How do increased gas prices affect the usage of hybrid cars? A new article in the Journal of the Association of Environmental and Resource Economists studies how drivers of plug-in hybrid cars respond to fuel prices and finds that when the cost of gas goes up, so does electric charging, improving the environmental performance of hybrid vehicles.
In “ Fueling Electrification: The Impact of Gas Prices on Hybrid Car Usage,” authors Laura Grigolon, Eunseong Park, and Kevin Remmy note that plug-in hybrid sales are growing across many markets as economies attempt to mitigate the effects of climate change. Additionally, rising hybrid sales can be attributed to the prevalence of purchase subsidies, incentivizing their adoption.
However, these subsidies do not extend to the actual usage of hybrid cars; drivers of hybrid cars are not incentivized to use electric charging in the same way they are to make the initial purchase of the vehicle. Analyzing microlevel data from a German app called Spritmonitor, the authors find that, on average, only 32% of hybrid mileage is driven using the vehicles’ electric mode. Despite the fact that electricity is often cheaper than gasoline, the authors identify a “hassle cost” associated with charging a hybrid vehicle, typically resulting in the choice to rely on the car’s gasoline-powered internal combustion engine for driving.
But when fuel prices go up, the authors note, hybrid drivers turn more often to electricity. A 10% increase in fuel price, they write, leads to an increase in electric factor usage of about 1.5 percentage points. This finding is particularly relevant because of the assumption that hybrid cars are “clean” vehicles. “In reality,” the authors write, “the environmental benefits of plug-in hybrids are overstated if they are not used in electric mode as much as expected,” and the full context of electric vehicle usage must be understood as consumers and economies attempt to adapt to and prevent the effects of climate change.
Journal of the Association of Environmental and Resource Economists
Fueling Electrification: The Impact of Gas Prices on Hybrid Car Usage