cited in EV deployment are technological development and social acceptance. The primary concern with the former is the range of the vehicle, typically referenced as "range anxiety," as well as price. The basis for the latter concern is that over this past century vehicles have primarily run on gasoline and, even if they were cost-competitive, EVs still face an uphill battle in being accepted as a primary means of personal transportation. This study models the spreading of individuals' willingness to consider (WtC) electric vehicles EVs through an agent-based model of vehicle innovation diffusion. Agents' social interactions are used to model the spread of WtC and if an agent has exceeded its WtC threshold (i.e. caught the "PHEVer") it will introduce EVs into their vehicle choice sets. Literature Review System and Agent-Based Models of Vehicle Choice and AFV Diffusion 2.1 The model developed in this paper draws from key strengths included in other recently created, agent-based vehicle choice models (VCMs). The decision- making component of this model utilizes survey data from the 2009 National Household Travel Survey (NHTS; US DOT 2009) to determine vehicle attribute valuation, similar to other past studies (de Haan and Mueller 2009; de Haan, Mueller, and Scholz 2009; Zhang et al. 2011; Cui et al. 2011). In previous agent- based VCMs, researchers have utilized a variant of logistic regression (logit) decision making methods (de Haan and Mueller 2009; de Haan, Mueller, and Scholz 2009; Cui et al 2011; Zhang et al 2011), while other researchers developed mathematical and systems-based estimates of consumer behavior (Struben and Sterman 2008, Sullivan et al 2009; Eppstein et al 2011). Prior research has primarily utilized two methods to incorporate agent attributes into their vehicle choice models. The first method creates synthetic agents from population characteristics (Eppstein et al. 2011; Cui et al. 2011). The second method replicates http://jasss.soc.surrey.ac.uk/16/2/5.html 1 14/10/2015

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Page 1: Catching the PHEVerjasss.soc.surrey.ac.uk/16/2/5/5.pdf · Social Influence as a Factor Affecting AFV Consumers 2.5 Driving a more environmentally-friendly vehicle is greatly influenced

©CopyrightJASSS

MaxwellBrown(2013)

CatchingthePHEVer:SimulatingElectricVehicleDiffusionwithanAgent-BasedMixedLogitModelofVehicleChoice

JournalofArtificialSocietiesandSocialSimulation 16(2)5<http://jasss.soc.surrey.ac.uk/16/2/5.html>

Received:06-Aug-2012Accepted:02-Nov-2012Published:31-Mar-2013

Abstract

ThisresearchdevelopsthenmergestwoseparatemodelstosimulateelectricvehiclediffusionthroughrecreationoftheBostonmetropolitanstatisticalareavehiclemarketplace.Thefirstmodelisamixed(randomparameters)logisticregressionappliedtodatafromtheUSDepartmentofTransportation's2009NationalHouseholdTravelSurvey.Thesecond,agent-basedmodelsimulatessocialnetworkinteractionsthroughwhichagents'vehiclechoicesetsareendogenouslydetermined.Parametersfromthefirstmodelareappliedtothechoicesetsdeterminedinthesecond.Resultsindicatethatelectricvehiclesasapercentagesofvehiclestockrangefrom1%to22%intheBostonmetropolitanstatisticalareaintheyear2030,percentagesbeinghighlydependentonscenariospecifications.Alowerpriceisthemainsourceofcompetitiveadvantageforvehiclesbutothercharacteristics,suchasvehicleclassificationandrange,aredemonstratedtoinfluenceconsumerchoice.Governmentfinancialincentiveavailabilityleadstogreatermarketsharesinthebeginningyearsandhelpstospreaddiffusioninlateryearsduetoanincreasedbaseofinitialadopters.AlthoughseenasapotentialhindrancetoEVdiffusion,batterycostscenarioshaverelativelysmallimpactsonEVdiffusionincomparisontopolicy,range,milespergallon(MPG),andvehiclemilestravelled(VMT)asapercentageofrangeassumptions.PessimisticrangeassumptionsdecreaseoverallPHEVandBEVpercentagesofvehiclestockby50%and30%,respectively,relativetotheEPA-estimatedrangescenarios.FuelcostscenariosdonotconsiderablyalterestimatedBEVandPHEVstockbutincreasetheratioofcarstocktolighttruckstockintheinternalcombustionengine(ICE)vehiclespectrum.Specifically,carsareestimatedat55%ofICEvehiclestockinthedefaultfuelpricescenariobutincreaseto62%ofICEvehiclestockinthehighworldoilpricescenario,withLTscoveringtheappropriatedifferences.

Keywords:ElectricVehicle,Diffusion,MixedLogit,VehicleChoice,NetworkEffects

Introduction

1.1 BeforetheModelT,engineswereprimarilydesignedtorunonsteamandthenethanolorbiodiesel(Hamlyn1967).HenryFord'swife,ClaraFord,droveanelectric-poweredvehicle;atthetime,electricvehiclesheldasmallbutsubstantial-enoughnichemarketwithwell-to-dourbanhousewives(HenryFordEstate2007;Romero2009).Thesevehicletypeswerequicklyphasedoutbythemass-producedinternalcombustionengine(ICE)vehicles.Overthepastcentury,automobileenthusiastshaveintroducedalternativefuelvehicles(AFVs)butnonehaveheldasubstantialshareintheUStransportationmarket.Untilrecently,electricvehicles(EVs)wereprimarilyputtogetherbytheend-usersfromkitssoldbythemanufacturer.Now,in2012,thelargestautomobilemanufacturersintheUShaveintroducedelectricvehiclesintotheirmodellineupandarepushingforwardwithresearchanddevelopment.

1.2 Proponentsofalternativefuelsarechallengingpetroleum'sdominanceinthetransportationsector.Realizingclimatechangeandenergysecuritybenefits,USgovernmentsatthestateandfederallevelhaveincentivizedAFVpurchasesinanattempttoincreasedeployment.Overthepastdecade,morethan20USstateshaveofferedfinancialincentivesofvarioustypesandtheUSfederalgovernmenthasofferedtaxwaiverstowardsthepurchaseofhybridelectricvehicles(HEVs),batteryelectricvehicles(BEVs),andplug-inhybridelectricvehicles(PHEVs).Additionally,energysecurityconcernsandtheeconomiceffectsofnationalpetroleumrelianceduringperiodsofsubstantialpetroleumpricefluctuationhavebecomemoresalientfollowingsignificantgasolinepriceincreasesin2008.

1.3 Thetwolargest,broadly-groupedbarrierscommonlycitedinEVdeploymentaretechnologicaldevelopmentandsocialacceptance.Theprimaryconcernwiththeformeristherangeofthevehicle,typicallyreferencedas"rangeanxiety,"aswellasprice.Thebasisforthelatterconcernisthatoverthispastcenturyvehicleshaveprimarilyrunongasolineand,eveniftheywerecost-competitive,EVsstillfaceanuphillbattleinbeingacceptedasaprimarymeansofpersonaltransportation.Thisstudymodelsthespreadingofindividuals'willingnesstoconsider(WtC)electricvehiclesEVsthroughanagent-basedmodelofvehicleinnovationdiffusion.Agents'socialinteractionsareusedtomodelthespreadofWtCandifanagenthasexceededitsWtCthreshold(i.e.caughtthe"PHEVer")itwillintroduceEVsintotheirvehiclechoicesets.

LiteratureReview

SystemandAgent-BasedModelsofVehicleChoiceandAFVDiffusion

2.1 Themodeldevelopedinthispaperdrawsfromkeystrengthsincludedinotherrecentlycreated,agent-basedvehiclechoicemodels(VCMs).Thedecision-makingcomponentofthismodelutilizessurveydatafromthe2009NationalHouseholdTravelSurvey(NHTS;USDOT2009)todeterminevehicleattributevaluation,similartootherpaststudies(deHaanandMueller2009;deHaan,Mueller,andScholz2009;Zhangetal.2011;Cuietal.2011).Inpreviousagent-basedVCMs,researchershaveutilizedavariantoflogisticregression(logit)decisionmakingmethods(deHaanandMueller2009;deHaan,Mueller,andScholz2009;Cuietal2011;Zhangetal2011),whileotherresearchersdevelopedmathematicalandsystems-basedestimatesofconsumerbehavior(StrubenandSterman2008,Sullivanetal2009;Eppsteinetal2011).Priorresearchhasprimarilyutilizedtwomethodstoincorporateagentattributesintotheirvehiclechoicemodels.Thefirstmethodcreatessyntheticagentsfrompopulationcharacteristics(Eppsteinetal.2011;Cuietal.2011).Thesecondmethodreplicates

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surveyrespondentsasagents(deHaanandMueller2009;deHaan,Mueller,andScholz2009;Zhangetal.2011).Governmentinterventionandmanufacturerresponsefunctionshavealsobeenincorporatedintoanagent-basedVCMframework(Zhangetal.2011).

