Measuring the Environmental Benefits of Electric Vehicles (Relative to the Car that Wasn’t Bought)

The true net environmental benefit of an electric vehicle (EV) is measured relative to the vehicle that an EV buyer would have bought and driven had they not opted for an EV. This “counterfactual” vehicle cannot be observed, but its fuel economy can be estimated. We use quasi-experimental variation in a generous California EV subsidy program to show that buyers of EVs would have, on average, purchased relative fuel-efficient gasoline-powered cars had they not gone electric. The true incremental pollution abatement arising from the EV is thus substantially smaller when compared to this appropriate reference vehicle, as opposed to, say, the average new passenger car.