Skip to main content
×
×
Home

Public investment and electric vehicle design: a model-based market analysis framework with application to a USA–China comparison study

  • Namwoo Kang (a1), Yi Ren (a2), Fred M. Feinberg (a3) and Panos Y. Papalambros (a4)
Abstract

Governments encourage use of electric vehicles (EV) via regulation and investment to minimize greenhouse gas (GHG) emissions. Manufacturers produce vehicles to maximize profit, given available public infrastructure and government incentives. EV public adoption depends not only on price and vehicle attributes, but also on EV market size and infrastructure available for refueling, such as charging station proximity and recharging length and cost. Earlier studies have shown that government investment can create EV market growth, and that manufacturers and charging station operators must cooperate to achieve overall profitability. This article describes a framework that connects decisions by the three stakeholders (government, EV manufacturer, charging station operator) with preferences of the driving public. The goal is to develop a framework that allows the effect of government investment on the EV market to be quantified. This is illustrated in three scenarios in which we compare optimal public investment for a city in USA (Ann Arbor, Michigan) and one in China (Beijing) to minimize emissions, accounting for customer preferences elicited from surveys conducted in the two countries. Under the modeling assumptions of the framework, we find that high customer sensitivity to prices, combined with manufacturer and charging station operator profit maximization strategies, can render government investment in EV subsidies ineffective, while a collaboration among stakeholders can achieve both emission reduction and profitability. When EV and station designs improve beyond a certain threshold, government investment influence on EV adoption is attenuated apparently due to diminishing customer willingness to buy. Furthermore, our analysis suggests that a diversified government investment portfolio could be especially effective for the Chinese market, with charging costs and price cuts on license plate fees being as important as EV subsidies.

  • View HTML
    • Send article to Kindle

      To send this article to your Kindle, first ensure no-reply@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about sending to your Kindle. Find out more about sending to your Kindle.

      Note you can select to send to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be sent to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

      Find out more about the Kindle Personal Document Service.

      Public investment and electric vehicle design: a model-based market analysis framework with application to a USA–China comparison study
      Available formats
      ×
      Send article to Dropbox

      To send this article to your Dropbox account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Dropbox.

      Public investment and electric vehicle design: a model-based market analysis framework with application to a USA–China comparison study
      Available formats
      ×
      Send article to Google Drive

      To send this article to your Google Drive account, please select one or more formats and confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your <service> account. Find out more about sending content to Google Drive.