2.2 Theprior-citedagent-basedVCMsgenerallyincludethevariablesoffuelsavingsandannualincomebut,unlikemostotherVCMs,alsoincludemediaand/orsocialinteractionsasinfluentialvariableswhichaffectconsumers'willingnesstoconsider(WtC)orpurchaseAFVs.Prioragent-basedVCMsmodelsocialinteractionssimulatedinaspatiallyexplicitenvironment(Eppsteinetal.2011;Cuietal.2011).ResearchershavesimulatedthresholdrangesforconsiderationofanAFV(Eppsteinetal.2011)whileothersendogenouslyincorporatedtheagents'socialnetworkconditionsintotheagents'utilityfunctions,derivedfromprimaryresearchandBayesianmixedlogitmethodologies(Zhangetal.2011).Inthemajorityofcitedstudies,aswellasothermodels,diffusionaspectsaremodeledusingthetheoryofhomophilywhich,initssimplestform,theorizesthatpeople'sbeliefstendtodrifttowardsthosethataresimilartothem(Schelling1978).

2.3 Eppsteinetal.(2011)createdauniqueattributeintheirsimulationswhichinvolvedathresholdtoconsiderAFVs;simulatedinteractionsamongagentsimpactedtheirconsiderationthresholdforEVs.ThethresholdisnormallydistributedaroundameanderivedfromsurveydataanalyzedbyCurtinetal.(2009).Theauthorsinitiatedtheenvironmentsuchthatinteractionsamongagentsaredonewithinasocialnetworkanddevelopaheuristicvaluationofmediaandsocialinfluences,determinedbyanagent'ssusceptibilitytoaswellastheassumedamountofmediacoverage.ThemodelpresentedheredrawsheavilyonEppsteinetal.'sconsumerinteractionframeworkwhileincorporatingmixedlogitparameterestimates.

2.4 StrubenandSterman(2008)developedaframeworkandmodelforAFVdiffusionbasedonconsumers'WtCAFVs.Intheirsimulations,WtCisaffectedbytotalexposuretotheplatformwhichisprimarilyinfluencedthroughthreemainchannels:marketing,socialexposurefromdriversofvehicles,andwordofmouthonvehiclesfromnon-drivers.Additionally,consumersgaugetheattractivenessofanAFVbasedonprice,performance,operatingcosts,safety,range,andecologicalimpactwhichmaintainadynamicrelationshipwithautomobileproducersandfossilfuelprices.ThemodelinthispaperseekstobeadaptableforseveraldifferentinstancesofinfluentialfactorsindicatedbyStrubenandSterman(2008)throughflexibilityinmodelassumptionsanddatasourcesrelatedtofuelcostsandvehiclecharacteristics.

SocialInfluenceasaFactorAffectingAFVConsumers

2.5 Drivingamoreenvironmentally-friendlyvehicleisgreatlyinfluencedbyindividuals'socialnetworks(Heffneretal.2005;KahnandVaughn2008;SextonandSexton2010).Theroleofpeerinfluenceonconsumerdecisionshasbeenobservedinmultiplepaststudies.BeardenandEtzel(1982)originatedthequantitativeassessmentofpeerinfluenceonconsumerdecisionsusinganestedrepeatedmeasuresdesign.Theirresultssuggestthatpeerinfluencehasastrongroleinconsumerdecision-makingprocesses,mostlyforthoseproductswhichareportrayedinpublicsettings.TheresultsofBeardenandEtzel'sanalysishavebeenrepeatedelsewhere(ChildersandRao1992;MakgosaandMohube2007).Similarly,evidencehasbeenfoundforover100differentstudiesinwhichhomophilywaspresent(McPhersonetal.2001).Blendingtheprimaryaspectsoftheaforementionedstudies,researchhasindicatedthatmediaandsocialnetworkscansignificantlyimpactconsumerdecisions(AralandWalker2011a;2011b)aswellastravelmodelchoice(Dugundjietal.2008;Dugundjietal.2011).

2.6 Consideringthatdrivingavehicleisapublicbehaviorandpeopletendtoidentifythemselvesandmakeastatementwiththeirvehicles(ChooandMokhtarain2004;SextonandSexton2010),peerinfluenceandsocialnetworkscanbededucedandhavebeenrecognizedasaninfluentialdeterminantofvehiclechoice.Realizingtheseinfluencesonvehiclechoice,studieshaveintroducedsocialandpsychological(Bolducetal.2008)aswellasneighboreffects(Mauetal.2008)intotheirVCMs.Thisstudymergeshomophilywithsocialnetworkeffectstoendogenouslydeterminethevehiclesavailableinconsumers'choicesets,theinclusionbeingspurredbyexceedingagents'WtCthresholdthroughsimulatedideadiffusion.

LogitModelsandSurveysofVehicleChoice

2.7 Researchershavedevelopedlogitmodelsforavarietyofpurposestoassessvehiclechoiceandconsumervaluationofvehiclefeatures.WhetheritisdeterminingthereasonbehindfallingmarketsharesofUSautomobilemanufacturers(TrainandWinston2007),examiningtheeffectsoftimeseriesvariationingasolinepriceexpectationsonthepricesandsharesofvehiclewithdifferentfueleconomyratings(AllcottandWozny2010),orgaugingwhetheraconsumerwillleaseorbuyavehicle(Dasgupta,Siddarth,andSilva-Risso2007),vehiclechoicemodelshavebeenusedforavarietyofdifferentapplicationsandpurposes.Thecoreideaisconsistentacrossallstudies:estimating,andincertaincasessimulating,consumerbehaviorandvaluationofvariousvehicleattributes.Theresearchpresentedheredevelopsasimilardiscretechoicestatisticalframeworkforvehiclechoicebutdeterminesthepowertypeofvehiclesavailableineachagent'schoicesetthroughsimulatedsocialnetworkinteractions.

2.8 SeveralVCMsarecapableofestimatingconsumervaluationoffueleconomyimprovements.Greene(2010)reviewedseveralpastconsumervaluationstudiesofvehiclesandfueleconomywithvariousmethodologies:mixedlogit,nestedlogit,statedandrevealedpreferencedata,hedonicprice,andpriceregression.Fueleconomyvaluationestimateswerefoundtoberatherinconsistentbetweenstudies;afindingsimilartotheUnitedStatesEnvironmentalProtectionAgency'sreviewoffueleconomyvaluation(USEPA2010).Greene'sanalysisandreviewindicatedthatconsumerswereestimatedtobewillingtopayfrom<1%upto400%ofdiscountedpresentvalueforfueleconomyimprovements.additionally,therewasnoevidentexplanationforthewidedifferencesamongtheestimates.

MethodsandModelOutline

MixedLogitModel

3.1 Foranoverviewofmixedlogitmethodology,seeTrain(2009).Mixedlogithastwobenefitstothepurposesoutlinedinthismodelandagent-basedmodelsingeneral.First,itpermitsaheterogeneoussetofconsumervaluationsofvehicleattributesbyallowingagentstoplaceuniqueemphases,drawnfromspecificdistributions,ontheobservablecharacteristicsinthechoiceset.Essentially,mixedlogitmodelsestimateboththemeanandspreadofanexplanatoryvariable'sinfluenceontheprobablyofthedependentvariable'soccurence.Second,afterestimationofparameters,thesimulationsarestraightforwardtoconductwithinanagent-basedframework.

