Electric Vehicles with a Battery Switching Station: Adoption and Environmental Impact

The transportation sector's carbon footprint and dependence on oil are of deep concern to policy makers in many countries. Use of all-electric drive trains is arguably the most realistic medium-term solution to address these concerns. However, motorist anxiety induced by an electric vehicle...

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Main Authors: AVCI, Buket, GIROTRA, Karan, NETESSINE, Serguei
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Language:English
Published: Institutional Knowledge at Singapore Management University 2015
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Online Access:https://ink.library.smu.edu.sg/lkcsb_research/4603
https://ink.library.smu.edu.sg/context/lkcsb_research/article/5602/viewcontent/Electric_Vehicles_with_a_Battery_Switching_Station__Adoption_and.pdf
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spelling sg-smu-ink.lkcsb_research-56022016-05-29T06:09:03Z Electric Vehicles with a Battery Switching Station: Adoption and Environmental Impact AVCI, Buket GIROTRA, Karan NETESSINE, Serguei The transportation sector's carbon footprint and dependence on oil are of deep concern to policy makers in many countries. Use of all-electric drive trains is arguably the most realistic medium-term solution to address these concerns. However, motorist anxiety induced by an electric vehicle's limited range and high battery cost have constrained consumer adoption. A novel switching-station-based solution is touted as a promising remedy. Vehicles use standardized batteries that, when depleted, can be switched for fully charged batteries at switching stations, and motorists only pay for battery use. We build a model that highlights the key mechanisms driving adoption and use of electric vehicles in this new switching-station-based electric vehicle system and contrast it with conventional electric vehicles. Our model employs results from repairable item inventory theory to capture switching-station operation; we embed this model in a behavioral model of motorist use and adoption. Switching-station systems effectively transfer range risk from motorists to the station operator, who, through statistical economies of scale, can better manage it. We find that this transfer of risk can lead to higher electric vehicle adoption than in a conventional system, but it also encourages more driving than a conventional system does. We calibrate our models with motorist behavior data, electric vehicle technology data, operation costs, and emissions data to estimate the relative effectiveness of the two systems under the status quo and other plausible future scenarios. We find that the system that is more effective at reducing emissions is often less effective at reducing oil dependence, and the misalignment between the two objectives is most severe when the energy mix is coal heavy and has advanced battery technology. Increases in gasoline prices (by imposition of taxes, for instance) are much more effective in reducing carbon emissions, whereas battery-price-reducing policy interventions are more effective for reducing oil dependence. Taken together, our results help a policy maker identify the superior system for achieving the desired objectives. They also highlight that policy makers should not conflate the dual objectives of oil dependence and emissions reductions as the preferred system, and the policy interventions that further that system may be different for the two objectives. 2015-04-01T07:00:00Z text application/pdf https://ink.library.smu.edu.sg/lkcsb_research/4603 info:doi/10.1287/mnsc.2014.1916 https://ink.library.smu.edu.sg/context/lkcsb_research/article/5602/viewcontent/Electric_Vehicles_with_a_Battery_Switching_Station__Adoption_and.pdf http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection Lee Kong Chian School Of Business eng Institutional Knowledge at Singapore Management University sustainable operations transportation business model innovation public policy electric vehicles Operations and Supply Chain Management Transportation
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic sustainable operations
transportation
business model innovation
public policy
electric vehicles
Operations and Supply Chain Management
Transportation
spellingShingle sustainable operations
transportation
business model innovation
public policy
electric vehicles
Operations and Supply Chain Management
Transportation
AVCI, Buket
GIROTRA, Karan
NETESSINE, Serguei
Electric Vehicles with a Battery Switching Station: Adoption and Environmental Impact
description The transportation sector's carbon footprint and dependence on oil are of deep concern to policy makers in many countries. Use of all-electric drive trains is arguably the most realistic medium-term solution to address these concerns. However, motorist anxiety induced by an electric vehicle's limited range and high battery cost have constrained consumer adoption. A novel switching-station-based solution is touted as a promising remedy. Vehicles use standardized batteries that, when depleted, can be switched for fully charged batteries at switching stations, and motorists only pay for battery use. We build a model that highlights the key mechanisms driving adoption and use of electric vehicles in this new switching-station-based electric vehicle system and contrast it with conventional electric vehicles. Our model employs results from repairable item inventory theory to capture switching-station operation; we embed this model in a behavioral model of motorist use and adoption. Switching-station systems effectively transfer range risk from motorists to the station operator, who, through statistical economies of scale, can better manage it. We find that this transfer of risk can lead to higher electric vehicle adoption than in a conventional system, but it also encourages more driving than a conventional system does. We calibrate our models with motorist behavior data, electric vehicle technology data, operation costs, and emissions data to estimate the relative effectiveness of the two systems under the status quo and other plausible future scenarios. We find that the system that is more effective at reducing emissions is often less effective at reducing oil dependence, and the misalignment between the two objectives is most severe when the energy mix is coal heavy and has advanced battery technology. Increases in gasoline prices (by imposition of taxes, for instance) are much more effective in reducing carbon emissions, whereas battery-price-reducing policy interventions are more effective for reducing oil dependence. Taken together, our results help a policy maker identify the superior system for achieving the desired objectives. They also highlight that policy makers should not conflate the dual objectives of oil dependence and emissions reductions as the preferred system, and the policy interventions that further that system may be different for the two objectives.
format text
author AVCI, Buket
GIROTRA, Karan
NETESSINE, Serguei
author_facet AVCI, Buket
GIROTRA, Karan
NETESSINE, Serguei
author_sort AVCI, Buket
title Electric Vehicles with a Battery Switching Station: Adoption and Environmental Impact
title_short Electric Vehicles with a Battery Switching Station: Adoption and Environmental Impact
title_full Electric Vehicles with a Battery Switching Station: Adoption and Environmental Impact
title_fullStr Electric Vehicles with a Battery Switching Station: Adoption and Environmental Impact
title_full_unstemmed Electric Vehicles with a Battery Switching Station: Adoption and Environmental Impact
title_sort electric vehicles with a battery switching station: adoption and environmental impact
publisher Institutional Knowledge at Singapore Management University
publishDate 2015
url https://ink.library.smu.edu.sg/lkcsb_research/4603
https://ink.library.smu.edu.sg/context/lkcsb_research/article/5602/viewcontent/Electric_Vehicles_with_a_Battery_Switching_Station__Adoption_and.pdf
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