      Public investment and electric vehicle design: a model-based market analysis framework with application to a USA–China comparison study
      Available formats
      ×
Copyright
Distributed as Open Access under a CC-BY-NC-SA 4.0 license (http://creativecommons.org/licenses/by-nc-sa/4.0/)
Corresponding author
Email address for correspondence: yren32@asu.edu
References
Hide All
Abernethy, J., Evgeniou, T., Toubia, O. & Vert, J.-P. 2008 Eliciting consumer preferences using robust adaptive choice questionnaires. IEEE Transactions on Knowledge and Data Engineering 20 (2), 145155.
Ahn, K., Bayrak, A. E. & Papalambros, P. Y.2013 Electric vehicle design optimization: integration of a high-fidelity interior permanent-magnet motor model.
Ahn, K., Cho, S. & Cha, S. 2008 Optimal operation of the power-split hybrid electric vehicle powertrain. Proceedings of the Institution of Mechanical Engineers, Part D: Journal of Automobile Engineering 222 (5), 789800.
Allcott, H. & Mullainathan, S. 2010 Behavioral science and energy policy. Science 327 (5970), 12041205.
AMESim 2014 On the WWW. http://www.lmsintl.com.
Aström, K. J. & Hägglund, T.1995 PID controllers: theory, design and tuning.
Axsen, J., Burke, A. & Kurani, K. S. 2008 Batteries for Plug-in Hybrid Electric Vehicles (PHEVs): Goals and the State of Technology Circa 2008. Institute of Transportation Studies.
Bayrak, A. E., Kang, N. & Papalambros, P. Y. 2015 Decomposition based design optimization of hybrid electric powertrain architectures: simultaneous configuration and sizing design. In Proceedings of the ASME 2015 International Design Engineering Technical Conferences, American Society of Mechanical Engineers.
Bayrak, A. E., Ren, Y. & Papalambros, P. Y. 2013 Design of hybrid-electric vehicle architectures using auto-generation of feasible driving modes. In ASME 2013 International Design Engineering Technical Conferences and Computers and Information in Engineering Conference, American Society of Mechanical Engineers, pp. V001T01A005–V001T01A005.
Bloomberg Business 2015 Currencies, On the WWW. http://www.Bloomberg.com.
Brand, C., Anable, J. & Tran, M. 2013 Accelerating the transformation to a low carbon passenger transport system: the role of car purchase taxes, feebates, road taxes and scrappage incentives in the UK. Transportation Research Part A: Policy and Practice 49, 132148.
Brock, W. A. & Durlauf, S. N. 2001 Discrete choice with social interactions. The Review of Economic Studies 68 (2), 235260.
Burns, L. D., Jordan, W. C. & Scarborough, B. A. 2013 Transforming Personal Mobility. The Earth Institute.
Carley, S., Krause, R. M., Lane, B. W. & Graham, J. D. 2013 Intent to purchase a plug-in electric vehicle: a survey of early impressions in large US cites. Transportation Research Part D: Transport and Environment 18, 3945.
ChargePoint 2014 ‘Charge point’, On the WWW. http://www.chargepoint.com.
Clearvoice 2015 Clearvoice research, On the WWW. http://www.clearvoiceresearch.com.
Cohen, M. A. & Whang, S. 1997 Competing in product and service: a product life-cycle model. Management Science 43 (4), 535545.
Daily, J.2015 New survey: free Shanghai plate is the most desired (translated title), On the WWW. http://www.jfdaily.com/minsheng/new/201504/t20150423_1443211.html.
Delprat, S., Lauber, J., Guerra, T. M. & Rimaux, J. 2004 Control of a parallel hybrid powertrain: optimal control. IEEE Transactions on Vehicular Technology 53 (3), 872881.
Easton, F. F. & Pullman, M. E. 2001 Optimizing service attributes: the seller’s utility problem*. Decision Sciences 32 (2), 251276.
ECOtality 2013 Q2 2013 Report - The EV Project. Electric Transportation Engineering Corporation, Technical Report, ECOtality North America, Phoenix, AZ, see also http://www.theevproject.com.
ECOtality 2014 The EV project, On the WWW. http://www.theevproject.com.
EERE 2011a Advanced Vehicle Testing Activity - 2011 Nissan Leaf - Baseline Testing Results, Technical Report, Energy Efficiency & Renewable Energy (EERE), see also http://www1.eere.energy.gov.
EERE 2011b Advanced Vehicle Testing Activity - 2011 Nissan Leaf - Beginning of Test Battery Testing Results, Technical Report, U.S. Department of Energy. See also http://www1.eere.energy.gov.