3.2 Logitmodelsareoftenreferredtoasrandomutilitymodels(RUMs);themainpurposeofaRUMistoestimateandevaluateutilityfunctionsbasedondifferentproductattributes.WithinaRUMcontext,thismixedlogitmodel'sRUMrepresentationis:

(1)

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Where:Ui,j:UtilityofobservationiforvehiclejCj:Classofvehiclej(e.g.CUV,SUV,sedan,etc.)HPj:HorsepowerofvehiclejFPj:Foot-poundoftorqueofvehiclejSafetyj:Safetyratinginstarsofvehiclej

K:Incomecategory(low,middle,high)[1]Dk:DummyvariableforincomecategorykMSRPj:Manufacturer'sSuggestedRetailPriceofvehiclejDPGi:Dollarspergallonofgasolineforobservationiduringmonthofpurchase,bystateMPGj:EPAmilespergallonestimateofvehiclejVMTi:Averagedailyvehiclemilestravelledofobservationi

3.3 Explanatoryvariablesinthispaper'smixedlogitmodelarerepresentativebutnon-exhaustive(duetodatalimitations)ofthosefoundinthestudiesreviewedbyGreene(2010).Thedailygascost(DGC)variableistheproductofstate-levelpricepergallonofgasolineatthemonthofpurchasedividedbytherespective

vehicle'smilespergallonofgasoline(MPG)andtheaveragedailyvehiclemilestravelled.Manufacturersuggestedretailprice[2](MSRP)andgasolinepricesareadjustedtoJanuary2011dollarsusingtheconsumerpriceindex.Differentclassesofvehiclesareimplementedasdummyvariables;allclassdummyparameterestimatesareinreferencetotheconvertibleclassbaselineanddefinedbyWard's(2011).Thegeometricmeanoftorque,infoot-pounds,andhorsepowerparametersattheWards-measuredenginerotationsperminute(RPM)isusedasameasureofvehicleperformance;forsimplificationthiswillbereferredtoasthe'power'variable.Thisvariable'sformprovedbestafterthreeprevailingconditionswereobserved:

1. Includingbothparametersseparatelyinthesamemodelintroducedcollinearityissues.2. Theformprovidesasignificantlyhigheradditiontothelog-likelihoodestimateforeachmarketsectorthaneitherparameterindividually.3. Thegeometricmeanprovidesasignificantlyhigheradditiontothelog-likelihoodestimateforeachmarketsectorthanonlytheproductofthetwoterms

Safetyofvehiclesismeasuredastheaverageofoverallimpact-testsofstarsbasedontheUSDepartmentofTransportation(USDOT)safetyratings(USDOT

2012)[3].ParameterestimatesaredisplayedinTable1anddatasourcesareexplainedinfurtherdetailinthe'Data'section.Severalfunctionalformswereassessed;theanalysiswhichprovidedthegreatestaveragelog-likelihoodvaluesacrossgroupswaschosenasthefinalform.

Table1:MixedLogitRegressionParameterResults

ParameterEstimates[4]

Grouping Single,NoChildren Single,WithChildren Married,NoChildren Married,WithChildren RetiredSedan 2.433**** 0.981** 1.735** 1.653*** 1.618***CUV 3.069** 1.272*** 1.704**** 1.954** 1.447***Pickup 2.040**** -0.271*** 1.538** 1.308** 1.294*SUV 2.067** 0.554** 1.184**** 0.8509**** 0.467**Coupe 2.841*** 0.323* 0.769*** 1.223**** 0.537**Hatchback 2.136**** -0.483* -0.021* 0.465**** 0.101*Wagon 0.415*** 0.746** -0.125** 0.978*** -0.464***Van 1.725*** 1.261**** 0.834** 1.732*** 1.380****ln(Safety) 2.105** 2.958*** 2.583*** 3.25**** 2.852***ln(Power) 2.41*** 1.950** 2.521*** 1.99** 2.64***ln(MSRP_Low) -4.267*** -5.067** -4.233**** -4.853*** -3.991****ln(MSRP_Mid) -3.426** -4.396*** -3.509**** -4.299*** -3.525***ln(MSRP_High) -3.044*** -3.904** -3.474*** -4.274*** -3.177***ln(DGC_Low) -2.937** -2.126*** -2.592**** -2.769*** -2.678****ln(DGC_Mid) -2.556**** -2.942*** -2.825**** -2.726**** -2.359***ln(DGC_High) -3.29*** -1.993** -2.254*** -1.985*** -2.654****

StandardDeviationln(Safety) 0.985** 0.568* 0.795*** 0.689*** 0.897**ln(Power) 0.567*** 0.298*** 0.354*** 0.453** 0.378***ln(MSRP_Low) 0.614** 0.490** 0.693**** 0.772**** 0.595****ln(MSRP_Mid) 0.524** 0.596** 0.594**** 0.658*** 0.595***ln(MSRP_High) 0.673** 0.880* 0.792** 0.635** 0.839**ln(DGC_Low) 1.252** 1.013** 1.375*** 1.235*** 1.2943***ln(DGC_Mid) 1.341*** 1.198** 1.125*** 1.123*** 0.986***ln(DGC_High) 1.120*** 1.001** 1.135** 1.356*** 0.978****

NumberofObservations 2136 527 17978 2162 10432Log-Likelihood -8.5E+6 -1.7E+6 -5.4E+07 -3.3E+6 -1.4E+07

SocialActorsandBehaviors

3.4 EachmodelagentisparameterizedforeveryNHTSsurveyrespondentfromMetropolitanStatisticalArea(MSA)groupings[5](USDOT2009).Theagentsarelocatedintheirenvironmentbyregionandthentothefurthestextentpossible,downtotheMSAandthenfurtherplacedaccordinglybytherespondent-indicated

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populationdensityatthetract-levelcountysubdivisions(USCensusBureau2012).Locationattributesareimplementedtocontrolforpossiblecorrelationsamongagents'demographicsandtheirlocation.Theagentsarerandomlylocatedinanorbitalfashionaroundthecitycenterwithdistancedependentonthepopulationdensityrecordsinthe2009NHTS,theindividualswithhigherreporteddensitiesbeingclosertothecitycenter.

3.5 Theagentsareoriginallylimitedtoexploreoptionswithinthefueltypeclassoftheircurrently-ownedmodel[6]butwillexploreotheroptionsaftertheirindividualconsiderationthresholdhasbeenmetthroughsimulatedsocialinteractions.Interactionswithfourneighborsareimplementedtoincorporatethesimilaritieswithlatticeneighborhoodsmodels,bywhichtheideadiffusionequationisheavilyinfluenced.

3.6 Correspondingwiththebeliefsofpeerinfluenceonconsumerdecisionmakingandhomophily,aswellasEppsteinetal.'s(2011)vehicleconsiderationfunctions,interactionsmodeledbyMolofskyetal(1999),StrubenandSterman's(2008)implementationoffractionaldecay,andconsiderableinspirationfromHiebeler(forthcoming),consumers'willingnesstoexploreothervehicletypesintheirpurchasedecisionismodeledusingthefollowingequation:

(2)

Where:Ev,i,t:WillingnessparameterforagentiduringtimettoconsidervehicletypevF:Annualfractionaldecayratej:Otheragentswithintheagenti'ssocialnetworkJ:Totalnumberofagentswithwhichagentiinteractsv:Vehiclepowertype(Hybrid,Plug-inElectric)

(3)

W(j_i),t:Referencedasasimilarityindex[7]p:Agenttraitindex(age,income,highesteducationalattainment)Cp:Characteristicoftypepofagentiorj

3.7 WhenEv,i,texceedstherandomly-assignedheterogeneousthresholdforvehicleconsiderationtheconsumerwillconsider(throughmixedlogitderivedparameters)vehicleoptionsfromvehiclepowertype,v.Withinthemodel,theoptionexiststoallowforagentsonlytoconsiderBEVsifanothermemberofthehouseholdhasavehiclewhichisnotaBEV.Theheterogeneousthresholdisacrucialcomponentoftheanalysisandthusatargetofsensitivityanalysis.Last,iftheagentdoesnotpurchaseanAFVinthatyear,theirpresentWtCdecreasesatafractionaldecayrate,similartoStrubenandSterman(2008).

3.8 Figure1providesanoverviewandpseudo-codeofthedecisionmakingsequenceforeachagent.Orderisdeterminedbywhichagenthastheleastamountoftimeremaininginvehicleownership;tiesaresettledbycoinflips.ThetablefollowingFigure1providesalegendandinformationregardingthevariablespresentedinFigure1.

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Figure1.FlowChartofAgentDecision-Making

Variable/Index Agent(A)orGlobal(G)

Description

Neighbors A OtheragentsinsocialnetworkAttributes A Attributesofagentsi A Focalagentj A OtheragentTraitRatio A W(j|i)ininteractionequationSimIndex A NumeratorinsecondportionofinteractionequationVEH G ICE,Hybrid,orElectricT G YearDecayRate G FractionaldecayrateofWtCfrom(T-1)toTMonthsRemaining A MonthsremaininginvehicleownershipYearsToOwn G YearsofownershipofnewvehiclepurchasersHybridsSold G HybridssoldinyearTAllVehSold G AllvehiclessoldinyearTMaximumMarketShare G MaximumvehiclepenetrationratefromNEMSAllHybridsSold G AllhybridssolduptoyearTMAN G ManufacturerindexPopRatio G P'inincentiveavailabityequationNationalVehicleSales G Total,nationalvehiclessoldfrom2012toyearTIncentiveLimit G IncentivelimitonnumberofvehiclessoldMSRP G Manufacturers'suggestedretailpriceHybModel G IndexofhybridmodelsiH A Otheragentsini'shouseholdDailyVMT A SurveyreportedaveragedailyVMTRange G EstimatedrangeofBEVModel,givenassumptionKBEVsSold G NumberofBEVssoldinyearTAllBEVsSold G AllBEVssoldupuptoyearTBEVModel G IndexofBEVmodelsBatCost G BatterycostfromUKCCC'sbatterycostreport(2012)Class G CarorLightTruckChargerCost G CostofchargingequipmentPresentValueBatDep G PresentvalueofbatterydepreciationDiscRate G Discountrate,assumedat7%AllPHEVsSold G AllPHEVssolduptoyearTPHEVModel G IndexofPHEVModelsDGC A DailyfuelcostinyearTDPGGE G DollarspergallonofgasolineequivalentMPG G MilespergallonofgasolineequivalentMPGROC G Milespergallonrateofchange(ANL2012)DailyVMT A DailyvehiclemilestravelledVehChoice A Vehicleselectedwhichmaximizesi'sutilityUtility A UtilityfromvehiclemodelsChoiceSet A VehiclechoicesetofagentML_Parameters A/G Agent'smixedlogitparametersfromglobaldistributionsR G Numberofrepetitionsforutilitycalculations,Train(2009)

