Total cost of ownership and market share for hybrid and electric vehicles in the UK, US and Japan

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Applied Energy, ISSN: 0306-2619, Vol: 209, Page: 108-119

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Kate Palmer; James E. Tate; Zia Wadud; John Nellthorp
Elsevier BV
Engineering; Energy; Environmental Science
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New powertrain technologies, such as Hybrid Electric Vehicles, have a price premium which can often be offset by lower running costs. Total Cost of Ownership combines these purchase and operating expenses to identify the most economical choice of vehicle. This is a valuable assessment for private and fleet purchasers alike. Studies to date have not compared Total Cost of Ownership across more than two vehicle markets or analysed historic costs. To address this gap, this research provides a more extensive Total Cost of Ownership assessment of conventional, Hybrid, Plug-in Hybrid and Battery Electric Vehicles in three industrialized countries – the UK, USA (using California and Texas as case studies) and Japan – for the time period 1997–2015. Finally, the link between Hybrid Electric Vehicle Total Cost of Ownership and market share is analysed with a panel regression model. In all regions the incremental Total Cost of Ownership of hybrid and electric vehicles compared to conventional vehicles has reduced from the year of introduction and 2015. Year on year Hybrid Electric Vehicles Total Cost of Ownership was found to vary least in the UK due to the absence of subsidies. Market share was found to be strongly linked to Hybrid Electric Vehicle Total Cost of Ownership through a panel regression analysis. Financial subsidies have enabled Battery Electric Vehicles to reach cost parity in the UK, California and Texas, but this is not the case for Plug-in Hybrid Electric Vehicles which haven’t received as much financial backing. This research has implications for fleet purchasers and private owners who are considering switching to a low-emission vehicle. The findings are also of interest to policymakers that are keen to develop effective measures to stimulate decarbonisation of the fleet and improve air quality.