Egbue, O. & Long, S. 2012 Barriers to widespread adoption of electric vehicles: an analysis of consumer attitudes and perceptions. Energy Policy 48, 717729.
EIA 2014 Electric Power Monthly with Data for January 2014, U.S, Technical Report, Energy Information Administration (EIA), Washington, DC, see also http://www.eia.gov.
EIA 2015 How much carbon dioxide is produced per kilowatthour when generating electricity with fossil fuels? On the WWW. https://www.eia.gov/tools/faqs/faq.cfm?id=74&t=11.
EPA 2015 Social cost of carbon, On the WWW. http://www3.epa.gov/climatechange/EPAactivities/economics/scc.html.
Evgeniou, T., Pontil, M. & Toubia, O. 2007 A convex optimization approach to modeling consumer heterogeneity in conjoint estimation. Marketing Science 26 (6), 805818.
Fiebig, D. G., Keane, M. P., Louviere, J. & Wasi, N. 2010 The generalized multinomial logit model: accounting for scale and coefficient heterogeneity. Marketing Science 29 (3), 393421.
Frischknecht, B. D., Whitefoot, K. & Papalambros, P. Y. 2010 On the suitability of econometric demand models in design for market systems. Journal of Mechanical Design 132 (12), 121007.
Frischknecht, B. & Papalambros, P. 2008 A pareto approach to aligning public and private objectives in vehicle design. In ASME 2008 International Design Engineering Technical Conferences and Computers and Information in Engineering Conference, pp. 393402. American Society of Mechanical Engineers.
Gallagher, K. S. & Muehlegger, E. 2011 Giving green to get green? Incentives and consumer adoption of hybrid vehicle technology. Journal of Environmental Economics and Management 61 (1), 115.
Goodale, J. C., Verma, R. & Pullman, M. E. 2003 A market utility-based model for capacity scheduling in mass services. Production and Operations Management 12 (2), 165185.
Greene, D. L. & Plotkin, S. 2011 Reducing Greenhouse Gas Emission from US Transportation. Pew Center on Global Climate Change.
Greening, L. A., Greene, D. L. & Difiglio, C. 2000 Energy efficiency and consumption the rebound effecta survey. Energy Policy 28 (6), 389401.
Hao, H., Wang, H. & Ouyang, M. 2011 Fuel conservation and ghg (greenhouse gas) emissions mitigation scenarios for Chinas passenger vehicle fleet. Energy 36 (11), 65206528.
He, L., Chen, W., Hoyle, C. & Yannou, B. 2012 Choice modeling for usage context-based design. Journal of Mechanical Design 134 (3), 031007.
Helveston, J. P., Liu, Y., Feit, E. M., Fuchs, E., Klampfl, E. & Michalek, J. J. 2015 Will subsidies drive electric vehicle adoption? Measuring consumer preferences in the US and China. Transportation Research Part A: Policy and Practice 73, 96112.
Hermance, D. 1999 Toyota hybrid system. In 1999 SAE TOPTEC Conference, Albany, NY.
JRJ.com 2015 Testing of crowdfunded charging station (translated title), On the WWW. http://auto.jrj.com.cn/2015/05/22094719256613.shtml.
Kang, N.2014 Multidomain demand modeling in design for market systems. PhD thesis, University of Michigan, Ann Arbor.
Kang, N., Emmanoulopoulos, M., Ren, Y., Feinberg, F. M. & Papalambros, P. Y. 2015 A framework for quantitative analysis of government policy influence on electric vehicle market. In DS 80-5 Proceedings of the 20th International Conference on Engineering Design (ICED 15) Vol 5: Design Methods and Tools-Part 1, Milan, Italy, 27-30.07. 15.
Kang, N., Feinberg, F. M. & Papalambros, P. Y. 2015a Autonomous electric vehicle sharing system design. In ASME 2015 International Design Engineering Technical Conferences and Computers and Information in Engineering Conference, American Society of Mechanical Engineers.
Kang, N., Feinberg, F. M. & Papalambros, P. Y. 2015b Integrated decision making in electric vehicle and charging station location network design. Journal of Mechanical Design 137 (6), 061402.
Kim, N., Cha, S. & Peng, H. 2011 Optimal control of hybrid electric vehicles based on Pontryagin’s minimum principle. IEEE Transactions on Control Systems Technology 19 (5), 12791287.
Kim, N., Kim, J. & Kim, H. 2008 Control strategy for a dual-mode electromechanical, infinitely variable transmission for hybrid electric vehicles. Proceedings of the Institution of Mechanical Engineers, Part D: Journal of Automobile Engineering 222 (9), 15871601.