Data

4.1 Figure2summarizesthevariousdatasourcesandtheirrespectivepurposesineachmodel.

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Figure2.MapofDataFlow

4.2 Thelargestsourceofdatadetailingagentattributesisthe2009NHTS(USDOT2009).The2009NHTSisanationallyrepresentativesurveyoftravelbehaviorconductedfromApril2008throughApril2009.The2009NHTSsamplesizewas150,147households,includinganationalsampleof25,000householdsandseparatesamplesfromtwentystateDepartmentsofTransportationthattogetheradded125,147completedhouseholds.Thesetwosampleunitsbroughtthe2009NHTSsamplesizetoapproximately150,000householdsand300,000people.

4.3 Thesecondmainsourceofdata,relatedtovehiclecharacteristics,isWard'sAutomotiveInformationProducts(2011).Thesedataentaildetailedcharacteristicsofvehiclesproducedfrom2004-2011whichwereavailableforpurchaseintheUnitedStates.ThesedatawerepurchasedinJuly2011.TheNHTS2009doesnotsupplydetailedautomobileinformationintheirpubliclyavailabledatafilesbutNationalAutomobileSamplingSystem(NASS)codesareprovidedwhichareusedtomatcheachobservation'svehicletoitsrespectiveattributes.NASSvehiclecodesusedinthisanalysiswereextractedfromtheDepartmentofTransportation's(DOT)manual(NHTSA2011).Anotherrequirementtoproducethefinaldatasetwasthecollectionofsafetydatameasuredintheaveragestars.ThesedatawereretrievedthroughtheUSDOT(viaSafeCar.gov;USDOT2011).FuturevehiclespecificationsareexplainedinAPPENDIX2.

4.4 Althoughmultipledatasourcesareutilizedtoallowforassumptionsonvehicleattributes,itisnotentirelyrealistictoassumethatspecificmodeltypesusedtocalibratethemodel(e.g.a2012FordFocus;seeAPPENDIX2)willstillbearoundby2030.Insteadthemodel'sresultsshouldbeunderstoodandinterpretedthatthemarketsharesofamid-classvehiclewithattributessimilartosaidvehiclesislikelytogroworshrinkby2030comparedtoothervehiclescharacterizedthroughdataassumptionsrelatedtofuturevehicleattributes.

4.5 Thepriceofgasolineattheindividualstatelevelduringthemonthofpurchase(EnergyInformationAdministration2011),basedonthedifferencebetweenmonthwhenthesurveywastakenandstatedmonthsofownership,wasmatchedtoeachvehicleandhouseholdobservation.Costspermileanddailygascostswerethencomputedforeachvehiclechoiceavailabletotheconsumer.Surveyresearchindicatesthatvehicleconsumersnormallydonotorerroneouslycalculateannualfuelcosts(KuraniandTurrentine2004),thusthefuelcostsforthetimeatpurchaseareincludedanddailyVMTisusedtoscaleobservationsbasedontheiraverageamountofdriving.Averagegasolinepricesthroughout2011atthestatelevelareusedasthereferencepointsduringtheinitialtimeperiodandthenthegasolinepriceisadjustedaccordingtothe2012AnnualEnergyOutlook's(AEO;USEIA2012)marginalannualrateofchange.Thesevaluesremaininconstant2011dollarsthroughoutprojectedperiods.IntheUSDepartmentofEnergy's(USDOE)NationalEnergyModelingSystem(NEMS;USDOE2001),themarketsharesofanyvehicletypearecalculatedusingacombinationofvehicleandpopulationcharacteristicsaswellastechnologycostsandregulatorycostsimplementedonmanufacturerstoimprovefueleconomy.WithinNEMS,themaximumvaluesforalternativefuelcarandlighttruckmarketsharesaredependentonthepasttimeperiod'smarketshare,carvehiclemarketsbeingmoreresponsiveandflexiblethanthelighttruckmarketshares.Withinthispaper'smodel,thesedatadeterminethemaximumamountofAFVsavailablebyclassgivenextensivedemand;thisistoreflectproducers'responsesandabilitytoadjustmanufacturingschedules.AfutureextensionofthismodelwouldbetheinclusionofadynamicmanufacturerprofitmaximizationfunctionsimilartoZhangetal(2011).Thelimitsformaximummarketsharesarecomputedfollowingindividualagents'choices.

4.6 Survivabilityratesbyageschedulesareneededtoaccuratelyestimatevehicleexpirationrates.VehiclesurvivabilityratesaretakenfromtheUSDOTNationalHighwayTrafficSafetyAdministration's(NHTSA)2006technicalreport(NHTSA2006).

4.7 Tocomputethegramsofcarbon-dioxideequivalent(gCO2e)emissionsandsubsequentlyAverageFuelCarbonIntensity,thegCO2e/MJofelectricityaretakenfromtheGreenhouseGases,RegulatedEmissions,andEnergyUseinTransportation(GREET)Model(ArgonneNationalLaboratory2011).ThecarbonintensitiesforblendedmotorgasolinearecomputedusingvaluesfromtheTransportationRegulationandCreditTrading(TRACT)model(RubinandLeiby2012).

VehiclePurchaseIncentivePolicies

4.8 AstheresultssectionofthisanalysisfocusesontheStateofMassachusettsandmorespecificallytheMSAofBoston,onlythefederalincentivewillbeofferedonvehicles.ThefederalincentivesfromthePlug-InElectricVehicleCreditintheamountof$7,500areavailableuntilalimitof200,000vehiclesnationallysoldpermanufacturerisreached(IRC30andIRC30D;InternalRevenueService2011).Theincentiveisappliedinthemodeluntiltheproportionofvehiclesthathavebeenpurchasedofthatvehicletypeisgreaterthanorequaltothesameproportionrelativetotheestimatednationalvehiclefleetfromthe2012AEO(USEIA2012).Forexample,ifaspecificEVweretoreach20,000totalsalesandtheMSAhas200,000vehiclessoldalready,thentheamountassumedtohavebeensoldonanationallevelis10%oftheprojectednationalvehiclesalesuptothatyear.Essentially,if

(4)

thenincentivesarenotincludedonvehiclemanufacturerm'smodel(s).Where:

P:Populationadjustmentfactor[8]v:Vehiclessoldfrommanufacturermofmodelim:Indexofvehiclemanufacturersi:IndexofvehiclemodelsV:AllvehiclessoldinsimulatedmarketinyearyY:CurrentyearUSVy:AmountofvehiclessoldintheUSinyeary

4.9 SincethehybridandEVfederaltaxcreditsareavailableonaper-manufacturerbasis,thisrateisappliedonlytovehiclemanufacturersthathavenotexceededthelimitasofMay2012,asindicatedbyAdvancedFuelDataCenter(AFDC,2012).Additionally,thenationalamountofvehiclessold,asindicatedbyWards(2011),ofeachmanufacturer'sincentive-eligiblevehiclesisdeductedfromthefederalincentive'sthresholds.ThesameruleregardingproportionsofEVsispresentindeterminingavailabilityofhybridvehicletaxincentives.Althoughaphase-downperiodexistsfollowingtheexpirationofincentiveavailability,thescopeoftimeisarbitraryrelativemodeltimescale.

Results

5.1 Themodeliscapableofimportingagentcharacteristicsfromseveraldifferentmetropolitanstatisticalareas(MSAs).Thissetofsensitivityanalysisandresults

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focusesontheBostonMassachusettsMSAwhichhasagoodbalanceof:

1. Highsurveyresponserate2. Representativepopulationproportionstothosepresentinthemixedlogitparameterestimationdata3. Adequatenumberofagentstoreliablydemonstratecoreconceptsandmodeldynamicswithoutconstrainingresultproductionandanalysisthrough

limitsoncomputerresources4. ThelimitedamountofpubliclyavailablehigherpercentagebiofuelsandCNGstationsavailable(AFDC,2012)minimizespotentialconcurrenteffects

fromotheralternativetransportationfuels

5.2 Therangeofforecastyearsissetat2009-2030throughoutthisresultssection.Themodelcanforecastoutfurther(to2100)whilekeepingseveralvariables

constantatthe2030level[9],buttheadditionaltimerequiredtorunthesimulationsoutto2100andthedecliningreliabilityofsimulationsdeterredtheauthorfromextended-rangeforecasting.

