The Role of Public Policy in Technology Diffusion: The Case of Plug-in Electric Vehicles

The plug-in electric vehicle (PEV) is regarded by many as a viable alternative to the internal combustion engine, so long as the radical technology is able to overcome technical and financial shortcomings that dictate consumer acceptance. States have instituted a variety of policies aimed at mitigating these shortcomings and simultaneously increasing consumer demand for PEV vehicles. Motivated by a limited body of literature on the effects of these policies, and a significant need for information about policy efficacy, in this study we evaluate the relationship between a suite of state-level policies and PEV registrations. Results reveal that tax credits for individuals, grants programs for charging infrastructure and PEV purchases, and incentives for state-owned PEVs fleets increase PEV registrations. The observed impact of grant incentives is mediated by charging capacity or, alternatively phrased, much of the influence of grants on registrations is through the channel of first improving the charging infrastructure within a state.