Lewis, K. E., Chen, W. & Schmidt, L. C. 2006 Decision Making in Engineering Design. American Society of Mechanical Engineers.
Li, Z. & Ouyang, M. 2011 The pricing of charging for electric vehicles in China–Dilemma and solution. Energy 36 (9), 57655778.
Liu, J.2007 Modeling, configuration and control optimization of power-split hybrid vehicles. PhD thesis, The University of Michigan.
Liu, J. 2012 Electric vehicle charging infrastructure assignment and power grid impacts assessment in Beijing. Energy Policy 51, 544557.
Liu, J. & Peng, H. 2010 A systematic design approach for two planetary gear split hybrid vehicles. Vehicle System Dynamics 48 (11), 13951412.
Liu, J., Peng, H. & Filipi, Z. 2005 Modeling and control analysis of toyota hybrid system. In IEEE/ASME International Conference on Advanced Intelligent Mechatronics. Proceedings, pp. 134139. IEEE.
MathWorks 2015 Neural network toolbox, On the WWW. http://www.mathworks.com.
McFadden, D. & Train, K. 2000 Mixed MNL models for discrete response. Journal of Applied Econometrics 15 (5), 447470.
Melaina, M. & Bremson, J. 2008 Refueling availability for alternative fuel vehicle markets: sufficient urban station coverage. Energy Policy 36, 32333241.
Michalek, J. J., Ebbes, P., Adigüzel, F., Feinberg, F. M. & Papalambros, P. Y. 2011 Enhancing marketing with engineering: optimal product line design for heterogeneous markets. International Journal of Research in Marketing 28 (1), 112.
Michalek, J. J., Feinberg, F. M. & Papalambros, P. Y. 2005 Linking marketing and engineering product design decisions via analytical target cascading. Journal of Product Innovation Management 22 (1), 4262.
Michalek, J. J., Papalambros, P. Y. & Skerlos, S. J. 2004 A study of fuel efficiency and emission policy impact on optimal vehicle design decisions. Journal of Mechanical Design 126 (6), 10621070.
Mock, P. & Yang, Z. 2014 Driving electrification: a global comparison of fiscal incentive policy for electric vehicles. The International Council on Clean Transportation (ICCT) 22 (6), http://www.theicct.org/sites/default/files/publications/ICCT_EV-fiscal-incentives_20140506 pdf. Last accessed.
Morrow, W. R., Gallagher, K. S., Collantes, G. & Lee, H. 2010 Analysis of policies to reduce oil consumption and greenhouse-gas emissions from the US transportation sector. Energy Policy 38 (3), 13051320.
Morrow, W. R. & Skerlos, S. J. 2011 Fixed-point approaches to computing bertrand-nash equilibrium prices under mixed-logit demand. Operations Research 59 (2), 328345.
Net, C. L. P.2015a New policy on license plate auction in Beijing, On the WWW. http://www.paizhao.com.cn/html/paizhaoxinwen/2015/0203/2021.html.
Net, C. L. P.2015b Policy on license plate application in Beijing, On the WWW. http://www.paizhao.com.cn/html/paizhaozhengce/2015/0130/1972.html.
Net, C. L. P.2015c Statistics of license plate auction in Shanghai, On the WWW. http://www.paizhao.com.cn/html/paizhaoxinwen/2010/0415/854.html.
Netzer, O., Toubia, O., Bradlow, E., Dahan, E., Evgeniou, T., Feinberg, F., Feit, E., Hui, S., Johnson, J. & Liechty, J. 2008 Beyond conjoint analysis: advances in preference measurement. Marketing Letters 19 (3), 337354.
Orme, B.2009 The CBC/HB system for hierarchical bayes estimation version 5.0 technical paper, In Technical Paper Series, Sawtooth Software.
Paganelli, G., Delprat, S., Guerra, T.-M., Rimaux, J. & Santin, J.-J. 2002 Equivalent consumption minimization strategy for parallel hybrid powertrains. In Vehicular Technology Conference, 2002. IEEE 55th’ VTC Spring 2002, Vol. 4, pp. 20762081. IEEE.
Pullman, M. E. & Moore, W. L. 1999 Optimal service design: integrating marketing and operations perspectives. International Journal of Service Industry Management 10 (2), 239261.
Raghavan, M., Bucknor, N. K. & Hendrickson, J. D.2007 Electrically variable transmission having three interconnected planetary gear sets, two clutches and two brakes. US Patent 7,179,187.
Ren, Y., Scott, C. & Papalambros, P. 2013 A scalable preference elicitation algorithm using group generalized binary search. In Proceedings of the ASME International Design Engineering Technical Conferences and Computers and Information in Engineering Conference.
Rossi, P., Allenby, G. & McCulloch, R. 2005 Bayesian Statistics and Marketing. Wiley.