SensitivityAnalysisofCoreModelParametersandAssumptions

5.3 Resultspresentedwithinthisandothersectionsaretheaverageoveraburn-inof250runs.Recognizingthatinitialconditionsimpactoutcomesofnetworkeddiscretechoicemodels(DugundjiandGulyás2013),agentlocationandWtCthresholdsareresetatthebeginningofeachsimulation.Asopposedtovariousscenarioresults,thissectionexploresthedifferentimplicationsthatunderlyingfundamentalmodelassumptionshaveonestimatedresults.

Table2:PotentialScenariosfortheVehicleMarketplaceModel

IteminSecondaryLegend

Translation PotentialValues

MeanWtC MeanWtCParameter EagerNeutralReluctant

WtCFDRate AnnualFractionalDecayRateofWtCValues 0.50.751

EconScen EconomicScenario Business-As-Usual(BAU)LowEconomicGrowth(LEG)HighEconomicGrowth(HEG)

PopRatio Populationratioforpolicyanalysis 0.512

BatScen Batterycostsscenario Business-As-Usual(BAU)ConservativeOptimistic

VMTasRangeLimit PercentageofdailyVMTwhichtheBEVsrangehastobeinordertoconsider

50%75%100%

MPG Miles-per-Gallon/GGE EPAMFR

Range RangeofBEVandPHEV C&DEPAMFR

FuelPrice[10] Gasolineandelectricitypricescenarios Business-As-Usual(BAU)HighWorldOilPrice(HWOP)

5.4 Adrivingassumptionbehindthevehicleconsiderationcomponentoftheagent-basedmodelisthedistributionofWtCthresholds.Inthefirstgraph,thepercentageoftheagentswhichhavesurpassedtheirpersonalthresholdisplottedovertimeforvariousthresholdmeansandaconstantfractionaldecayrateof0.75,indicatingthateachagent'sWtCis75%ofthepriorperiods.Thelowerlimitfractionaldecayrateissetat0.5,approximatelythedecayratewithwhichdecaybecomestoosevereandnooneconsidersEVs.Thus,adecayrateof1indicatesthatagents'WtCdoesnotdeclinebetweentimeperiods.Intheanalyses,thedecayrateisassumedat0.75andthustheresultingeager,neutral,andreluctantscenarios'percentagesofpopulationexceedingWtCthresholdsaredisplayedinFigure3.

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Figure3.ComparisonofMeanWtCwithDecayHeldConstant

5.5 Arecurring,andespeciallynoticeablewiththeeagerscenario,resultisthateventhoughtheWtCforEVsbeginsataslightlylowerpoint(sincehybridownersalreadyexist)itincreasesatanincreasingratefollowingthespreadinducedbyinitialadopters.Note:thebeginningpercentagesofpopulationexceedingthethresholdisgreaterthanzerosincetheleft-handtailofthenormaldistributionpassesovertheY-axiswhileWtCvaluesareassumedtorangebetween0and100.

5.6 AninterestingandimportantaspectregardingtheassumptionofmeanWtCistheamountofdiffusion,measuredinthisanalysisasthepercentageofvehiclestockofeachvehicletype.AsshowninFigure4,themeanWTCassumptionhasvaryingyetprofoundeffectsonthediffusionofdifferentvehicletypes.Inconjunctionwithaforementionedparameterassumptions,thevaluesdemonstratetheeffectsofthedifferentmeanWtCthresholds.Notably,thediffusionratesofchangeroughlyresembletheexponentialgrowthfunction,representativeofproductdiffusiontheory(Rogers1963).

Figure4.AFVStockPercentageswithDifferentMeanWtCThresholds

IncentivePolicyPopulationRatio

5.7 The2012AnnualEnergyOutlook(AEO;USDOE2012)estimatesgreatvariabilityinregionalusageofalternativefuels.GiventhatotherregionsareestimatedtohavedifferentusageratesofFFVs,CNGvehicles,andEVs,assumingaone-to-oneratioofnationalvehiclesalestoBostonMSAvehiclesalescouldhinderreliabilitybyskewingnationalEVconsumptionestimates.AratiogreaterthanoneindicatesthatalesseramountofthenationalEVincentivesareavailabletotheBostonMSAresidentsthanotherareas.BecauseofthemultipleconcurrentpoliciesrelatedtoAFVdeploymentandalternativefuelusage(e.g.theCaliforniaLowCarbonFuelStandardandtheRenewableFuelStandardrevisedundertheEnergyIndependenceandSecurityAct),theratioofBostonMSAvehiclestocktonationalvehiclestockbecomesafocusofincentivepolicystructuresensitivityanalysis.

5.8 ThemostpertinentresultfromtheincentivepolicystructureanalysisisthatthegreateravailabilityofincentivesinthebeginningperiodsaddstothebaseofinitialadopterswhichinturnincreasestheoverallspreadofWtCoverthemodeledperiods.Anincentive-dependentpopulationratiothatisbeneficialfortheBostonMSA(i.e.PopulationRatio<1)resultsinahigheroverallstockofevsbutpercentagesofvehiclestockbymodelhavevariedresponses.bothvehiclesestimatedtohavethehigheststocklevels,thefocusandvolt,incurrelativelylesserincreasesinestimatedvehiclestockwithincreasedincentives.themiev,givenitsunfavorablecategorizationofahatchback(basedonmixedlogitparameterestimates)butlowermsrp,incursthelargestrelativeincreasewithgreateravailabilityofincentivesasthevehicle'slowermsrpbeginstooutweighthegenerallyrelativedisutilityofbeingahatchback.fromobservingthecharacteristicsofbuyersbymodelofev,priuspurchasingisprimarilydonebydriverswithverylowvmtandlesseraversionstomsrp.giventhatthepriusandrav4arebothproducedbythesamemanufacturertheavailabilityofincentives,andthusestimatedpercentagesofvehiclestock,areinterdependent.

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EffectsofMPGandRangeAssumptions

5.9 Estimatesofrangehavebeenproducedfrommanufacturers(MFR),thegovernmentthroughtheEnvironmentalProtectionAgency(EPA),andCarandDriver(C&D).Additionally,MPGrateshavebeenmeasuredbymanufacturersaswellastheEPA.Inthissection,thesimulationsareconductedwiththesesixdifferentassumptionsontherangeandMPGofelectricvehicles.Resultsindicatethat,similartothesensitivityanalysisinvolvingthelimitofdailyVMTasrange,theestimatedrangeofBEVshasacriticalimpactonthedeploymentofelectric-onlyvehicles.Theoverallpercentagestockofvehiclesvariesbynearly1.2%fromtheoptimistic(MFR)tothepessimistic(C&D)estimatesofBEVrange.HybridvehiclesarealsoinfluencedbythevariousassumptionsofBEVsandPHEVs;whentherangeestimatescomefromthemostpessimisticsource,hybridvehicles'2030percentageofvehiclestockincreasesbyapproximately0.6%overtheothermostoptimisticrangeassumptionsscenarios.SimilartoBEVs,PHEVsasapercentageofvehiclestockaresignificantlyimpactedbythevariousrangeandMPGassumptionsyettheeffectismuchmoresubstantialbetweentheEPAandC&Dscenarioswhichentailanestimated1%decreaseinpercentageofvehiclestockin2030.

BatteryCharacteristics

5.10 AlthoughseenasapotentialhindrancetoEVdiffusion,thedifferentcharacteristicsofbatterycostshaverelativelysmallimpactsonEVdiffusionincomparisontopolicy,range,MPG,andVMTasrangeassumptions.Incomparisontotheotherprimaryfinancial-centricmodelmechanismofpolicypopulationratios,the2030estimatesforbatterycostsvarybyapproximately$1000-$2000whereasthefinancialincentivesreducetheMSRPby$7500inthebeginningyearswhenEVsarestillrelativelyexpensive,addingtothebaseofinitialadoptersandencouragingWtCdiffusion.

5.11 Eventheoptimisticbatteryscenarioscouldbesignificantlyoverestimatingthefuturecostsofbatteries.ThebatteriesandEVportionoftheAmericanRecoveryAct(USDOE2012)anticipatesthatinvestmentsinbatteriesaloneshouldhelplowerthecostofsomeelectriccarbatteriesbynearly70%bytheendof2015,withthelargestproportionofvehiclecostreductionsoccurringbetween2009and2013.Additionally,theAmericanRecoveryActanticipatesthattheexpectedlifetimeofatypicalEVbatterywillincreaseby350%inthesametimeperiod,allowingthebatterytolastuptoandpotentiallybeyondthevehicles'anticipatedlifetimesanddecreasingthepresentvalueofbatterydepreciationoverownershipperiods.TheUKCCCmodeledchangesinEVbatterycostsaremuchless

optimisticandwiththeAmericanRecoveryAct'sassumptions[11],totalEVdiffusionisincreasedbyapproximately0.85%overtheoptimisticscenariobytheUKCCC.Othervehiclecharacteristicsthemselveswhichwouldbeaffectedinthesescenariosaresimplifiedinthisportionoftheanalysisandwouldlikelyplayamajorroleinconsumerdecision-making.

HighWorldOilPrice(HWOP)Scenario

5.12 Forthisscenario,theratesofchangeofallfuelpriceswereadjustedusingtheHWOPdatafromtheAEO2012(USEIA2012).TheestimatedeffectthattheHWOPconditionshadonEVstockswasminimal,buttheeffectsontheICEportionsofvehiclestockofcarsandlighttrucks(LTs)areworthmentioning.ConsumersubstitutionofLTsforcarsincreasestheestimatedstockofcarsbyapproximately5.1%by2030intheHWOPscenarioovertheBAUscenario.Figure15displaystheCarandLTpercentagesofICEstockundertheBAUandHWOPscenarios.IntheHWOPscenario,thestockofcarsisexpeditedduetotherelativelylargegaspricemarginalratesofchangeestimatedinthefirstfewyearsofsimulations.FollowingtheearlygreaterdivergencefromtheBAUscenarioICEstockpercentages,theHWOPcarandtruckICEstockpercentagesadjustatlessintenseratesbutstillmorerapidlythanintheBAUscenario.

5.13 WithrespecttoFigure5,thereisaninnateinstitutionalandmarketplacelagassociatedwithshiftingstocksandthusgaspriceincreaseswillnotforceimmediateshiftsofvehiclecharacteristics.AlthoughitisintuitivelyexpectedwithrisinggaspricesthatLTpercentagesofvehiclestockwouldimmediatelyfall,agentswithhigheraversiontoDGCareseekinghigherMPGLTsaswellasalternative,non-ICEvehicleswhichmeetthesestandards.Additionally,survivabilityratesfromNHTSAfavorLTsslightlymorethancars.Forsomeagents,inthelateryears,withanincreaseddisutilityofincreasedDGCs,theyarewillingtosacrificethepurchaseofanLTcategorizedvehicleforacar.

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Figure5.PercentageofICEStockbyVehicleTypeandFuelPriceScenario[12]

MostOptimisticScenario

5.14 Inthisscenario,themostoptimalconditionsaresettoinvestigatetheupperboundonEVdiffusion;theseconditionsaretohaveoptimisticbatterycosts,eagerWtC,noWtCdecay,0.5PopulationRatio,andmanufacturer-estimatedMPGandrange.TheVMTasRangeLimitisleftat0.75sincethiscomponenthasbeenshowntonothaveaconsiderableimpactonBEVdiffusionoverthefull-rangescenariobutisnecessarytomaintainrealisminagents'BEVconsiderations.Whentheopposite(most-conservative)simulationsareconducted,percentagesofvehiclestockofBEVsandPHEVsapproachzeroandhybridvehicles'percentageofvehiclestockisestimatedatapproximately0.25%bytheyear2030.Inthemostoptimisticscenario,PHEVsandBEVsareestimatedtomaintain12.2%and8.4%ofvehiclestockin2030.

Discussion

6.1 Resultsfromthisanalysisarehighlyvariabledependingonmodelspecificationswiththeunderlyingcoreparametershavingthehighestinfluenceonresultantscenarios.Thisreflectsthewiderangeinpotentialmodelinputsaswellastheagent-basedmodel'sassumptions.RecentsurveyworkhasindicatedthatamajorityofconsumersareeitherlikelyormoderatelylikelytoconsiderthepurchaseofanAFV,withthetwomostdeterringaspectsbeingvehiclepricesandrefuelingoptions(Michniaketal.2012).Thus,itmaybemoreappropriatetoassumeaneagermeanWtC.Neutralscenarioresultsweredisplayedtoprovideconservativeestimatesandthemainintentionofthispaper'sresultssectionistodemonstratemodeldynamicsfromimposedscenarioassumptions.Todevelopthe'true'meanWtCdistribution,furtherpurpose-specificprimaryresearchisrequiredtoquantifyconsumers'willingnesstoexploreAFVoptions;thissourceofuncertaintyisthemodel'slargestshortcomingintermsofexternalvalidity.

6.2 HybridandPlug-inEV(PEV)percentagesofvehiclestockandmarketsharesaredemonstratedtobeinterdependent.WhenthecharacteristicsofPEVsare

improvedtomakesaidvehiclesmoredesirablewithrespecttoconsiderationassumptions[13]andmixedlogitderivedparameters,hybridvehiclesaredisplacedbythemoreattractivePEVs;thisdisplacementisespeciallyevidentinscenariosinvolvingrangeandMPGassumptions.Atthesametime,thismodeldoesnottakeintoaccounthowlearning-by-doinginthesupplychainbyPHEVsandBEVsassistingimprovementsinoneanother.Thatis,evenifPHEVsdisplaceBEVsinearlyyears,theyhelpdevelopandlowerthecostoftechnologythatcanassistBEVs.

6.3 Similartopaststudiesoffinancialpolicyefficacy(GallagherandMuehlegger2011),hybridvehiclepercentagesofvehiclestockareestimatedtoberesponsivetofinancialpolicyavailabilityassumptions.Inthesesimulations,hybridvehiclesareestimatedtobethemostresponsiveintermsofpercentageofvehiclestock.FinancialpolicyefficacyisnotparticularlyevidencedforthePHEVpercentagesofvehiclestockastheirhigherMSRPandlowerconsiderationratesinthebeginningyears,evenwiththeincentive,isamajordeterrenttodiffusion.EstimatesofBEVsasapercentageofvehiclestockrisesubstantiallymorethanPHEVsasapercentageofvehiclestocksincetheirgenerallylowerMSRPrelativetoPHEVsbecomesevenmoreattractivewhentheincentiveisapplied;thisalsohelpstoalleviatethedisadvantageouscategorizationoftheMiEVasahatchbackvehicle.ThisleadstohigheroveralldiffusionofPHEVsandBEVssincetheWtCisabletospreadatanincreasedratefollowingmoreinitialadoptersinthebeginningperiodsofsimulations.

6.4 VehicleselectionofBEVsandPHEVsgenerallyfavorthemodelswiththelowerMSRPandsedancategorization,sincethesearegiventhehigherrelativepart-worthestimatesfromthemixedlogitmodel.GreenautomobilecolumnistsarecurrentlydenotingtheRAV4EVasanichevehicledesignedforwealthyearly-adopters(Voelcker2012;Marchetti2012)butasbatterycharacteristicsimproveconsumerswithloweraversionstoMSRPandhigheraversionstoDGCareestimatedtopurchasethevehicleatsmallyetstillconsiderablerates.Givenitsrelativelylowvalue,sensitivityanalysiswasconductedonthePrius'rangebyadjustingittohypotheticalvalues;thevehiclebecomesmuchmorecompetitivewhenrangesareincreasedtotheaverageofitsPHEVcompetitors.Withinthecontextofthismodel'smixedlogitparametersthereisonlyasmallrangeofagentswillingtospendextramoneyonacarwithlessrange;generallyonlyconsumerswithhigherincomes,muchlessdailyVMT,andhighersafetyparameterpart-worthsareestimatedtopurchasethePriusPHEV.Thesehouseholdsweregenerallythemarried,higher-incomehouseholdswithlowdailyVMT.

6.5 IntheAEO2012,PEVsandAFVsareestimatedtoreachapproximately1.6%and19.81%ofvehiclestock,respectively.HigherestimatesofPEVsasapercentageofvehiclestockareanticipatedinmostscenariossincesubstitutionsofPEVsbyotherAFVsarenotincorporatedintothisanalysis.ThismodelreplicatesamarketplacewheretheonlyalternativeoptiontoanICEisanEVandthusconsumersareassumedtoseekalleviationfromhigherDGCthroughthissinglechannel,creatingthespreadbetweenthismodel'sandtheAEO2012'sestimatesofEVsasapercentageofvehiclestock.Inthemostoptimisticscenario,theEVsasapercentageofvehiclestocknearlymatchbutslightlyexceedtheAEO2012'sestimateofAFVsasvehiclestockin2030.

6.6 SimilartoKarplus(2011)butnotafocalobjectiveofthisanalysis,simulationsdemonstratethatUShouseholdsareestimatedtopurchasemorefuelefficientvehiclesinresponsetogasolinepriceincreases(evidencedbyFigure5).However,dissimilarinthesesimulationstoKarplus'analysisisthenon-distinctincomegroupingsofhouseholdsthatswitchtheirvehicleconsumptionbehavior.Theambiguousbehaviorbyhouseholdcategoricalgroupingslendsitselftotherandomnessinheritinthemixedlogitparameterswhichhaveoverlappingestimateddistributions.

6.7 Overall,ahighamountofvariationisestimatedwithrespecttoallscenarioassumptionsandresults.ThemostoptimisticscenarioestimatesEVsatapproximately22%of2030vehiclestock,muchlessthanmoreoptimisticestimates(Becker,Sidhu,andTenderich2009)butthelandscapeiscontinuallychangingonboththefossilfuelandEVsides.Althoughgasolinepriceshaveincreasedgreatlyoverthepastfewyears,thegrowingextractionratesofunconventionalsourcesofpetroleumintheBakkentightshaleformationandCanadianoilsandshavedramaticallyalteredtheperceptionsofthefutureintheNorthAmericanpetroleummarket.Ingeneral,EVproponentsareoptimisticofthefutureoftheelectricautomobilebutmightfaceanuphillbattleifmajorrisesinpetroleumpricesareaprerequisitetoEVdeployment.

Limitations

7.1 Throughoutthisanalysis,multipleassumptionswereimposedanddemonstratedtoalterresults.Thereisgreatuncertaintyinthefuturecharacteristicsofautomobilesand,althoughthismodelattemptstogrounditselfinstatisticsanddata,aninfinitenumberofdifferentoutcomesarepossible.Inthesesimulationsalone,thepermutationsofpossiblescenariosamountto8,748differentcombinationsofassumptions.Asinanyothermodel,itshouldbethoughtofasasimplifiedversionofrealityandtreatedasawell-informedthoughtexperiment.

7.2 AlargeassumptionisthatconsumersvaluethesevehiclesequallyastheywouldtheirICEcounterparts.Atthetimethisiswritten,EVtechnologieshavenotbeenaroundinsufficientquantitiestofullyassessconsumervaluationfunctionswithrevealedpreferencedata.Anotherapproachtodevelopingthemixedlogit

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parametersinthisstudywouldbetoperformprimaryresearchwithstatedpreferencedataacquiredthroughconjointanalysis,orwaitforAFVstobecomemoremainstreamvehiclesandthenre-assessthestatisticalportionofthisanalysis.Performingthistaskwouldprovideaninterestingandvaluableanalysisbutisoutsidecurrenttimeandresourceavailability.

7.3 Asmentioned,EVtechnologieshavenotbeenaroundforasubstantive-enoughamountoftime.Thiscreatesuncertaintyinthefuturecharacteristicsofvehicles.Thisanalysisincorporatedconstantproducerandbatterymanufacturerresponseswhereasamoredynamicdepictionwouldbeaprofit-maximizationresponseofvehicleandcomponentmanufacturers,similartoZhangetal(2011).

7.4 Paststudieshaveindicatedthatseveralothersocialfactorsinfluenceconsumeradoptionandperceptionsofvehicles(ChooandMokhtarain2004;TurrentineandKurani2007).IncorporatingnetworkinteractionsintoaVCMisdonetoincludetheseeffectsbutfurtherresearchisrequiredtoinvestigatehumaninteractionsinamathematicalframework.Themodelpresentedhereisasimplificationoftheseinteractionsandtheassumptionsappliedhaveasubstantialeffectonthemodel'soutcome.

Appendix

AdditionalMixedLogitModelAssumptions

8.1 Discretechoicemodelsrequiredatatobeformattedsothatasinglechoiceismadeamongalternatives.Withrespecttothenewvehiclemarketplace,therearemorepurchaseoptionspresentthancurrentstatisticalsoftwarepackagescanreasonablyhandle.Duetotheserestrictions,thevehicleconsumerwasoriginallydesignatedtohavechosenamong100differentrandomly-determined(withoutreplacement)vehicleoptionsfromthesameyeartheobservedvehiclewaspurchased.Afterseveralstatisticalrunsandbasedonconvergenceandestimationefficiency,thechoicesetwaslimitedto20randomly-includedchosenvehicles.Thefinalamountofpotentialoptionsavailableinthechoicesetalsopresentedassuranceinboththereliabilityandconsistencyofestimationresults.

8.2 Theprobabilitythataspecificvehicleisincorporatedintothechoicesetisbasedontheannualmarketshareofsaidvehicle.Forexample,in2004,theFordF150marketsharewas5.29%(Wards2011),meaningthatineachobservation'schoicesettheprobabilitythattheFordF150isincludedis5.29%.Theaccuracyofthemarketsharesandtheirprobabilitiestobeincludedistothenearest1e-4,anyvehiclebelowthisvaluewasnotincludedinobservations'choicesets.

8.3 ThesoftwarepackagechosenforestimationisStata/SE64-bitandtheprocedureutilizedis'mixlogit'(Hole2007).Weightsfromthe2009NHTSwereincorporatedasfrequencyweightsintheanalysis.Additionally,sincethelargeamountofobservationsandvariabilityinthedatapresentedchallengesforthestandardalgorithmtoreachconvergence,thestandardNewton-RaphsonalgorithmweresupplementedwiththesteepestascentmethoddevelopedbyGouldandScribney(1999)aswellasGould,Pitblado,andScribney(2003).Thisreplacementonlyimpactedthenumberofiterationsrequiredtoreachconvergenceandnottheresultingparameterestimatesormodelqualities.

8.4 Since"[t]heobjectivefunctionoptimizedtoestimatethecoefficientsof[mixedlogit]modelsisgenerallyhighlynonlinear,andthuspronetomultiple,localoptima"(Greene2010,p.12),post-optimizationalgorithmsensitivityanalysiswasperformed.Theproductoftheparametersfollowingconvergenceandrandomly-assignedvalueswereusedasstartingparametersintheoptimizationprocesstoinsurethealgorithmacquiredthesameconvergencevalues.Theparametersobtainedfollowingtheoriginaloptimizationweresubsequentlymultipliedbyrandomly-assignedvaluesfromthefollowingsets:(-1.1,1.1),(-1.5,1.5),and(-2,2).Followingthesemodifications,thealgorithmreachedconvergencewiththesameparameters;theamountofadditionaliterationsrequireddependedontheextentofthedistortionappliedtotheoriginalparameterset.

8.5 Inthismodel,distributionsareimposedusingthebestfitmethoddescribedbyTrainandSonnier(2004).First,themodelswererunwithzeroandthenonlyoneofeachexplanatoryvariablewithanimposedlog-normaldistribution.Ifmultipleexplanatoryvariablessolelyprovidedanincreaseinthelog-likelihoodvalue,theexplanatoryvariablewiththegreatestmarginalcontributiontowardsthelog-likelihoodfunctionwasintroducedasthefirstlog-normallydistributedexplanatoryvariable.Thesecondgreatestcontributingexplanatoryvariabletothelog-likelihoodvaluefromlog-normaldistributionspecificationisthenintroducedandthelog-likelihoodvaluecomparedtothepriormodel'slog-likelihoodestimation,andsoon.Intheanalyses,thehouseholdswithchildrenincurredthebestfitwhenonlythelog-normaldistributionisappliedtothesafetyparameter.Imposingthelog-normaldistributiononthepowerparameteronlyimprovedtheretiredhousehold'smodelfit.Noneofthegroupings'modelfitsimprovedwhenimposingthelog-normaldistributiononeithertheDGCorMSRPparameters.Theresultsforlog-normaldistributedparameterspresentedinTable1haveundergonethenecessaryconversioncalculations.

8.6 Observationsfromthe2009NHTSwithincompleteinformationforvaluesincludedinthisstudywereexcludedresultinginalossofapproximately5%oftheoriginalsample.Also,inordertotakeintoaccountrecentvehiclecharacteristics,onlynewvehiclespurchasedfrom2004tothedateofthesurveytakenwereincludedinthemixedlogitmodel.TheNHTS2009queriedneitherthevehicle'sconditionwhenpurchased(neworused)northepriceofthevehicleandthustwoassumptionsneedtobemade.First,thedateofpurchaseneededtobewithinthenewmodelyear'ssellingperiod,assumedtobeAugusttheprioryearof

releasetoDecemberofthevehicleyear.Second,theconsumerpaidtheinflation-adjustedmanufacturer'ssuggestedretailprice(MSRP)[14].Intheend,thedatasetusedinthemixedlogitmodelcontained33,235observationsofvehiclesmatchedwiththeirprimarydriversandrespectivehouseholds.

