Are consumers willing to pay to let cars drive for them? Analyzing response to autonomous vehicles

Autonomous vehicles use sensing and communication technologies to navigate safely and efficiently with little or no input from the driver. These driverless technologies will create an unprecedented revolution in how people move, and policymakers will need appropriate tools to plan for and analyze the large impacts of novel navigation systems. In this paper we derive semiparametric estimates of the willingness to pay for automation. We use data from a nationwide online panel of 1260 individuals who answered a vehicle-purchase discrete choice experiment focused on energy efficiency and autonomous features. Several models were estimated with the choice microdata, including a conditional logit with deterministic consumer heterogeneity, a parametric random parameter logit, and a semiparametric random parameter logit. We draw three key results from our analysis. First, we find that the average household is willing to pay a significant amount for automation: about $3500 for partial automation and $4900 for full automation. Second, we estimate substantial heterogeneity in preferences for automation, where a significant share of the sample is willing to pay above $10,000 for full automation technology while many are not willing to pay any positive amount for the technology. Third, our semiparametric random parameter logit estimates suggest that the demand for automation is split approximately evenly between high, modest and no demand, highlighting the importance of modeling flexible preferences for emerging vehicle technology.     

Willingness-to-pay for alternative fuel vehicle characteristics: A stated choice study for Germany

In the light of European energy efficiency and clean air regulations, as well as an ambitious electric mobility goal of the German government, we examine consumer preferences for alternative fuel vehicles (AFVs) based on a Germany-wide discrete choice experiment among 711 potential car buyers. We estimate consumers’ willingness-to-pay and compensating variation (CV) for improvements in vehicle attributes, also taking taste differences in the population into account by applying a latent class model with 6 distinct consumer segments. Our results indicate that about 1/3 of the consumers are oriented towards at least one AFV option, with almost half of them being AFV-affine, showing a high probability of choosing AFVs despite their current shortcomings. Our results suggest that German car buyers’ willingness-to-pay for improvements of the various vehicle attributes varies considerably across consumer groups and that the vehicle features have to meet some minimum requirements for considering AFVs. The CV values show that decision-makers in the administration and industry should focus on the most promising consumer group of ‘AFV aficionados’ and their needs. It also shows that some vehicle attribute improvements could increase the demand for AFVs cost-effectively, and that consumers would accept surcharges for some vehicle attributes at a level which could enable their private provision and economic operation (e.g. fast-charging infrastructure). Improvement of other attributes will need governmental subsidies to compensate for insufficient consumer valuation (e.g. battery capacity).     

Consumer valuation of changes in driving range: A meta-analysis

We perform a meta-analysis of studies investigating consumer preferences for electric and other alternative fuel vehicles (AFVs) to provide insights into the way driving range is traded off for capital costs. We find that consumers are willing to pay, on average, between 66 and 75 US$ for a 1-mile increase in driving range. Ceteris paribus, 100-mile-range cars have to be priced about 60% less than their conventional counterparts to become competitive. In line with intuition, but in contrast to most specifications employed in primary studies, we find that consumers’ marginal willingness to pay (WTP) decreases at a diminishing rate with increases in driving range. The variation in the WTP and compensating variation estimates among examined studies can be attributed to differences in the levels of driving range considered, in other elements of the study design and in the country of study. Our findings support stated preference literature’s conclusion that short driving range has been a major limitation to the large-scale adoption of battery electric vehicles (BEVs) and other AFVs, and that technological developments permitting longer driving ranges will, to some extent, facilitate their market penetration. We further propose that consumer valuation of driving range should not be examined in isolation from other attributes related to refuelling activities, such as refuelling duration and the coverage of refuelling infrastructure.     