Schroeder, A. & Traber, T. 2012 The economics of fast charging infrastructure for electric vehicles. Energy Policy 43, 136144.
Serrao, L., Onori, S. & Rizzoni, G. 2009 ECMS as a realization of Pontryagin’s minimum principle for HEV control. In American Control Conference, pp. 39643969. IEEE.
Shiau, C.-S. N. & Michalek, J. J. 2009a Optimal product design under price competition. Journal of Mechanical Design 131 (7), 071003.
Shiau, C.-S. N. & Michalek, J. J. 2009b Should designers worry about market systems? Journal of Mechanical Design 131 (1), 011011.
Sina 2015 Data source for charging station installment and maintenance in China, On the WWW. http://news.sina.com.cn/c/2015-03-10/052931588084.shtml.
Skerlos, S. J. & Winebrake, J. J. 2010 Targeting plug-in hybrid electric vehicle policies to increase social benefits. Energy Policy 38 (2), 705708.
Small, K. A. & Van Dender, K. 2007 Fuel efficiency and motor vehicle travel: the declining rebound effect. The Energy Journal 2551.
Smart, J. & Schey, S. 2012 Battery electric vehicle driving and charging behavior observed early in the EV project. SAE International Journal of Alternative Powertrains 1 (1), 2733.
Sohu 2015 Data source for electricity cost for charging stations, On the WWW. http://auto.sohu.com/20150514/n413066164.shtml.
Stockar, S., Marano, V., Rizzoni, G. & Guzzella, L. 2010 Optimal control for plug-in hybrid electric vehicle applications. In American Control Conference (ACC), 2010, pp. 50245030. IEEE.
Swait, J. & Louviere, J. 1993 The role of the scale parameter in the estimation and comparison of multinomial logit models. Journal of Marketing Research 30 (3), 305314.
Tansel, B. C., Francis, R. L. & Lowe, T. J. 1983 State of the art-location on networks: a survey. Part I: the p-center and p-median problems. Management Science 29 (4), 482497.
Tejada, C.2015 Uber launches in Beijing, will face uber-heavy traffic jams, On the WWW. http://blogs.wsj.com/chinarealtime/2014/07/15/with-beijing-launch-uber-to-face-uber-heavy-traffic-jams/.
Train, K. 2001 A comparison of hierarchical bayes and maximum simulated likelihood for mixed logit. In University of California, Berkeley, pp. 113.
Train, K. E. 2009 Discrete Choice Methods with Simulation. Cambridge university press.
Vardera, L.2010 The Electric Vehicle Market in the USA, Market report, Finpro, Stamford, CT.
Verma, R., Thompson, G. M., Moore, W. L. & Louviere, J. J. 2001 Effective design of products/services: an approach based on integration of marketing and operations management decisions . Decision Sciences 32 (1), 165194.
Wassenaar, H. J. & Chen, W. 2003 An approach to decision-based design with discrete choice analysis for demand modeling. Journal of Mechanical Design 125, 490.
Whitefoot, K., Fowlie, M. & Skerlos, S. J.2011 Product design response to policy intervention: evaluating fuel economy standards using an engineering model of product design, Technical Report, Working paper.
Whitefoot, K. S. & Skerlos, S. J. 2012 Design incentives to increase vehicle size created from the US footprint-based fuel economy standards. Energy Policy 41, 402411.
Xinhuanet 2013 Vehicle demand in Beijing, On the WWW. http://news.xinhuanet.com/local/2013-02/08/c_114650897.htm.
Xinhuanet 2015 Data source for charging station installment in China, On the WWW. http://news.xinhuanet.com/auto/2015-02/04/c_127455056.htm.
Yabe, K., Shinoda, Y., Seki, T., Tanaka, H. & Akisawa, A. 2012 Market penetration speed and effects on reduction of electric vehicles and plug-in hybrid electric vehicles in Japan. Energy Policy 45, 529540.
Zhang, X., Li, C.-T., Kum, D. & Peng, H. 2012 Prius+ and volt-: configuration analysis of power-split hybrid vehicles with a single planetary gear. IEEE Transactions on Vehicular Technology 61 (8), 35443552.
Zhang, X., Peng, H. & Sun, J. 2013 A near-optimal power management strategy for rapid component sizing of power split hybrid vehicles with multiple operating modes. In American Control Conference (ACC), 2013, pp. 59725977.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Design Science
  • ISSN: -
  • EISSN: 2053-4701
  • URL: /core/journals/design-science
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×

Keywords

Metrics

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed