How does policy awareness impact consumer preferences for passenger vehicles? A study from China

Abstract

To reduce energy consumption and carbon emissions in the transportation sector, various incentives for promoting electric vehicle (EV) uptake have been implemented worldwide. However, little attention has been given to how individuals perceive EV-related policy incentives, and a knowledge gap may reduce the effectiveness of these incentives. The aim of this study is to discern how a deep understanding of fiscal incentives can also contribute to greater environmental benefits and how green product-related policy awareness is formed in developing countries. Taking a newly released purchase tax exemption for EVs in China as an example, this study compares consumer preferences over certain attribute levels of vehicles with and without detailed policy information via a randomized group design. A best‒worst scaling profile case experiment is embedded to elicit consumer preferences and detailed information about a newly released vehicle emission standard is also provided to avoid a knowledge gap on this regulation. The result shows that compared to the group without detailed policy information, those with information about tax exemption caps are significantly less attracted to hybrid EVs, larger sized and cheap vehicles. Heterogeneous preferences are observed for the attribute levels. Income level, family size and uncertain are found to be associated with various preference through a latent class logit model. A full understanding of the tax exemption policy with caps may raise the preference for battery EVs among individuals with higher income levels and more confident with their choice, and reduce the preference for large cars among individuals from relatively larger families in particular. Self-reported knowledge about this tax exemption policy and the released vehicle emission standard is also examined before the experiment. The results indicate that the awareness of fiscal policies is greater than the awareness of the emission regulation. Individuals who are less risk averse, have higher household income levels, are from regions with more fluently standard language use, or are male are found to have a deeper understanding of these policy incentives. To enhance individual’s greener vehicle related policy awareness and further shape their preference towards sustainable consumption, employing social media to transmit policy information and improving confidence in greener vehicle uptake among target populations through well designed policy incentives, especially in less developed regions might be important for developing countries.