Assessing public opinions of and interest in new vehicle technologies: An Austin perspective

Technological advances are bringing connected and autonomous vehicles (CAVs) to the ever-evolving transportation system. Anticipating public acceptance and adoption of these technologies is important. A recent internet-based survey polled 347 Austinites to understand their opinions on smart-car technologies and strategies. Results indicate that respondents perceive fewer crashes to be the primary benefit of autonomous vehicles (AVs), with equipment failure being their top concern. Their average willingness to pay (WTP) for adding full (Level 4) automation ($7253) appears to be much higher than that for adding partial (Level 3) automation ($3300) to their current vehicles.Ordered probit and other model specifications estimate the impact of demographics, built-environment variables, and travel characteristics on Austinites’ WTP for adding various automation technologies and connectivity to their current and coming vehicles. It also estimates adoption rates of shared autonomous vehicles (SAVs) under different pricing scenarios ($1, $2, and $3 per mile), choice dependence on friends’ and neighbors’ adoption rates, and home-location decisions after AVs and SAVs become a common mode of transport. Higher-income, technology-savvy males, who live in urban areas, and those who have experienced more crashes have a greater interest in and higher WTP for the new technologies, with less dependence on others’ adoption rates. Such behavioral models are useful to simulate long-term adoption of CAV technologies under different vehicle pricing and demographic scenarios. These results can be used to develop smarter transportation systems for more efficient and sustainable travel.     

Will subsidies drive electric vehicle adoption? Measuring consumer preferences in the U.S. and China

We model consumer preferences for conventional, hybrid electric, plug-in hybrid electric (PHEV), and battery electric (BEV) vehicle technologies in China and the U.S. using data from choice-based conjoint surveys fielded in 2012–2013 in both countries. We find that with the combined bundle of attributes offered by vehicles available today, gasoline vehicles continue in both countries to be most attractive to consumers, and American respondents have significantly lower relative willingness-to-pay for BEV technology than Chinese respondents. While U.S. and Chinese subsidies are similar, favoring vehicles with larger battery packs, differences in consumer preferences lead to different outcomes. Our results suggest that with or without each country’s 2012–2013 subsidies, Chinese consumers are willing to adopt today’s BEVs and mid-range PHEVs at similar rates relative to their respective gasoline counterparts, whereas American consumers prefer low-range PHEVs despite subsidies. This implies potential for earlier BEV adoption in China, given adequate supply. While there are clear national security benefits for adoption of BEVs in China, the local and global social impact is unclear: With higher electricity generation emissions in China, a transition to BEVs may reduce oil consumption at the expense of increased air pollution and/or greenhouse gas emissions. On the other hand, demand from China could increase global incentives for electric vehicle technology development with the potential to reduce emissions in countries where electricity generation is associated with lower emissions.     

A choice experiment on alternative fuel vehicle preferences of private car owners in the Netherlands

This paper presents results of an online stated choice experiment on preferences of Dutch private car owners for alternative fuel vehicles (AFVs) and their characteristics. Results show that negative preferences for alternative fuel vehicles are large, especially for the electric and fuel cell car, mostly as a result of their limited driving range and considerable refueling times. Preference for AFVs increases considerably with improvements on driving range, refueling time and fuel availability. Negative AFV preferences remain, however, also with substantial improvements in AFV characteristics; the remaining willingness to accept is on average € 10,000–€ 20,000 per AFV. Results from a mixed logit model show that consumer preferences for AFVs and AFV characteristics are heterogeneous to a large extent, in particular for the electric car, additional detour time and fuel time for the electric and fuel cell car. An interaction model reveals that annual mileage is by far the most important factor that determines heterogeneity in preferences for the electric and fuel cell car. When annual mileage increases, the preference for electric and fuel cell cars decreases substantially, whilst the willingness to pay for driving range increases substantially. Other variables such as using the car for holidays abroad and the daily commute also appear to be relevant for car choice.     

Innovative alternatives take action – Investigating determinants of alternative fuel vehicle adoption

Alternative fuel vehicles (AFVs) as environmentally friendly alternatives to conventional internal combustion engines have gained increasing attention in general public. While empirical studies have begun to explore product-specific factors that drive consumer adoption of AFVs, an integrative framework of a comprehensive set of AFV adoption factors and its theoretical foundation as well as empirical validation is still missing. By drawing on theory of innovation adoption and theory of reasoned action we show that consumers’ perceptions of AFV attributes lead to a general attitude formation towards AFV. In conjunction with consumers’ subjective and personal norm, this in turn determines AFV adoption behavior. Concerning AFV attributes, compatibility, design, and relative advantage of AFVs exhibit the strongest influence on consumers’ attitude formation toward AFV. We derive implications for future research and policy makers. The latter include suggestions on how to develop and communicate AFV in order to stimulate AFV adoption.     