8.7 SinceNationalAutomotiveSamplingSystem(NASS)vehiclecodesdonotdifferentiatebetweenvehicletrimlevels,theobservations'vehicletrimlevelwasdeterminedbytheclosestmatchwithinvehiclemodelbasedonthereportedMPGlevelfromthe2009NHTS.

FutureVehicleSpecifications

8.8 Vehicleconsumerswillchooseamongthesubsetofvehiclesavailableforpurchaseinthe2011vehiclefleetbutlimitedtothosewhichmeetthesamemarketsharepercentagesasthoseincludedinthemixedlogitmodeldatasetconstruction.ThesevehiclesarefixedinspecificationsexceptfortheattributesofMPGwhichincreases,foreachvehicle,withrespecttotheannualmarginalratesofchange(ROC)ofeachvehicle'spowertype(ICE,BEV,PHEV,HEV)andclass(carandlighttruck)indicatedinArgonneNationalLaboratory'sVISIONmodel(ANL,2011).

ICE

8.9 AcaveatwiththesimulationsisthatthechoicesetfromwhichthemixedlogitderivedparameterswereestimatedissmallerthanthechoicesetavailabletoconsumerswithintheABMsimulations.

HEV

CarClass LightTruckClassChevroletCruzeEcoFordFusionHybrid

BMWActiveHybridX6CadillacEscaladeHybrid

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HondaCivicHybridHondaInsightHondaCR-ZandCR-ZEXHyundaiSonataHybridKiaOptimaHybridLexusCT200hand200hPremiumLexusGS450hLexusHS250hand250hPremiumLincolnMKZHybridMercedesBenzS500HybridNissanAltimaHybridToyotaCamryHybridToyotaPriusI-V

ChevroletSilverado1500SeriesHybridChevroletTahoeHybridFordEscapeHybridGMCSierra1500SeriesHybridGMCYukonHybridMercedesBenzML450HybridPorsche911CayenneSHybridToyotaHighlandHybridVolkswagenTouaregHybrid

PHEV

8.10 ChevroletVolt

ToyotaRAV4Electric[15],[16],[17]

ToyotaPrius[18]

BEV

8.11 NissanLeafFordFocusElectric

Mitsubishii(MiEV)[19],[20],[21]

TeslaModelS[22](with40,60,and85kWhbatterycapacities,atbaseMSRP)

RechargingSystemCosts,PHEVDGC,andBatteryCosts

8.12 FuelingstationavailabilityandrangeanxietyhavebeenasignificantlimitationwithconsiderationtothediffusionofBEVs(Tate,Harpster,andSavagian,2008).

Inthemodel,ifthehouseholdisconsideringanEV,thefixedpriceforalevel2chargingstationis$2000[23]andisincurredasafixcostaddedtotheMSRP.Toaccountforrangeanxiety,aconsumerwillonlyconsideranelectricvehicleiftheiraveragedailyvehiclemilestravelledislessthanorequaltoaspecifiedpercentageoftherangeoftheBEVbeingassessed.ThisspecifiedpercentageisexploredintheResultssection.

8.13 Agenti'sDGCforPHEVmodeljiscomputedas:

(5)

where:

(6)

DPGGEe:Dollarspergallonofgasolineequivalent[24]MPGej:MilespergallonofgasolineequivalentVMTi:AveragedailyvehiclemilestravelledofagentiDPGg:DollarspergallonofgasolineMPGgj:MilespergallonofthegasolineportionofPHEVj

8.14 BEVandPHEVbatteryrangeshavebeenevaluatedbythreedifferentgroups:manufacturers,government(EPA),andtheprivatesector(CarandDriver).Sincetherangeofthevehicleisaseriousconsiderationforbuyers,scenariosareimplementedwhichreducetheagents'rangeofeachBEVandPHEVmodelbydifferentspecifications.Manufacturers,theEPA,aswellasCarandDriverestimatethemaximum,median,andminimumofrangeestimates,respectively.IftheEPAhastestedthevehicle,thatreductiongoesintoplace.Ifnot,theaveragepercentagereductionofthatvehicletype'srangeisapplied.SinceCarandDriverhasonlyreviewedandsuppliedestimatesfortheNissanLeafandChevroletVolt(asofMay2012),thesamepercentagereductionswillbeappliedontherangeofsaidvehicles'class.Additionally,MPGisadjustablebetweenmanufacturerandEPAestimates,andaveragepercentagereductionsifnotavailablefromthepriorsource.

8.15 SincebatterydepreciationandcostsareabarriertoconsumeradoptionofEVs(Morales-Espana2010),thepriceofEVsisadjustedannuallytotherateofchange,byvehicleclass(carandlighttruck)andBEV/PHEVdesignation,accordingtothescheduleestimatedbytheUKCommissiononClimateChange's(CCC)reportregardingfuturebatteryspecifications(UKCCC2012).Thesedataaremanufacturerpricesandthusanassumedmarkupof10%isincluded.Additionally,sincethebatterymaintainsalargereplacementcost,thenetpresentvalueofthetotaldepreciatedvalueofthebatteryattimeofresaleisincludedatthetimeofpurchase.Thisisdonewithanassumedconstantfailurerateat10years.Inequationform:

(7)

Where:

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PVi:PresentvalueofbatterydepreciationofvehicleiT:Yearsofownership(pre-determinedattimeorpurchase)ΔCi:Annualchangeinbatteryvalue

r:Discountrate[25]

FFVUtilization

8.16 Althoughotherworkhasresearchedconsumers'choicesinusingE85fuels(GreeneandZhou2008),usageratesforE85arenotsimulatedinthisresearchendeavor.Eventhoughbiofuelsareanimportantcomponentofaless-carbonintensiveandmoreenergysecurefuture(LeibyandRubin2012),severallimitationsonbiofuelutilizationhavebeenontheindustrialstructure,feedstock,andfinancialcomponentsintheindustrialsphere(Rabago2008)whichareoutsideofthismodel'spurpose.Thisisapotentialmodelexpansioncurrentlybeingexplored.

Acknowledgements

Thisworkwouldnotbepossiblewithouttheguidanceandsupportofmyadvisor,Dr.JonathanRubin.ThesiscommitteemembersDr.GaryHuntandDr.TimothyWaringdeserveconsiderableappreciationforhelpingmecompletethistask.Additionally,Iamfortunateandthankfulforthefouranonymousreviewerswhogreatlyhelpedinrefiningthispaper.

Notes

1Rangesforannualincomeareasfollows:Low:≤$45,000Middle:$45,000<x<$125,000high:≥$125,000

2Gas-guzzlertaxisincludedforcarsmeetingthecriteria

3Methodsforestimatingsafetyratingschangedforyear2011vehicles;safetyratingsusedinthisanalysisarethosepresentduringvehiclechoicedecision-making

4Significancelevels:*:0.15**:0.10***:0.05****:0.01

5AlthoughpossibletoreplicatetheentireUSpopulationitisdiscouragedduetoextensivecomputingtimes

6IftheagentownsanEV,theywillstillconsiderthestatusquoofICEvehicles

7Thisvariablefunctionssimilarlytothe'susceptibility'variablefromEppsteinetal(2011)

8ThisparameterbecomesthefocusofincentivepolicystructuresensitivityanalysisintheResultssection.

9After2035,annualratesofchangeforgasolinepricesarefromVISION2011

10Becausethisscenarioonlychangesonce,itisnotnormallypresentedinthesecondarylegend

11Includesextended-lifeonthepresentvaluecalculationsofbatterydepreciationandbatterycostadjustmentsbutdoesnotincludeefficiencygainsfromenergydensityimprovementbenefits.

12Assumedgasolineheatingvalueof125,000BTU

13Forexample,rangeisincreasedandthusVMTasarangelimitisnotasbinding

14Allmonetaryvaluesinthismodelwereadjustedto2011dollarsusingtheConsumerPriceIndex(2011)

15ModelinformationtakenfromToyota(2012a)andEdmunds(2012)

16TargetLaunchDateofSpring2013(Edmunds,2012)

17Volumeassumedtobethesameasthe2011modelICEcounterparts

18ModelinformationtakenfromToyota(2012b)

19ModelinformationtakenfromMitsubishi(2012)andEdmunds(2012)

20TargetLaunchDateofFall2012

21Atthetimethiswaswritten,safetyinformationwasnotavailable;thereforetheratingfromtheEuropeanNewCarAssessmentProgramme(EuroNCAP)offourstarswasassumed(EuroNCAP,2012)

22Sourceforinformation:TeslaMotors(2012);currentlysetonlytobeavailableinCalifornia

23BasedonNissan'sestimatesforchargerandinstallation(Nissan,2012)

24Assumedgasolineheatingvalueof125,000BTU/gallon

25Assumeddiscountrateof7%

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