What does an electric vehicle replace?
The emissions reductions from the adoption of a new transportation technology depend on the emissions from the new technology relative to those from the displaced technology. Evaluate the emissions reductions from electric vehicles (EVs) by identifying which vehicles would have been purchased had EVs not been available. Do so by estimating a random coeﬃcients discrete choice model of new vehicle demand and simulating counterfactual sales with EVs no longer subsidized or removed from the new vehicle market. Results suggest that vehicles that EVs replace are relatively fuel-eﬃcient: EVs replace gasoline vehicles with an average fuel economy of 4.2 mpg above the ﬂeet-wide average and 12 percent of them replace hybrid vehicles. Federal income tax credits resulted in a 29 percent increase in EV sales, but 70 percent of the credits were obtained by households that would have bought an EV without the credits. By simulating alternative subsidy designs, ﬁnd that a subsidy designed to provide greater incentives to low-income households would have been more cost eﬀective and less regressive.