Consumer attitudes about electric cars: Pricing analysis and policy implications

As electric vehicles (EVs) become more readily available, sales will depend on consumers’ interest and understanding. A survey of consumer attitudes on electric cars was conducted in Manitoba from late 2011 to early 2012. It utilizes two price assessment methods. The van Westendorp price sensitivity method (PSM) shows the acceptable price range for EVs to be $22,000–27,500. This range closely matches average price range for sales of conventional cars during the same period. The willingness-to-pay method reveals consumers are unwilling to pay large premiums for EVs, even when given information on future fuel savings. A consumer group with experience or exposure to EVs is somewhat different. Nearly 25% of these people are willing to pay a premium of up to $10,000. Different interpretations can be drawn from these responses, calling for further research. An apparent policy opportunity involves consumer education to enhance knowledge and facilitate EV purchase decisions. Survey results also support the hypothesis that EV rollout has focused too much on technology, and not enough on consumers.     

Customizing driving cycles to support vehicle purchase and use decisions: Fuel economy estimation for alternative fuel vehicle users

Wider deployment of alternative fuel vehicles (AFVs) can help with increasing energy security and transitioning to clean vehicles. Ideally, adopters of AFVs are able to maintain the same level of mobility as users of conventional vehicles while reducing energy use and emissions. Greater knowledge of AFV benefits can support consumers’ vehicle purchase and use choices. The Environmental Protection Agency’s fuel economy ratings are a key source of potential benefits of using AFVs. However, the ratings are based on pre-designed and fixed driving cycles applied in laboratory conditions, neglecting the attributes of drivers and vehicle types. While the EPA ratings using pre-designed and fixed driving cycles may be unbiased they are not necessarily precise, owning to large variations in real-life driving. Thus, to better predict fuel economy for individual consumers targeting specific types of vehicles, it is important to find driving cycles that can better represent consumers’ real-world driving practices instead of using pre-designed standard driving cycles. This paper presents a methodology for customizing driving cycles to provide convincing fuel economy predictions that are based on drivers’ characteristics and contemporary real-world driving, along with validation efforts. The methodology takes into account current micro-driving practices in terms of maintaining speed, acceleration, braking, idling, etc., on trips. Specifically, using a large-scale driving data collected by in-vehicle Global Positioning System as part of a travel survey, a micro-trips (building block) library for California drivers is created using 54 million seconds of vehicle trajectories on more than 60,000 trips, made by 3000 drivers. To generate customized driving cycles, a new tool, known as Case Based System for Driving Cycle Design, is developed. These customized cycles can predict fuel economy more precisely for conventional vehicles vis-à-vis AFVs. This is based on a consumer’s similarity in terms of their own and geographical characteristics, with a sample of micro-trips from the case library. The AFV driving cycles, created from real-world driving data, show significant differences from conventional driving cycles currently in use. This further highlights the need to enhance current fuel economy estimations by using customized driving cycles, helping consumers make more informed vehicle purchase and use decisions.     

Improving the behavioral realism of global integrated assessment models: An application to consumers’ vehicle choices

A large body of transport sector-focused research recognizes the complexity of human behavior in relation to mobility. Yet, global integrated assessment models (IAMs), which are widely used to evaluate the costs, potentials, and consequences of different greenhouse gas emission trajectories over the medium-to-long term, typically represent behavior and the end use of energy as a simple rational choice between available alternatives, even though abundant empirical evidence shows that real-world decision making is more complex and less routinely rational. This paper demonstrates the value of incorporating certain features of consumer behavior in IAMs, focusing on light-duty vehicle (LDV) purchase decisions. An innovative model formulation is developed to represent heterogeneous consumer groups with varying preferences for vehicle novelty, range, refueling/recharging availability, and variety. The formulation is then implemented in the transport module of MESSAGE-Transport, a global IAM, although it also has the generic flexibility to be applied in energy-economy models with varying set-ups. Comparison of conventional and ‘behaviorally-realistic’ model runs with respect to vehicle purchase decisions shows that consumer preferences may slow down the transition to alternative fuel (low-carbon) vehicles. Consequently, stronger price-based incentives and/or non-price based measures may be needed to transform the global fleet of passenger vehicles, at least in the initial market phases of novel alternatives. Otherwise, the mitigation burden borne by other transport sub-sectors and other energy sectors could be higher than previously estimated. More generally, capturing behavioral features of energy consumers in global IAMs increases their usefulness to policy makers by allowing a more realistic assessment of a more diverse suite of policies.     

Adoption of alternative fuel vehicles: Influence from neighbors,family and coworkers

During the last years, many governments have set targets for increasing the share of biofuels in the transportation sector. Understanding consumer behavior is essential in designing policies that efficiently increase the uptake of cleaner technologies. In this paper we analyze adopters and non-adopters of alternative fuel vehicles (AFVs). We use diffusion of innovation theory and the established notion that the social system and interpersonal influence play important roles in adoption. Based on a nationwide database of car owners we analyze interpersonal influence on adoption from three social domains: neighbors, family and coworkers. The results point primarily at a neighbor effect in that AFV adoption is more likely if neighbors also have adopted. The results also point at significant effects of interpersonal influence from coworkers and family members but these effects weaken or disappear when income, education level, marriage, age, gender and green party votes are controlled for. The results extend the diffusion of innovation and AFV literature with empirical support for interpersonal influence based on objective data where response bias is not a factor. Implications for further research, environmental and transport policy, and practitioners are discussed.     

User preferences regarding autonomous vehicles

This study gains insight into individual motivations for choosing to own and use autonomous vehicles and develops a model for autonomous vehicle long-term choice decisions. A stated preference questionnaire is distributed to 721 individuals living across Israel and North America. Based on the characteristics of their current commutes, individuals are presented with various scenarios and asked to choose the car they would use for their commute. A vehicle choice model which includes three options is estimated:

• (1)Continue to commute using a regular car that you have in your possession.
• (2)Buy and shift to commuting using a privately-owned autonomous vehicle (PAV).
• (3)Shift to using a shared-autonomous vehicle (SAV), from a fleet of on-demand cars for your commute.

A factor analysis determined five relevant latent variables describing the individuals’ attitudes: technology interest, environmental concern, enjoy driving, public transit attitude, and pro-AV sentiments. The effects that the characteristics of the individual and the autonomous vehicle have on use and acceptance are quantified through random utility models including logit kernel model taking into account panel effects.Currently, large overall hesitations towards autonomous vehicle adoption exist, with 44% of choice decisions remaining regular vehicles. Early AV adopters will likely be young, students, more educated, and spend more time in vehicles. Even if the SAV service were to be completely free, only 75% of individuals would currently be willing to use SAVs. The study also found various differences regarding the preferences of individuals in Israel and North America, namely that Israelis are overall more likely to shift to autonomous vehicles.Methods to encourage SAV use include increasing the costs for regular cars as well as educating the public about the benefits of shared autonomous vehicles.     

Introducing alternative fuel vehicles in Hong Kong: views from the public light bus industry

Hong Kong was the first place in the world to implement a trial scheme to convert all public light buses (PLBs) on the road from diesel to alternative fuel vehicles (AFVs). The scheme, however, did not receive much support from PLB operators. At present, there is a rich literature on households’ demand for AFVs (especially in the USA). However, there have not been many studies about the demand for commercial AFVs in the business and public transport sectors. Since light buses running on alternative fuels are not widely available in the Hong Kong market, a stated preference (SP) survey was conducted to solicit the preferences of PLB operators on eight commercial vehicle attributes and seven forms of government support. The SP data are analyzed by multinomial logit (MNL) models. Detailed analyses on market segmentation and price elasticities follow. The results are of theoretical and practical significance.     

Influence of connected and autonomous vehicles on traffic flow stability and throughput

The introduction of connected and autonomous vehicles will bring changes to the highway driving environment. Connected vehicle technology provides real-time information about the surrounding traffic condition and the traffic management center’s decisions. Such information is expected to improve drivers’ efficiency, response, and comfort while enhancing safety and mobility. Connected vehicle technology can also further increase efficiency and reliability of autonomous vehicles, though these vehicles could be operated solely with their on-board sensors, without communication. While several studies have examined the possible effects of connected and autonomous vehicles on the driving environment, most of the modeling approaches in the literature do not distinguish between connectivity and automation, leaving many questions unanswered regarding the implications of different contemplated deployment scenarios. There is need for a comprehensive acceleration framework that distinguishes between these two technologies while modeling the new connected environment. This study presents a framework that utilizes different models with technology-appropriate assumptions to simulate different vehicle types with distinct communication capabilities. The stability analysis of the resulting traffic stream behavior using this framework is presented for different market penetration rates of connected and autonomous vehicles. The analysis reveals that connected and autonomous vehicles can improve string stability. Moreover, automation is found to be more effective in preventing shockwave formation and propagation under the model’s assumptions. In addition to stability, the effects of these technologies on throughput are explored, suggesting substantial potential throughput increases under certain penetration scenarios.     

Are we ready to embrace connected and self-driving vehicles? A case study of Texans

While connected, highly automated, and autonomous vehicles (CAVs) will eventually hit the roads, their success and market penetration rates depend largely on public opinions regarding benefits, concerns, and adoption of these technologies. Additionally, the introduction of these technologies is accompanied by uncertainties in their effects on the carsharing market and land use patterns, and raises the need for tolling policies to appease the travel demand induced due to the increased convenience. To these ends, this study surveyed 1088 respondents across Texas to understand their opinions about smart vehicle technologies and related decisions. The key summary statistics indicate that Texans are willing to pay (WTP) $2910, $4607, $7589, and $127 for Level 2, Level 3, and Level 4 automation and connectivity, respectively, on average. Moreover, affordability and equipment failure are Texans’ top two concerns regarding AVs. This study also estimates interval regression and ordered probit models to understand the multivariate correlation between explanatory variables, such as demographics, built-environment attributes, travel patterns, and crash histories, and response variables, including willingness to pay for CAV technologies, adoption rates of shared AVs at different pricing points, home location shift decisions, adoption timing of automation technologies, and opinions about various tolling policies. The practically significant relationships indicate that more experienced licensed drivers and older people associate lower WTP values with all new vehicle technologies. Such parameter estimates help not only in forecasting long-term adoption of CAV technologies, but also help transportation planners in understanding the characteristics of regions with high or low future-year CAV adoption levels, and subsequently, develop smart strategies in respective regions.     

Who will buy electric vehicles? Identifying early adopters in Germany

Electric vehicles (EVs) have noteworthy potential to reduce global and local emissions and are expected to become a relevant future market for vehicle sales. Both policy makers and car manufacturers have an interest to understand the first large EV user group, frequently referred to as ‘early adopters’. However, there are only a few empirical results available for this important group. In this paper, we analyse and discuss several empirical data sets from Germany, characterising this user group from both a user and a product perspective, i.e. who is willing to buy an EV and who should buy one. Our results show that the most likely group of private EV buyers in Germany are middle-aged men with technical professions living in rural or suburban multi-person households. They own a large share of vehicles in general, are more likely to profit from the economical benefits of these vehicles due to their annual vehicle kilometres travelled and the share of inner-city driving. They state a higher willingness to buy electric vehicles than other potential adopter groups and their higher socio-economic status allows them to purchase EVs. In contrast to this, inhabitants of major cities are less likely to buy EVs since they form a small group of car owners in general, their mileage is too low for EVs to pay off economically and they state lower interest and lower willingness to pay for EVs than other groups. Our results indicate that transport policy promoting EVs should focus on middle-aged men with families from rural and sub-urban cities as first private EV buyers.     

Consumer preferences for alternative fuel vehicles: A discrete choice analysis

This paper analyzes the potential demand for privately used alternative fuel vehicles using German stated preference discrete choice data. By applying a mixed logit model, we find that the most sensitive group for the adoption of alternative fuel vehicles embraces younger, well-educated, and environmentally aware car buyers, who have the possibility to plug-in their car at home, and undertake numerous urban trips. Moreover, many households are willing to pay considerable amounts for greater fuel economy and emission reduction, improved driving range and charging infrastructure, as well as for enjoying vehicle tax exemptions and free parking or bus lane access. The scenario results suggest that conventional vehicles will maintain their dominance in the market. Finally, an increase in the battery electric vehicles’ range to a level comparable with all other vehicles has the same impact as a multiple measures policy intervention package.     

Effects of providing total cost of ownership information on consumers’ intent to purchase a hybrid or plug-in electric vehicle

Energy-saving technologies have a difficult time being widely accepted in the marketplace when they have a high initial purchase price and deferred financial benefits. Consumers might not realize that, in the long-run, the financial benefits from reduced energy consumption offset much or all of the initial price premium. One strategy to address consumer misconception of this advantage is to supply information on the “total cost of ownership”, a metric which accounts for the purchase price, the cost of the fuel, and other costs over the ownership period. In this article, we investigate how providing information on five-year fuel cost savings and total cost of ownership affects the stated preferences of consumers to purchase a gasoline, conventional hybrid, plug-in hybrid, or battery electric vehicle. Through an online survey with an embedded experimental design using distinct labels, we find that respondent rankings of vehicles are unaffected by information on five-year fuel cost savings. However, adding information about total cost of ownership increases the probability that small/mid-sized car consumers express a preference to acquire a conventional hybrid, plug-in hybrid, or a battery-electric vehicle. No such effect is found for consumers of small sport utility vehicles. Our results are consistent with other findings in the behavioral economics literature and suggest that further evaluation of the effects of providing consumers with information on the total cost of vehicle ownership is warranted.     

Preferences for shared autonomous vehicles

Shared autonomous vehicles (SAVs) could provide inexpensive mobility on-demand services. In addition, the autonomous vehicle technology could facilitate the implementation of dynamic ride-sharing (DRS). The widespread adoption of SAVs could provide benefits to society, but also entail risks. For the design of effective policies aiming to realize the advantages of SAVs, a better understanding of how SAVs may be adopted is necessary. This article intends to advance future research about the travel behavior impacts of SAVs, by identifying the characteristics of users who are likely to adopt SAV services and by eliciting willingness to pay measures for service attributes. For this purpose, a stated choice survey was conducted and analyzed, using a mixed logit model. The results show that service attributes including travel cost, travel time and waiting time may be critical determinants of the use of SAVs and the acceptance of DRS. Differences in willingness to pay for service attributes indicate that SAVs with DRS and SAVs without DRS are perceived as two distinct mobility options. The results imply that the adoption of SAVs may differ across cohorts, whereby young individuals and individuals with multimodal travel patterns may be more likely to adopt SAVs. The methodological limitations of the study are also acknowledged. Despite a potential hypothetical bias, the results capture the directionality and relative importance of the attributes of interest.     

A hedonic test of the effects of the Alternative Motor Fuels Act

Under the Alternative Motor Fuels Act (AMFA), vehicles that run on ethanol, methanol, or natural gas get extra credits in the calculation of Corporate Average Fuel Economy (CAFE). This paper uses hedonic techniques to examine the effect of production of alternative-fuel vehicles (AFVs) on the implicit price of fuel economy. This study finds that, after AFVs came to market, the marginal value of fuel economy from companies producing them decreased. This finding suggests that manufacturers who produced AFVs were willing to offer a lower price for fuel economy, because automakers had an additional way to achieve fuel economy standards beyond improving the fuel efficiency of conventional cars. These findings bolster the argument that a major role of the AMFA credit for AFVs is to allow automakers to increase their production of fuel-inefficient vehicles.